Reference no: EM131451518

Question: Select two other industries that could copy the buy-one-give-one-away model, and explain how it could be adopted.

SUICIDES AT FOXCONN
Foxconn Technology Group is a subsidiary of Taiwan's Hon Hai Precision Industry Company (reputed to be the world's largest "contract manufacturer"). Even as a subsidiary, Foxconn's numbers are impressive-the company employs about 800,000 people, half of whom work in a huge industrial park in Shenzhen, China, called Foxconn City. With 15 separate multistory buildings, each dedicated to individual customers such as Apple, Dell, Nintendo, and Hewlett Packard, Foxconn's promotional material proudly states that the company pays minimum wage (900 yuan, or $130 a month), offers free food and lodging, and extensive recreational facilities to its employees-on the face of it, not your stereotypical "sweatshop" environment. However, in the fi rst half of 2010, a total of 12 Foxconn employees found the working conditions so oppressive that they elected to kill themselves by jumping from the roofs of those 15-story buildings. According to reports, two other employees were seriously injured in suicide attempts, and another 20 have been saved before completing their planned attempt. This sudden spate of suicides has drawn unwelcome attention to the true state of the working conditions in factories that visitors have described as "grim." Labor activists report annual turnover of 40 percent or more as employees leave rather than face dangerously fast assembly lines, "military-style drills, verbal abuse by superiors as well as occasionally being pressured to work as many as 13 consecutive days to complete a big customer order-even when it means sleeping on the factory fl oor."

Consider the case of 19-year-old Ma Xiangqian, a former migrant worker who leapt to his death on January 23, 2010. His family revealed that he hated his job at Foxconn: "11-hour overnight shifts, seven days a week, forging plastic and metal into electronic parts amid fumes and dust." In the month before he died, Ma worked 286 hours, including 112 overtime hours, three times the legal limit. The negative publicity has been swift and targeted. Apple's international release of its iPad in Hong Kong was marred by the ritual burning of pictures of iPhones and calls for a global boycott of all Apple products. This negative press has prompted an equally swift response from Foxconn customers seeking to distance themselves from the story. Apple, Dell, and HP all announced investigations of the working conditions at Foxconn's plants, with the implied threat of contract termination. Foxconn's response has been to surround the buildings with nets to prevent any further suicide attempts, to hire counselors for employees experiencing stress from the working conditions, and to assign workers to 50-person groups so that they can keep an eye on each other for signs of emotional stress. The company also announced two separate pay increases more than doubling worker pay to 2,000 yuan a month (although workers must pass a three-month review to qualify for the second pay increase).

In addition, a series of "motivational rallies," entitled "Treasure Your Life, Love Your Family, Care for Each Other to Build a Wonderful Future," were scheduled for all Foxconn facilities. While the immediate response has been targeted directly at the media criticism, there are concerns about the longer-term consequences for Foxconn and its customers. Hon Hai's reputation and dominance have been built on top quality with wafer-thin margins-margins that may prove to be too thin to absorb a 100 percent increase in labor costs. As for their customers, they may have given implied threats of contract termination, but with Hon Hai as the world leader, there are limited options for alternative suppliers. Of greater concern is the changing demographic in China: "a generation of workers rejecting the regimented hardships their predecessors endured as the cheap labor army behind China's economic miracle." High turnover rates are leading to acute labor shortages as workers reject oppressive working conditions in favor of opportunities elsewhere in China. "Many seek positions in the service sector, or jobs closer to home." Counselors and better pay may help in the short term, but critics argue that without a dramatic shift in managerial culture, the situation at Foxconn may be just the beginning.