Apple, Foxconn: We overly relied on temporary workers in China

Above, a recruitment point of Foxconn — an Apple manufacturing partner — in Shenzhen, south China’s Guangdong province in this February 22, 2013 file photo. (AFP)
Updated 09 September 2019

Apple, Foxconn: We overly relied on temporary workers in China

  • Apple said it investigated the percentage of temporary workers among the overall workforce and found it ‘exceeded our standards’
  • Earllier media reports said Apple was considering moving some operations out of China to avoid new US tariffs

SHANGHAI: Apple and manufacturing partner Foxconn Technology on Monday rebutted allegations of lapses in people management levelled by a non-profit monitor of worker rights, though confirmed they employed too many temporary workers.
The response comes after China Labor Watch on Monday issued a lengthy report accusing the two companies of breaching numerous Chinese labor laws, including one barring temporary staff from exceeding 10 percent of the total workforce.
US tech firm Apple relies heavily on Taiwan’s Foxconn and its Chinese manufacturing facilities to produce devices such as the iPhone, the next line of which will be unveiled on Tuesday.
In a statement, Apple said it investigated the percentage of temporary workers among the overall workforce and found it “exceeded our standards.” It said it was working with Foxconn to “immediately resolve the issue.”
Apple did not state whether the excess amounted to a breach of Chinese law. It declined to comment when asked directly by Reuters.
China’s Ministry of Human Resources and Security did not respond to a Reuters fax seeking comment. Reuters could not immediately determine any penalty for temporary employees exceeding 10 percent of the workforce.
Apple also said it discovered interns at a supplier facility had worked overtime at night, violating company policy, and that “this issue has been corrected.” It said the interns worked overtime voluntarily and were properly compensated.
Foxconn separately confirmed over-reliance on temporary workers, known internally dispatch workers.
“We did find evidence that the use of dispatch workers and the number of hours of overtime work carried out by employees, which we have confirmed was always voluntary, was not consistent with company guidelines,” Foxconn said.
It said it “immediately began a detailed process to ensure that all issues were addressed.”
The labor report comes at a time of trade tension between the United States and China that has threatened to upend supply chains across the technology industry with tit-for-tat import tariffs.
Earlier this year, media reports said Apple was considering moving some operations out of China to avoid new US tariffs, with Japan’s Nikkei Asian Review in June putting the figure at 15 percent to 30 percent of production.
In an earnings call in July, Apple Chief Executive Tim Cook downplayed such speculation, stating the vast majority of Apple’s products “are kind of made everywhere.”
“There’s a significant level of content from the United States and a lot from Japan to Korea to China, and the European Union also contributes a fair amount. And so, that’s the nature of a global supply chain. Largely, I think that will carry the day in the future as well.”


Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

Updated 17 October 2019

Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

  • American companies, significantly disrupting its ability to source key parts
  • Huawei was all but banned by the United States in May from doing business with American companies

SHENZHEN, SHANGHAI: Huawei Technologies Co. Ltd’s third-quarter revenue jumped 27%, driven by a surge in shipments of smartphones launched before a trade blacklisting by the United States expected to hammer its business.
Huawei, the world’s biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with American companies, significantly disrupting its ability to source key parts.
The company has been granted a reprieve until November, meaning it will lose access to some technology next month. Huawei has so far mainly sold smartphones that were launched before the ban.
Its newest Mate 30 smartphone — which lacks access to a licensed version of Google’s Android operating system — started sales last month.
Huawei in August said the curbs would hurt less than initially feared, but could still push its smartphone unit’s revenue lower by about $10 billion this year.
The tech giant did not break down third-quarter figures but said on Wednesday revenue for the first three quarters of the year grew 24.4% to 610.8 billion yuan.
Revenue in the quarter ended Sept. 30 rose to 165.29 billion yuan ($23.28 billion) according to Reuters calculations based on previous statements from Huawei.
“Huawei’s overseas shipments bounced back quickly in the third quarter although they are yet to return to pre-US ban levels,” said Nicole Peng, vice president for mobility at consultancy Canalys.
“The Q3 result is truly impressive given the tremendous pressure the company is facing. But it is worth noting that strong shipments were driven by devices launched pre-US ban, and the long-term outlook is still dim,” she added.
The company said it has shipped 185 million smartphones so far this year. Based on the company’s previous statements and estimates from market research firm Strategy Analytics, that indicates a 29% surge in third-quarter smartphone shipments.
Still, growth in the third quarter slowed from the 39% increase the company reported in the first quarter. Huawei did not break out figures for the second quarter either, but has said revenue rose 23.2% in the first half of the year.
“Our continued strong performance in Q3 shows our customers’ trust in Huawei, our technology and services, despite the actions and unfounded allegations against us by some national governments,” Huawei spokesman Joe Kelly told Reuters.
The US government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy. Huawei has repeatedly denied its products pose a security threat.
The company, which is now trying to reduce its reliance on foreign technology, said last month that it has started making 5G base stations without US components.
It is also developing its own mobile operating system as the curbs cut its access to Google’s Android operating system, though analysts are skeptical that Huawei’s Harmony system is yet a viable alternative.
Still, promotions and patriotic purchases have driven Huawei’s smartphone sales in China — surging by a nearly a third compared to a record high in the June quarter — helping it more than offset a shipments slump in the global market.