May 23, 2010 10:34 pm

Suicides put Foxconn under scrutiny

When Terry Gou opened a factory in Longhua, a town north of Shenzhen in southern China in 1988, he was ahead of most other electronics companies.

Longhua was an expanse of hills and paddy fields when the founder and chairman of Hon Hai, a Taiwanese computer parts producer, set up shop there. The low wages and land prices allowed Mr Gou to make computers and handsets for the world’s technology brands more cheaply and efficiently than his competitors.

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Like many other low-cost manufacturers in China, Hon Hai or Foxconn, the trade name the group goes by, took charge not just of its workers’ labour but their entire lives. Migrant workers are housed and fed on campus.

The plant – believed to be the largest in the world with 300,000 workers – helped Mr Gou transform Foxconn into the world’s largest electronics contract manufacturer by a wide margin.

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Today Foxconn – which normally maintains secrecy about the workings of its factories – makes the majority of iPhones and iPods for Apple as well as TVs, phones and digital cameras for a host of other big names including Dell, Sony and Nokia.

“Ours is a factory most unlike a factory,” Liu Kun, spokesman at Foxconn’s China headquarters, tells the Financial Times. “It is a plant and a town at the same time, but the basic unit here is the dorm, not the family.”

But following a spate of suicides among workers, outsiders argue this operations model is no longer fit to deal with the pressures of modern Chinese society which seep in through the factory gates.

And the doubts about the factory town model raise much broader questions about the way China’s manufacturing sector works.

“[The deaths] force us to question the future of the ‘factory of the world’ and the new generation of migrant workers,” according to nine Chinese social sciences professors in an open letter to Foxconn last week.

The country outside Foxconn’s factory gates has undergone stunning change over the past two decades.

Viewed from the roof of the plant’s newest dormitory, a 15-storey tower, Longhua is a sprawling urban area with factories, apartments and office blocks squeezing in between multiple highways.

There has been at least as big a change among the workforce.

“The monotonous work I do here is not in line with my idea of life, it doesn’t make any sense,” says Lü Pengguo, a 22-year-old logistics worker at Longhua from the inland province of Henan. “My dad says I should keep the job. But as soon as I find something better, I’ll leave.”

The new generation of workers is very different to the one that helped Mr Gou build his manufacturing machine. Twenty years ago workers would consider a factory job the chance of a lifetime and for many the food and accommodation offered at the plant would have been no worse than they would expect at home.

Now, 90 per cent of Foxconn’s workforce are between 18 and 24 years old. Born after China started its economic reforms, most have much higher expectations.

“The migrant workers nowadays want other things in life, they want fun,” says Mr Liu.

Foxconn has tried to adapt, building sports facilities, libraries and internet cafés on campus. With banks, post offices, retail and restaurant chains, the streets of the compound feel no different from those outside.

But while Foxconn is clearly not running a sweatshop, there is still little time and energy left for recreation.

Production lines run on two 12-hour shifts. Each shift includes time for one meal and two hours of overtime. Several workers interviewed during a factory visit on Friday said they were also doing overtime each Saturday.

Mr Lü complains that the company agreed to raise wages since lunar new year in February, but had yet to follow up.

Liu Liping, a female worker at Foxconn, says she rarely ever leaves the Foxconn campus because things are too expensive outside.

But others struggle to get used to life inside. Mr Liu says that a newly installed helpline is spotting desperate and confused staff pondering suicide almost every day.

“There is certainly a strong copycat factor in the recent events,” says Michael Phillips, Director of the Suicide Research and Prevention Center at Shanghai Mental Health Center.

Mr Phillips also points out that contrary to findings in western countries, almost half of all suicides among young people in China happen impulsively.

This raises the risk of “infection”, especially on campus where everyone’s lives resemble each other so closely.

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