Apple & Slave Labour: It gets worse

[K. A. Pital]

To say corporations are deliberately sabotaging the systems crosses the line into comic-book villainy.

They're not "deliberately sabotaging", rather than simply twisting towards their own needs. Workers with fragmentary education are more docile, easier to discipline and control. That's the basic. It does not require ill intentions, that's the way the system works.

[Irbis]

If consumers were willing to pay more money just so people aren't roped into slavery, the world would already be a better place. Instead we get horseshit like this.

Le what. Do you have any idea just how high Apple's profit margins are? They could afford to produce their stuff in Norway or Luxembourg (or other country with very high base pay) and they would still turn a profit. They just don't care

Like 99% of all companies. This isn't an Apple problem

Yes it is. Other companies run on razor-slim profit margins if you compare them to Apple. That's why their products are often 20-50% cheaper than Apple's. While I agree they should absolutely change their business practices, in their case it would take effort and raising of prices to not kill the parent company. Apple? They could double their worker's pay virtually overnight and would make a killing compared to others.

The issue is that it really doesn't matter what Apple does, Foxconn's business practices wouldn't change because there's no incentive for them to do so. They're just about the only volume manufacturer of electronics, the whole supply chain is also in China, so manufacture of electronics is not going to be leaving China, so all their competitors are going to be operating on the same level as regards employee protection etc.

Um, first, if Apple and other major customers demanded changes (because, say, someone sensible in the west made it into regulations) Foxconn would change their tune virtually overnight. They did before. Apple just cares about their profit only, is all.

Second, since when Foxconn has a monopoly? What's this, then? Or this? IIRC, Foxconn's slice of pie, albeit significant, is hardly market-controlling.

[Magis]

Le what. Do you have any idea just how high Apple's profit margins are?

Apple's net profit margin in 2011 was 23.95%, which is less than Microsoft's 33.1%, for comparison.

They could afford to produce their stuff in Norway or Luxembourg (or other country with very high base pay) and they would still turn a profit.

You realize that just "turning a profit" isn't nearly good enough for a business to succeed. In order for people to invest in a business, the profit it generates needs to be more competitive in some way than other investments that are competing for the same money.

Yes it is. Other companies run on razor-slim profit margins if you compare them to Apple.

Profit margins are most strongly tied to the in type of industry rather than particular companies. For example, mining companies tend to have high profit margins (i.e. Potash Corp - 35.35%. Goldcorp - 36.33%), and retailers tend to have low margins (i.e. Walmart - 3.78%, Target - 4.33%, Amazon - 1.34%). But I don't really understand your point. If your point is that Apple's shareholders could "afford" to deliberately reduce their profits, it's not as simple as saying, "They make some profit x, therefore if they made only 0.5x instead it would still be more than zero! Yay!". Many shareholders invested in Apple (and all other companies) because they need investments to survive. They need money for retirement, or to buy a house, or to save for medical emergencies, etc. Whether each shareholder could "afford" to reduce the profitability of their investments depends on their individual financial circumstances.

Apple just cares about their profit only, is all.

Apple doesn't care about anything, because Apple is not a conscious entity. The management of Apple cares about whatever the shareholders tell them to care about. As far as the shareholders go, some of them probably support Foxconn's labor policies, but others don't. Most probably aren't even aware there's a labor issue at all.

[K. A. Pital]

Magis, Microsoft is a monopolist (and also hardly a good example). They extract monopoly rent and they're ugly bastards as well. Apple is operating in a competitive environment (smartphones, tablets, mp3 players, etc.) and still they manage to almost extract a monopoly profit margin?

If that was supposed to show something, it demonstrated the correctness of the point.

Mining is a highly oligopolistic, if not monopolistic, sector, and it is also telling.

[Magis]

Magis, Microsoft is a monopolist (and also hardly a good example). They extract monopoly rent and they're ugly bastards as well.

Microsoft doesn't have a monopoly in the server business (24% of their 2010 revenue), they don't have a monopoly in online services (3.5%), or entertainment devices (xbox, etc., 13%), or office software (30%). When it comes to operating systems (30%), they do have a market share of 92%, but Macs are widely available, and hell, linux is free. I can't really fault Microsoft for building an OS that most people want to buy. But in any case, 70% of their business is not in the operating systems market.

Apple is operating in a competitive environment (smartphones, tablets, mp3 players, etc.) and still they manage to almost extract a monopoly profit margin?

My point was simply that Apple is not in a league of their own when it comes to profit margins, which is what had been implied earlier in the thread.

If that was supposed to show something, it demonstrated the correctness of the point.

Apple has the margin it does because their products sell at a premium price due to their desirability. Their low manufacturing costs are in common with every other electronics company that has products made in similar factories, which is most of them. As someone pointed out earlier in the thread, the manufacturing labor standards problem is not unique to Apple, but instead pretty much unique to China.

This all said, I would prefer if Apple moved their manufacturing to a facilities that pay better wages and treat workers like actual people. And I'm an Apple shareholder.

[K. A. Pital]

Apple has the margin it does because their products sell at a premium price due to their desirability.

You mean because it exploits the apish nature of intellectually underdeveloped men.

[Lord Zentei]

^That's a rather paternalistic attitude, isn't it? Who's to say that people ought not to desire the kinds of products that Apple produces?

Of course, that point is quite apart from the more relevant point of Apple's labour issues - which is one reason why I don't buy their stuff.

[K. A. Pital]

I may come off as smug, but idiots who line up in long queues to buy overpriced mp3 players or tablets, which are non-essential fancy gadgets of secondary whatever-the-last-number order of importance, do not cause any emotion other than repulsion when I see it.

People can, of course, desire this and that, but nobody can stop me from passing a judgement on them. Just like pimps buy huge cars to demonstrate their alpha-male status and dominance, the IT and petit-bourgeois crowd rushes to buy the newest fanciest gadgets from the most popular brand (despite hardware and software lockups which often make them inferior to other devices of the same type from less popular brands). Or rich artists going crazy about plastic surgeries.

This is apish, instinct-driven behaviour, in my view. Not all instinct-driven behaviour is bad, mind you, I just noted that allowing instincts do dominate your life so much as to cause you to participate in shopping rushes which look like a mass run from the asylum to a side observer is definetely a sign of intellectual failure.

[Ryan Thunder]

^That's a rather paternalistic attitude, isn't it? Who's to say that people ought not to desire the kinds of products that Apple produces?

I do. There were better, cheaper devices available before Apple blew them all out of the market in favour of idiotic designs you can't even use while wearing gloves, and don't even get me started on their computers. "zomg it has a neat power cord (among a few other neat features that nowhere near justify the price) => superior"

[Lord Zentei]

Disagreeing with people's tastes (and finding their criteria for choosing products silly) is one thing, but dismissing the legitimacy of companies who profit by them is another, is all I'm saying. I'll agree with the former, but not the latter. Besides, I'm not sure that you can dismiss Apple's success by simply assuming its its popularity is based on popular "instinct" in any case.

[K. A. Pital]

You can, why? Many companies exploit instincts.

[Lord Zentei]

Even if that's the case, it's not enough to demonstrate that Apple's success is exclusively or predominantly such. And it's an all too easy name-call to pull in any case for stuff you disagree with.

[Lagmonster]

Question for the history buffs; how similar are the industrial labour practices in China now, to conditions in similar industries in the United States at or around the 1880s? I seem to recall that Western nations went through their own period of industrial expansion where things were fairly shitty for all concerned. I'm curious as to how closely we're seeing history repeat itself as China develops in turn.

[Dominus Atheos]

Le what. Do you have any idea just how high Apple's profit margins are?

Apple's net profit margin in 2011 was 23.95%, which is less than Microsoft's 33.1%, for comparison.

Apple is a hardware company while Microsoft is a software and services company. All copies of Windows, Windows Server, Xbox games, and Office have margins of 100%. Apple hardware has shitdiculous margins of 50% or more, EG the iPhone; the iPhone 4gs costs Apple about $200 in parts and probably about $10 in labor (See above thread) while they sell it to carriers and individuals for $650 to $850. (the carriers then subsidize it with a 2 year contract)

Dell and Samsung don't make nearly that kind of profit off of their computers/phones.

[Todeswind]

The iPhone is the free phone in Japan.

[JointStrikeFighter]

The iPhone is cheaper than most android smartphones (galaxy etc) in Australia too.

[Dominus Atheos]

Seriously? In the US Verizon sells the Motorola Droid X2 (a 3g touchscreen 16gb dual-core phone that came out in summer of last year) for $50 while the 16gb iPhone 4S sells for $200. (a 3g touchscreen 16gb dual-core phone that came out in summer)

In other countries the prices are wildly different?

[Stark]

Handset prices in Australia bear no relation to reality whatsoever. You'd probably die laughing if you knew what people paid for a 4S here.

PS it's $800.

[Gandalf]

How many people here buy their handsets outright as opposed to getting them "free" with a plan?

[Stark]

How many people here buy their handsets outright as opposed to getting them "free" with a plan?

Here, probably fuck-all - but that's a result of them being so laughably expensive, because that's the price people expect.

Even in the 90s a RAZR was $600.

[Surlethe]

What's really ridiculous about China is that these hell-hole factories are still, overall, better than farming in the country. 300 million people voting with their feet don't lie.

Question for the history buffs; how similar are the industrial labour practices in China now, to conditions in similar industries in the United States at or around the 1880s? I seem to recall that Western nations went through their own period of industrial expansion where things were fairly shitty for all concerned. I'm curious as to how closely we're seeing history repeat itself as China develops in turn.

I can't directly answer your question.

However, I'd pretty confidently bet that industrial labor practices in China now are very similar to conditions in similar industries in the US during what Krugman calls the "long gilded age," 1880-1930, when similar migration from rural areas (often in other countries!) to industrial cities occurred in the US. Probably also similar in the UK during its industrialization. Patterns of geographic organization of industry in China are also similar to those in the US during the gilded age. In the US, developing cities specialized -- Detroit to cars, Cleveland to steel, my home town to transmissions, etc. -- and the same is happening in China. Living standards rose dramatically in the US during the long gilded age, they are rising meteorically in China. (In fact, wages in China are rising as industrialization outpaces even the immigration from the countryside to the cities.) Ultimately, it seems like almost exactly the same dynamics are at work, so I'd expect something like labor practices to be very similar as well.

[phongn]

How many people here buy their handsets outright as opposed to getting them "free" with a plan?

I do, but T-Mobile offers a cheaper plan if you buy a phone outright (or bring your own).

Handset prices in Australia bear no relation to reality whatsoever. You'd probably die laughing if you knew what people paid for a 4S here.

Handset prices have no bearing to reality in the US, either. Provider subsidies mask the true price of a phone.

[K. A. Pital]

What's really ridiculous about China is that these hell-hole factories are still, overall, better than farming in the country. 300 million people voting with their feet don't lie.

Maybe because not all factories are hellholes, actually. Foxconn does not employ 300 000 000 former Chinese peasants.

[Magis]

Le what. Do you have any idea just how high Apple's profit margins are?

Apple's net profit margin in 2011 was 23.95%, which is less than Microsoft's 33.1%, for comparison.

Apple is a hardware company while Microsoft is a software and services company.

Again, my point was simply that Apple is not in a league of their own with a 23.95% net profit margin. If you want a more relevant comparison, I can give you one. Intel Corporation had a 2011 net profit margin of 23.97%, slightly edging past Apple.

All copies of Windows, Windows Server, Xbox games, and Office have margins of 100%.

Firstly, what you're trying to say - that the incremental cost of selling each of those products is zero - is not true. There are still things like distribution costs and even manufacturing the discs, and obviously the cost of servers for their cloud services. But regardless, the figures I was quoting include all expenses, such as R&D, marketing, salaries, taxes, etc.

[Surlethe]

Maybe because not all factories are hellholes, actually. Foxconn does not employ 300 000 000 former Chinese peasants.

I would be quite surprised if Foxconn were very atypical.