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Businesses The Almighty Buck

The Forbidden City of Terry Gou 253

Posted by kdawson
from the not-made-in-newark dept.
ElvaWSJ writes "Hon Hai churns out iPhones and Wiis, and provides a window into China's secretive world of outsourcing and manufacturing. With a work force of some 270,000 — about as big as the population of Newark, N.J. — the factory is a bustling testament to the ambition of Hon Hai's founder, Terry Gou. In an era when manufacturing has been defined by outsourcing, no one has done more to shift global electronics production to China. Little noticed by the wider world, Mr. Gou has turned his company into China's biggest exporter and the world's biggest contract manufacturer of electronics."
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The Forbidden City of Terry Gou

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  • Ah, if only (Score:5, Funny)

    by Stanistani (808333) on Monday August 13, 2007 @01:52PM (#20214361) Homepage Journal
    Can I roam amongst the endless rows of bins filled with our disposable electronic baubles? Please?
  • He's done so without attempting to poison or kill his own customers.
    • Re: (Score:2, Funny)

      by subl33t (739983)
      Yeah, just his employees.
      • Re: (Score:3, Insightful)

        Too bad unions are illegal in China. Unionization was what it took to change that in the United States.
        • Re: (Score:3, Informative)

          by CodeBuster (516420)
          They are not illegal in China (at least not the "official" ones), but the government controls all of them (in Soviet Russia the union controls you...or something like that) so the unions in China are more for keeping the workers in line than working on behalf of the workers. Why do you suppose that the only country where Walmart has not objected to unionization is China?
      • by plague3106 (71849) on Monday August 13, 2007 @02:49PM (#20215085)
        I guess you didn't read the article.

        They get paid $0.60 an hour (a lot in China), but they also get to live rent free, their food is subsidized, and they have free health care. They also get overtime pay and actually do get raises. I wouldn't mind that deal, if I were just starting out of high school and needed to work.
        • They get paid $0.60 an hour (a lot in China), but they also get to live rent free, their food is subsidized, and they have free health care.

          Oh, like the US military!

          They also get overtime pay and actually do get raises.

          Oh wait, never mind.

        • by Danathar (267989)
          And...I bet they buy their food from the "company" owned store not with food but with company "credits" they are given.

          You know this was how it was done back in the 19th century. It's close to slavery.
        • Re: (Score:2, Insightful)

          by quarmar (125648)
          $0.60 an hour is listed as minimum wage, not "a lot in China".
        • by fliptout (9217) on Monday August 13, 2007 @05:26PM (#20217067) Homepage
          Really, these "amenities" are almost standard here in China. In many places that use unskilled labor, the workers live in a dormitory and have access to health care, ie shitty public hospitals or clinics.

          They've got access to genuine 1960s era medical technology there, which I suppose is better than medical tech from the Qin dynasty that is available in the boondocks. That is, if people don't just watch you die.

          Workers typical have access to low cost/free housing too, which consists of crappy temporary concrete buildings. I'm sure Chinese business owners have a paternal warm fuzzy when taking care of their workers, but don't let the the "spin" of how great the workers have it get to you. The conditions totally suck here.

          The Chinese pride themselves on their ability to endure hardship, but the other side of the coin is that they are ignorant of what a better life is like AND they are fairly passive as a people. Change is going to be a long, frustrating progress here. Honestly, I don't think China would be progressing so fast if they weren't being given oodles of money on a silver platter.
    • Re: (Score:3, Insightful)

      by HungWeiLo (250320)
      I just got done talking with an uncle of mine who does a lot of business in China (he's pretty high up in an international engineering firm based in Hong Kong). He says that all the poisonings and shenanigans would not have gone on without the knowledge of their American clients (i.e. the CEOs who wanted to outsource to them in the first place). He says that, for example, extra lead levels in Mattel toys were most likely already known by the bosses in the U.S., and they were just betting that no one would f
  • Worker conditions (Score:5, Interesting)

    by ktappe (747125) on Monday August 13, 2007 @01:58PM (#20214435)
    Note the interviewee who says that while the living conditions have improved since the BBC publicity last year (the "iPod slaves" story), he says the changes are "incomplete" and seemed afraid to go into more detail or give his full name. I really do wish that buying electronics wouldn't mean supporting companies whose workers have to live in slum conditions. But I really don't know what to do short of writing probably useless letters to Steve Jobs and Michael Dell.
    • by middlemen (765373) on Monday August 13, 2007 @02:10PM (#20214569) Homepage
      I really do wish that buying electronics wouldn't mean supporting companies whose workers have to live in slum conditions.

      Ok, humanitarian perspective aside. Those workers are now able to provide a their families 2 square meals a day. If companies stop using them, then they go hungry, continue living in slums and you pay more for your beloved techno-gadgets. Right now they are better off than they were earlier and you are happier since you can have the privilege of using an iPod and listening to your choice of music on the go. See win-win scenario...
      • by iamacat (583406) on Monday August 13, 2007 @03:04PM (#20215263)
        Or you could consider that the US company could easily double their salary, reduce work week to, say, 60 hours and fix the most grievous safety hazards - all at the cost of cutting compensation of top executives by half. Just like we are prosecuting ordinary citizens for patronizing child prostitutes in Thailand, we should start going after companies (and their CEOs) that break US labor laws abroad. 5-7 bucks minimum wage per hour is not to expensive for a company, will help 3rd world countries stand up on their feet rather than being cheap slaves and will give US workers at least a slight chance to compete for jobs.
        • Re: (Score:2, Insightful)

          by Colin Smith (2679)

          Or you could consider that the US company could easily double their salary, reduce work week to, say, 60 hours and fix the most grievous safety hazards
          And they'd be unemployed in less than a year.

           
          • by iamacat (583406)
            Why? I don't see american overpaid corporate management getting the boot. Surely improving conditions of someone currently working 16h/day in a sweatshop will do more good to product quality than increasing a rich guy's net worth from 4 to 8 billion.
        • by servognome (738846) on Monday August 13, 2007 @03:58PM (#20215941)

          Or you could consider that the US company could easily double their salary, reduce work week to, say, 60 hours and fix the most grievous safety hazards - all at the cost of cutting compensation of top executives by half.
          Having worked with companies in China, I can say it's not that easy. Because labor costs are low, companies in asia simply throw people to solve problems rather than automating. They easily employ 10x the number of people to accomplish the same job. What would happen with a western style system is 1 person would have US style benefits running machines, and the other 9 would be unemployed.
          • by Travoltus (110240)
            If Americans are barred from having manufacturing jobs (which sell to the US market), then hell, why should anyone?

            Give us our jobs back or let the machines take over.
            • Re: (Score:3, Insightful)

              by CodeBuster (516420)
              You are barred from having a manufacturing job not because of the Chinese but because of the federal minimum wage laws (among other economic conditions). In fact it is well known that labor organizations in the United States have long lobbied for the continuation of the minimum wage AND increases to the minimum wage, on account that they, "are looking out for the good of all workers" when in fact they are *hurting* the workers that are not part of their union with these minimum wage laws (and they know that
              • by Travoltus (110240)
                "You are barred from having a manufacturing job not because of the Chinese but because of the federal minimum wage laws (among other economic conditions)."

                So basically, to compete with China, we need to start working at 60 cents a day.

                Do you realize what this will do to America's spending power? It would plunge us into utter poverty. And the rest of the world, too.
      • by gstoddart (321705) on Monday August 13, 2007 @03:54PM (#20215889) Homepage

        Ok, humanitarian perspective aside. Those workers are now able to provide a their families 2 square meals a day. If companies stop using them, then they go hungry, continue living in slums and you pay more for your beloved techno-gadgets.

        If they were actually all getting better standards of living, we wouldn't be objecting on humanitarian grounds. Yes, they get a better standard of living, we get products. Everyone wins. The fact that they do it for a fraction of what it would cost here, I guess one lives with because it's an actual opportunity for them and they get to move up the economic ladder. Such things are relative to where you live.

        But, when one hears stories about what is outright slavery, workers not getting paid at all, and all of that stuff, then one tends to be a little more worried about how ethical these products are. There are regular stories about appalling things happening in Chinese factories, as well as a lot of shady dealings from sub-sub contractors who nobody seems to be accounting for (like, lead in kids toys for instance).

        Personally, I would like a little more assurance that the products I'm buying which are made in China actually have a little fairer labour practice than the worst case we tend to hear about. And, I don't think it's too unrealistic to basically tell the companies using these manufacturers that they really need to be sure of such things. I don't begrudge the workers a chance to make a living -- but, I do expect the parent companies to do more than the most superficial due-diligence to Do The Right Thing.

        This is an unfortunate side effect of outsourcing (well, one of many) -- you really have no assurances that the people making the stuff you buy aren't being subject to really awful conditions.

        Cheers
      • by vidarh (309115)
        I'm all for buying from companies in developing countries. However that does not remove the very valid concern of how they are treating their employees.

        Consider this: You are right that stopping to use them would be bad for the workers too. However, as a consumer spending lots of money with these companies you have the choice to learn about which of these companies treat their customers best and take that into account when picking products. You also have the choice of threatening companies using the worst

    • by maillemaker (924053) on Monday August 13, 2007 @02:13PM (#20214611)
      Something to consider here is that in many cases though the job conditions and pay looks terrible to /you/, the actual workers love it compared to what they had.

      This is not to say that we nor they should be satisfied with their present lot in life, but rather to say that things are improving. Their economy is primitive by modern standards. It will grow, rapidly, and working conditions will improve - just like they did in our country.

      The answer to helping these people advance is not to stop buying their products, which puts them right back where they were - with nothing. The answer is to continue to buy their products, which empowers them and gives them options.
      • by onkelonkel (560274) on Monday August 13, 2007 @02:48PM (#20215071)
        I remember my history teacher telling us about working conditions during industrial revolution times in England. Workers (some of them children as young as 6 years old) toiled from sunup to sundown six days a week in dirty noisy horribly dangerous factories for the lowest possible wages.

        The point that stuck with me was that hordes of people flocked from the farms to the cities, because horrible as it may have seemed to us, it was still _better_ than the conditions they left behind. On the farms you toiled (men, women and children) from sunup to sundown 7 days a week. Conditions were no less dangerous; farm machines could kill you just as dead as machines in a factory. And on the farm if it didn't rain at the right time, or rained too much, or the bugs came your crop was wiped out and you starved. At least in the mills, as long as you could work you knew you were not going to starve. While "not starving to death" is a pretty minimum standard of living, it sure beats "maybe starving to death"
        • by rodentia (102779) on Monday August 13, 2007 @04:05PM (#20216025)

          The people had already flocked to the city because they had been evicted from their pastoral livelihood by the Enclosure Laws. The industrial revolution happened substantially due to the critical mass of effectively starved humans ready to make the toil economically and emotionally feasible.

          And there were no machines on the farms until the late nineteenth century.

          Bread only becomes critical on the farm when the cities find it necessary to keep their machine-minder's bellies full. I am not saying the expropriation of labor by capital is not essential. There is no interpretive value in pretending that it is something other than it is for the sake of whitewashing the motives of the haute bourgeoisie.

          • Interesting. Turns out one of the reasons for enclosure (besides plain old greed of the landlords) was "The Great Debasement" where the king devalued the currency, and thereby unintentionally caused horrible inflation, to pay for his foreign wars. (Has a familiar ring to it, no?). The landlords were squeezed by inflation and taxes and grabbed the "commons" to help pay their bills.

            You are right about the machinery, it happened almost at the end of the IR. So please sub "kicked in head by horse;run over by h
          • Re: (Score:3, Interesting)

            by rcs1000 (462363) *
            "The people had already flocked to the city because they had been evicted from their pastoral livelihood by the Enclosure Laws. The industrial revolution happened substantially due to the critical mass of effectively starved humans ready to make the toil economically and emotionally feasible."

            1. The Enclosure Laws were only in England. The Industrial Revolution happened all over Europe and the US.
            2. Between 1500 and 1900, the agricultural output of England and Wales rose three-fold. Enclosure, while not nic
      • by The-Bus (138060)

        The answer to helping these people advance is not to stop buying their products, which puts them right back where they were - with nothing. The answer is to continue to buy their products, which empowers them and gives them options.

        You're partly right. Not buying the product certainly won't help that worker, unless you replace the purchase of that product with something that is fair to its workers. The problem is, I don't know who that company is, in electronics at least.

        One example I can think of is Blackspot Shoes [adbusters.org], a "shoe brand" created by the equally loony and insightful AdBusters magazine. At $78/pair, they're more expensive than the Converse All-Stars they copy (which used to be made in the USA).

        I'm not in the market for shoes,

        • by HungWeiLo (250320)
          The term "Made in U.S.A." is sometimes a highly dubious one in the fashion industry. It often means slave labor of illegal Chinese immigrants in the Chinatown sweatshops of L.A. or New York. Or oftentimes in Saipan or Guam, which makes it technically still American soil.
      • by xtracto (837672)
        Yeah, I always giggle when I read such kind of post in slashdot referring to the differences in pays of US compared to any other country... the article is actually quite good (yes, I read it /all/, until the paragraph when he says that he is looking for young successor before he gets too old to have good judgement), and the man and factory policies also seem quite nice.

        My girlfriend works as a manufacturing Warehouse Manager for an international company in Mexico, she has a Master in Manufacturing and her
      • by elrous0 (869638) *
        Hey, just because your plant is better than a concentration camp, that doesn't make you a humanitarian for exploiting jewish slave labor. These major corporations know damn well that they're exploiting these people--that's why they outsource to China. It's not like they're going there and offering Western-style pay and working conditions.
        • >Hey, just because your plant is better than a concentration camp, that doesn't make you a humanitarian for
          >exploiting jewish slave labor. These major corporations know damn well that they're exploiting these
          >people--that's why they outsource to China. It's not like they're going there and offering
          >Western-style pay and working conditions.

          Of course not - because the locals don't demand such compensation, and even if they did, it could be terribly disruptive to the local economy anyway.

          A buddy of
          • They had to scale their pay back. Why? Because the local merchants discovered that the Iraqis working on base made enough money to afford more expensive goods, so they raised their prices. But the effect was that things were now much worse for all the Iraqis who were not working on base.

            A good real world example of what economists call the price/wage spiral [wikipedia.org].
      • by couchslug (175151)
        Compare their lot to that of US workers in the 1920s and 1930s, and suddenly their compensation looks a lot better.
    • by juuri (7678) on Monday August 13, 2007 @02:18PM (#20214695) Homepage
      Well he did say conditons have improved. This may not mean much to us, but it was already well known that foxconn had some of the best factory conditions in the entire industry over there. Do these conditions really meet what we would consider ideal? No, but an improvement is an improvement. I would submit that most Americans have no idea how bad factory work is, even without our own country. If you want to be truly disgusted by the treatment of workers and the quality of their environment take yourself to the nearest chicken factory or any other "plant" with is obviously skirting the edges of legality.

      China moves slow traditionally but as they develop a real middle class, the lower class conditions will improve becaue of increased internal spending and more attitudes similiar to those in more developed nations.
    • by Marxist Hacker 42 (638312) * <seebert42@gmail.com> on Monday August 13, 2007 @02:22PM (#20214749) Homepage Journal
      Easy- start buying the products that are $5000 instead of $500....that is, the ones that you can verify were made in the USA out of components created from raw materials in the USA.
      • Parent statement is accurate. The troll mod is totally uncalled for.
      • by ThosLives (686517)

        Hrm. There's also the opposite method which in theory could work but never will on paper:

        You can start accepting less payment for everything you do, and make sure you can still get by. This will lower the cost of all the goods based on your efforts, so that will make US goods more competitive in the world market. Cool!

        Oh, wait, that doesn't work like that, does it...why don't other people lower their prices if I lower mine again?

        • I'm not sure- I tried it while I was unemployed for 2 years in the early part of the decade- for my customers, the cost of setting up their computers and LANs and broadband connections dropped to half what the professionals charged. Funny though, I couldn't afford housing or food on that....
    • One would be to do some research and see how the conditions are, relative to others in China. Remember you always have to compare things on an equal scale. You can't expect that someone in China will be paid US wages and live in the same style as in the US. Not only would that not work economically (no reason to outsource) but it could actually severely upset the economy if that happened on a wide scale. So first see if things are actually good, comparatively speaking. If they are, and if the money they bri
    • by sholden (12227)
      It was all flowers and joy for workers back in the early factories (and mines) of England when that whole industrial revolution thing got off the ground...

      Or maybe it transitions from shitty lives working in the fields, to shitty (but less so) lives working in factories, and then when the people actually get enough income to care about such things the conditions start improving - due to workers out numbering factory owners...

      You can try and skip all that I guess, but that last great leap forward didn't turn
    • by leoc (4746)
      And how much does anyone, including the Apple reps who went to inspect the place, really see? They admit at the beginning of the article that many parts of the plant are off-limits and protected by a 1000 member strong security force. For a company headed by a man who says he idolizes Genghis Khan you would have expected a little more research into the ethical practices of the company. Mind you, since this is an article in the Wall Street Journal, I am not surprised they spent more time talking about the
      • by Sunburnt (890890) *

        Mind you, since this is an article in the Wall Street Journal, I am not surprised they spent more time talking about the guys wealth and his company's income than they did investigating the working conditions or environmental practices in his factories.

        At least the WSJ hasn't been fully "Rupertized" yet. At that point, they'll probably spend the entirety of these articles asserting that Chinese entrepeneurs' successes are proof that we should all go back to living in company towns, where the evil libruhls

      • by alienw (585907)
        What sort of ethical breaches could there possibly be? Sounds like the workers are paid in actual currency, they are free to leave, they are being paid an above-average wage, and they can find alternate employment. What exactly is the problem here?
    • But I really don't know what to do short of writing probably useless letters to Steve Jobs and Michael Dell.
      This is going to sound overly simplistic, but why don't you stop buying consumer electronics if it really bothers you? I mean, nobody needs an iPod or a PC at home...
  • by aapold (753705) on Monday August 13, 2007 @02:03PM (#20214499) Homepage Journal
    Now that Rupert Murdoch owns the WSJ, I would have expected headlines more in line with, say, the New York post.... you know, like....

    Don't have a Gou, man!

    Holy Gou!

    Gouabunga!

    Pass Gou, collect $200 (billion)

    Is that to Gou?

  • The article reads like something that should be in a William Gibson [wikipedia.org] book.
    • Uh, what? You kind of have to be reaching to see anti-Semitism in it.

      Oh, you said *William* Gibson...
    • by Dogtanian (588974)

      The article reads like something that should be in a William Gibson book.
      The secretive factory sounds like something out of a Roald Dahl [wikipedia.org] book.
  • by krou (1027572) on Monday August 13, 2007 @02:23PM (#20214759)

    FTA:

    In addition to its dozens of assembly lines and dormitories, Longhua has a fire brigade, hospital and employee swimming pool, where Mr. Gou does early morning laps when he is there. Restaurants, banks, a grocery store and an Internet cafe line the company town's main drag. More than 500 monitors around the campus show exercise programs, worker-safety videos and company news produced by the in-house television network, Foxconn TV. Even the plant's manhole covers are stamped "Foxconn."

    Is it just me, or could I replace "Longhua" with "Cypress Creek", "Mr. Gou" with Hank Scorpio, and "Foxconn" with "Globex Corporation", and we'd have the world's first living simulation of a Simpsons episode?

    I've heard the Chinese were good at imitation, but this seems to be going just a bit too far ...

  • TFA states that they can make even more with overtime. I always assume that means more than 40+ hours, and time and a half. But I'm am unfamiliar with other countries labor laws. Anyone know if this is the case ? If not, when do they get the overtime, and at what rate ?
    • Re: (Score:3, Informative)

      by p0tat03 (985078)

      I don't know about Shenzhen or most of the rest of China, but where I came from in Asia the work day is 6 days a week, 8-10 hours a day. Overtime is paid at par (i.e. there is no bonus), but people love it anyway. Workers in these factory-cities don't have much of a life besides making money and sending most of it back home - so an opportunity to make even more cash with time they wouldn't spent doing diddly squat anyways seems appealing.

      Some companies pay out mid-year bonuses based on company performance

    • There has always been a tendency in the past, wherever there were large supplies of workers relative to demand, for workers to "put in time for the company" (i.e. take one for the team) by working *some* extra hours gratis before logging any overtime (this was endemic in Japan during the 1980s where you had the salarymen, as they were called over there, dropping dead from sheer stress). It is implied (sometimes not to indirectly) that if you don't work hard (i.e. meet the quota which is impossible to meet w
  • by tgatliff (311583) on Monday August 13, 2007 @02:34PM (#20214895)
    Quite interesting that FoxComm has put all of its operations in one spot. This is something that US plants are not known for, and I suspect it is due to all types of single point failures such as power, water, and other facilities. One advantage of doing this, though, is that having all 270K of employees makes providing things such as hospitals and other ammenities. I wonder how much US manufactures thought about this in the early days... Meaning, why doesnt Boeing have their own hospital?
  • by The-Bus (138060) on Monday August 13, 2007 @02:38PM (#20214949)
    Wired had a great photo gallery of factories and assembly lines [wired.com] in China.

    And here is a write-up [bunniestudios.com] about someone from Chumby Industries [chumby.com] visiting Shenzhen to get their production line up-to-date. It's more about the area than anything about the factory.
    • This is the same municipality that is rolling out the world's first chipped citizen [nytimes.com] initiatives.

      I am sure this is merely coincidental.

    • by E++99 (880734)
      Those are some great photos. I watch a regular show called Inside China. They mostly show different rural cultures, but they did at least one show on a live-in factory much like this one (possibly the same). It is such an amazing country, with such a different mindset, that is hard for us Westerners to really get our heads around. I'd love to go there one day. The only two things that are truly disturbing are the amount of pollution due to corruption in government that prevents any remedies, and the in
      • by The-Bus (138060)
        I think I've seen an episode of this. Intergoogling the tubes just now I couldn't find any info on it though. Is it perhaps called "China from the Inside" [pbs.org]? It ran as a four-part documentary on PBS. I saw the first episode, about how the Communist Party controls people even in remote areas. Didn't know it was a series.
  • http://maps.google.com/maps?f=q&hl=en&geocode=&q=F oxconn+OR+Longhua&sll=22.683242,114.04727&sspn=0.0 63274,0.107803&ie=UTF8&ll=22.661304,114.066153&spn =0.063284,0.107803&t=h&z=14&om=1

    Interesting place. Unless the Google imagery is horribly out of date, the Hon Hai facility has plenty of room to expand.
  • There's this other story [slashdot.org] from a certain "News for Nerds" outlet about the same city considering electronic surveillance. Consider ~5% of the people who live in Shenzhen are employed by this person (WSJ reports factory having 270K employees out of a population of 6M) or maybe who would manufacture said devices, and the stories seem rather related to me.

    Not that I'm suggesting a conspiracy, just pointing out that two stories on the front page take place in the same geographic location.
  • While I had never heard of Hon Hai before today, I think I have never seen a PC without at least one Foxconn part in it for at least the last 3 years. That name is on everything but CPUs and ram.
  • "Took our jobs"? (Score:3, Insightful)

    by toby (759) * on Monday August 13, 2007 @05:10PM (#20216903) Homepage Journal
    No, suckers, you GAVE your jobs away by misunderstanding your place in the world. Good luck with that...

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