In Foxconn's iPad factory, a window on Chinese hopes - and frustrations

Invitations to the conference in Chengdu promised “China’s New Future,” with the country’s name spelled out in large gold letters. Mayor Ge Honglin, wearing a nicely tailored black suit, assured the audience sitting beneath rows of bright chandeliers that the regional market will grow “bigger and bigger.”

Throughout the afternoon, business executives repeated economic plans as mantra: Research and development! High-tech manufacturing! Alternative energy!

For all the enthusiasm offered by Mayor Ge and his guests, prominent local employer Foxconn Technology Group received little mention at the day’s press events. Even the spot in a promotional video boasting that more than half the world’s iPads are manufactured in Chengdu didn’t name Foxconn as having churned them out.

The lack of appetite for open discussion about the Taiwanese electronics firm – with its reputation as a 21st-century sweatshop where workers leap off rooftops – wasn’t surprising.

In Chengdu and other cities across the country, companies such as Foxconn are a reminder of the complexities facing Chinese Communist Party efforts to promote quality of life, household spending and, ultimately, social stability. Underneath China’s great economic strides, its labor market remains rooted in tough conditions and wages that have risen but remain relatively low.

Workers at Foxconn described a strictly regimented and depersonalized environment. It’s a life spent sitting mutely at assembly lines, they said, then shuffling back home to towering, cramped apartment buildings monitored by guards.

“Some people come for a few days and leave,” said Wu Zeyun, an assembly line worker who was eating a bowl of rice and vegetables at a rundown row of restaurants near the company’s facility in Chengdu. “And then others come for a few days and leave.”

His friend Huang Li said, “It happens every day. The feeling here is not good.”

Support for the Communist Party

But interviews with the factory’s rank and file also pointed to a significant reason that, despite such frustrations, support for the Communist Party remains strong: Based on the nation’s past three decades of momentum, they expect something better to come.

That’s a crucial, if not existential, margin for party rulers presiding over a system beset by corruption, swelling prices and a widening gap in wealth and privilege. It might help explain why, despite a staggering average of some 10 percent annual growth for the previous 30 years, Chinese officials often seem edgy about the prospect of slowing down the economy.

As the largest private employer in the country, Foxconn certainly has generated revenue and jobs in Chengdu and elsewhere. The company says it employs more than 1 million people in mainland China – 100,000-plus in Chengdu alone – contracting with Apple and others to assemble their products.

That business, however, has come with a cost.

The deaths

Less than a year after starting operations in Chengdu, an explosion at Foxconn’s facility in May 2011 killed four people and injured more than a dozen.

Last month, an incident involving seven Foxconn employees and restaurant staff near the factory led to “a disturbance” in which about 100 people at an apartment compound hurled various objects, some at security guards, according to official accounts and interviews. Nine days later, a Chengdu worker apparently jumped to his death from an 18th-floor apartment, echoing the 2010 spate of more than 12 reported suicides at company operations in other parts of the country.

In a statement defending its practices, Foxconn described a wide range of measures it’s implemented to benefit workers. Those include entry-level pay that’s considerably above the minimum wage, four wage hikes in the last three years, a cap in overtime, 24-hour counseling hotlines and recreational facilities, the company said.

“We are focused on providing the best working and living environments for our employees and, in that process, raising the bar for the industry in China,” said the statement, which was released through the Hong Kong offices of the public relations firm Burson-Marsteller.

Economic powerhouse

China’s leadership wants Chengdu, a southwestern metropolis of 14 million-plus people spread across urban and rural areas, to help anchor an economic powerhouse in the nation’s interior. Away from coastal regions, where an export boom built on cheap labor fueled three decades of growth, they envisage a China that attracts state-of-the-art research and manufacturing. The resulting salaries presumably would encourage consumption among Chinese and a broader service sector, helping to lessen dependence on exports, which are prone to the swings of struggling Western economies.

For now, the day-to-day reality is closer to Foxconn – or worse. Workers said that although the factory wasn’t a particularly pleasant place, it was better than many other options.

To give one example: A 16-year-old girl that McClatchy interviewed said she worked full time, 40 hours a week, inspecting iPads for the company. It’s a fact that might make US consumers uncomfortable. The girl, though, emphasized that her overtime doesn’t exceed 36 hours per month. Nervous about being interviewed, she didn’t give her name.

Foxconn’s statement referred to Chinese law that permits hiring 16-year-olds, and said that about 4 percent of its employees in China are aged 16 to 18.

While income levels have climbed in Chengdu and China as a whole – more than tripling in this city since 2000 – they’re still far below those in more developed economies. Last year, the annual per-capita disposable income for urban residents in Chengdu was about $3,750, according to official statistics. The annual net income for rural residents was around $1,550.

Transition ahead?

“We want to transit from this kind of labor-intensive, or lower labor cost industry, to higher-end or higher-profile industries,” Chen Fu, the vice director of Chengdu’s investment promotion commission, said in interview outside the conference in April. Organizers at the event – held to celebrate the city being named host to next year’s Fortune Global Forum, a meeting of international executives – handed out brochures that listed the gross domestic product in Chengdu at more than $107 billion last year. The pamphlets described the figure as a “stunning five-fold increase since the turn of the millennium.”

Chen said Chengdu wanted to encourage sectors such as product development, marketing and after-sales service. At the bottom of his hierarchy was manufacturing based on unskilled labor. “Migrant workers, if they train several days, they can do that. It’s just a physical job,” Chen said, looking displeased in his gray suit and striped silk tie.

Foxconn, whose corporate parent is Taiwan’s Hon Hai Precision Industry Co., claimed in its statement to be “fully supportive of the government’s efforts to move workers up the value chain.” Even as the company plans to remain a major employer in China, it’s investing in the automation of routine assembly tasks, according to Foxconn. From there, the statement said, the firm plans to make more sophisticated products and accelerate the recruitment of people with backgrounds in areas such as engineering.

Wu and Huang, who began working at Foxconn this spring, said that after deductions from their paychecks that included housing, they’d each pocketed about 1,100 yuan, some $173, in May. That was for 40 hours a week putting together iPads, plus about 10 hours of overtime during the month, they said.

By way of contrast, the meeting at which Mayor Ge spoke – he’s also the deputy secretary of the Communist Party’s municipal committee for Chengdu – was in a complex attached to an InterContinental Hotel. The lowest advertised room rate on the hotel’s website for a recent Saturday was 1,188 yuan, or roughly $186.

But as they dipped their food into a spicy pot of boiling oil and poured beer into small glasses, a group of four other Foxconn workers who were having dinner a couple of weeks ago sounded optimistic, for the most part.

Mao Jie, the son of farmers from a town about 45 miles to the north of Chengdu, said he hoped to work his way up to management. He’s been doing quality control inspection at the company for six months.

His friend Zhou Chao said he was going to save up money. Unlike his farmer parents, Zhou said, he plans to travel.

The oldest person at the table, 22-year-old Xu Xiaoqing, at first listened to her friends’ banter without speaking much. A team supervisor, she came to the company almost three years ago in the southern province of Guangdong and transferred to Chengdu in May. She nets twice what the others do, more than $600 a month.

Asked about working at Foxconn and her thoughts on the future, Xu paused before reciting a phrase that means that while one’s ideals may be very full, reality is very skinny.

“At the beginning I didn’t think I would work here so long,” Xu said. “The job is very tiring. Everything here is different from home – I don’t have my dreams and my ideals anymore.”

The others let her words sink in.

Zhou spoke up a bit later in his chirpy voice: “If we perform well, we will get a higher salary.”

Zhou and the two other newcomers looked relieved by what he’d said. Xu did not.

• Researcher Joyce Zhang contributed to this report.