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Bits Blog: Apple Takes Aim at Providers of Under-Age Laborers

January 26, 2013 by Leave a Comment

Labor recruiters in China last year knowingly provided underage workers to a supplier that built parts for products from Apple and other companies.

That finding was included in Apple’s 2013 report on labor conditions at its suppliers, where more than 1.5 million workers make or assemble the ingredients that go into the iPhone, iPad and other products. The report, posted late Thursday night, is the latest installment in the company’s annual assessment of how well its suppliers are complying with Apple’s code of conduct, which dictates standards for workplace safety and other labor conditions. The 2013 report is the result of 393 audits at Apple suppliers, the company said.

Apple said it found no cases of underage workers at its final assembly suppliers in 2012 — including big companies like Foxconn — but it discovered such violations deeper within its network of suppliers at subcontractors. Apple described in the report how “dishonest third-party labor agents” in China work to skirt Apple’s policy against underage laborers. In January of last year, Apple said it audited a company that makes circuit board components found in Apple’s and other companies’ products, Guangdong Real Faith Pingzhou Electronics Co., and discovered 74 cases of workers who were under the age of 16.

As part of the investigation, it found that Shenzhen Quanshun Human Resources Co., a large labor agency in China’s Shenzhen and Henan provinces, had provided the children to the maker of circuit board parts, conspiring with their families to forge documents to represent them as older than they were. Apple said it reported the labor agency to the provincial governments, which fined the agency and revoked its license. The children were returned to their families, Apple said in the report.

The report said Apple’s audits showed 92 percent compliance with its policy of a 60-hour maximum workweek.

Article source: http://bits.blogs.nytimes.com/2013/01/25/apple-targets-providers-of-underage-laborers/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

China Is Said to Consider Plan to Deal With Failed Banks

December 14, 2012 by Leave a Comment

A consensus has formed among China’s leaders that the country needs a formal system of bank deposit insurance as banks have rapidly ramped up lending and begun offering a wide variety of increasingly risky investment products that do not appear on their balance sheets, the official and advisers said.

Introducing deposit insurance could also help the government steer the financial system toward providing more credit for small and medium-size private enterprises. These now receive as little as 3 percent of bank lending even as they account for at least half the country’s economic activity.

Without a clear system until now for closing banks that lend unwisely, banks have been encouraged by regulators to lend overwhelmingly to state-owned enterprises that appear certain to repay loans. That has left smaller businesses and private companies starved for credit.

The first public indication of the government’s intense interest in deposit insurance is likely to come at the Central Economic Work Conference this month, said the official, who discussed internal government matters only on the condition of anonymity. Held each December since 1994, the conference is the most important economic policy-making event in the Chinese calendar and sets the agenda for the coming year.

This month’s conference, the exact dates of which are still secret but which could start as soon as this weekend, is being watched with particular scrutiny by economists and investors as a clue to the agenda for the next decade of Xi Jinping, the new general secretary of the Communist Party. The conference is jointly overseen by the cabinet and by the Central Committee of the Communist Party.

Mr. Xi startled many analysts by rushing down to Shenzhen in southern China last weekend for an inspection tour of the city, known within China for its embrace of free-market capitalism. He is following in the footsteps of Deng Xiaoping, who restarted China’s economic liberalization after the Tiananmen Square crackdown in 1989 with a trip three years later to the same city.

Until now, the government has quietly paid off all depositors in full, regardless of the size of their deposits, when small banks and rural cooperatives have failed; no large banks have been allowed to fail. The government’s fear has been that allowing any depositors to sustain losses, even at the worst-run institutions, would undermine confidence in the financial system.

China’s banking industry is divided on the need for deposit insurance. As in other countries, including the United States, the biggest banks are the least enthusiastic. With a little more than half the country’s deposits, China’s Big Four banks are widely viewed as much too big to fail but are likely to owe hefty premiums for the deposit insurance plan being developed.

“The debate over the deposit insurance scheme is that the larger banks that would contribute more feel as though they would be subsidizing smaller banks,” said Andrew Sheng, a former head of Hong Kong’s securities regulator who for the last 10 years has been the convener of the international advisory council of the China Banking Regulatory Commission.

China’s current five-year plan calls for the government to study deposit insurance, but not necessarily to adopt it. Mr. Sheng expressed surprise when told that the subject was likely to be on the agenda of the Central Economic Work Conference and said that “it means that they are taking it more seriously.”

But Mr. Sheng cautioned that even once the leadership approves the concept of deposit insurance, it could take a full year just to draft the necessary legislation.

Article source: http://www.nytimes.com/2012/12/14/business/global/china-is-said-to-consider-plan-to-deal-with-failed-banks.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Economix Blog: Charles Duhigg Responds to Readers on Apple and the iEconomy

January 24, 2012 by Leave a Comment

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.Thomas Lee/Bloomberg NewsA production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees.

7:36 p.m. | Updated Charles Duhigg has provided answers to select reader questions. See the comments, below.

On the front page of Sunday’s newspaper, Charles Duhigg and Keith Bradsher published the first of a series of articles on The iEconomy, examining the challenges posed by increasingly globalized high-tech industries. In a deep look inside the economics of Apple’s manufacturing, Mr. Duhigg and Mr. Bradsher described the powerful incentives that first drew Apple’s assembly work overseas, and the subsequent pressure that encouraged related jobs to follow suit:

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the more than 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.

“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.

The article was accompanied online by an animated graphic detailing the economic pressures underlying the process.

But the problem, the article noted, isn’t unique to the maker of the iPhone and the iPad:

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.

The article, which followed months of reporting, also arrived shortly after Apple released a list of its major suppliers for the first time, and weeks after an episode of the public radio program “This American Life” focused intently on labor conditions at an Apple supplier in China.

Twitter users had lots to say, from the admiring:

To the skeptical:

At Slate, Matthew Yglesias took a distinctive view:

The more interesting question, to me, is why we don’t hear more about the possibility of letting the workers come to America. At the same time that a lot of companies seem to want to move certain kinds of production to foreign countries to take advantage of their labor forces, an awful lot of people seem to want to move to the United States.

What questions do you have about the iEconomy and Apple’s role in it? Submit them in the comments field below. Charles Duhigg will respond to a selection later on Monday.

Article source: http://feeds.nytimes.com/click.phdo?i=45522b5334979bc7d07d472b828453cf

Filed Under: Economy News Tagged With: , ,

High-Speed Rail Poised to Transform China

June 22, 2011 by Leave a Comment

Complaints include the system’s high costs and fares, the quality of construction and an allegation of self-dealing by a rail minister who was fired this year on grounds of corruption.

But often overlooked amid all the controversy are the very real economic benefits that the world’s most advanced fast-rail system is bringing to China, and the competitive challenges it poses for the United States and Europe.

Just as building the interstate highway system in the United States a half-century ago made modern commerce more feasible on a national scale, China’s ambitious rail rollout is helping to integrate the economy of this sprawling, populous nation. In China’s case, it is doing so on a much faster construction timetable and at significantly higher travel speeds than anything envisioned by the United States in the 1950s.

Work crews of as many as 100,000 people per line have built about half of the 16,000-kilometer, or 10,000-mile, network in just six years, in many cases ahead of schedule, including the Beijing-to-Shanghai line, which was originally planned to open next year. The entire system is still on course to be completed by 2020.

For the United States and Europe, the implications go beyond marveling at the pace of Communist-style civil engineering. As trains traveling 320 kilometers per hour link cities and provinces that were previously as much as 24 hours by road or rail from the entrepreneurial seacoast, China’s manufacturing might and global-export machine are likely to grow more powerful.

Zhen Qinan, a founder of the stock exchange in the coastal city of Shenzhen and the recently retired chief executive of ZK Energy, a wind turbine producer in Changsha, said that high-speed trains were making it more convenient to base businesses here in Hunan Province — a populous region that has long provided labor to the factories of the east, but whose mountain ranges have tended to isolate it from the economic mainstream.

Mr. Zhen ticked off Hunan’s economic attributes: “Land is much cheaper. Electricity is cheaper. Labor is cheaper.”

Throughout China, real estate prices and investments have risen sharply in the more than 200 inland cities that have already been connected by high-speed lines in the past three years. Businesses are flocking to these cities, now just a few hours by bullet train from China’s busiest and most international metropolises.

Meanwhile, a shift in passenger traffic to the new high-speed rail routes has freed up congested older rail lines for freight. That has allowed coal mines and shippers to switch to cheaper rail transport from costly trucks for heavy cargos.

Because of this shift, plus the further construction of freight rail lines, the tonnage hauled by China’s rail system increased in 2010 by an amount equaling the entire freight carried last year by the combined rail systems of Britain, France, Germany and Poland, according to the World Bank.

The bullet train bonanza, and the competitive challenge it poses for the West, is only likely to increase with the opening of the 1,320-kilometer Beijing-to-Shanghai line, which will create a business corridor between China’s two most dynamic cities. The Ministry of Railways plans 90 bullet trains a day in each direction.

The trains will barrel along at speeds of more than 300 kilometers per hour initially, with plans to accelerate to about 350 kilometers per hour by the summer of 2012 if the first year of operation goes smoothly.

Even at the initial speeds, the trains will take less than five hours to travel between Beijing and Shanghai. That is roughly comparable to the distance between New York and Atlanta, which takes nearly 18 hours on an Amtrak train.

China’s huge investment in high-speed rail may be instructive for the United States, whether for proponents of U.S. rail investments or critics who consider bullet trains a boondoggle.

Article source: http://www.nytimes.com/2011/06/23/business/global/23rail.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,