Chances are you're reading this on a computer or smartphone made by an American company, like Dell or HP or Apple. And chances are also that the machine was actually constructed in China. That relationship came to broader attention recently when Foxconn, a Chinese company that puts together iPhones, Sony Playstations, and Dell computers, among other things, experienced a number of suicides, with its workers hurling themselves off buildings, purportedly out of despair at their low pay and shabby working conditions.
As part of their response, Foxconn hired the global PR behemoth Burson-Marsteller to help clean up their image, and as part of that effort, the company opened its doors to Business Week. The result is a fascinating article giving a glimpse into one of the emblematic cogs in today's global economy. The company employs 920,000 people, and its chairman, Terry Guo, is the richest man in Taiwan. Here's a taste:
To understand how diversified Foxconn's supply chain is, pry the back off a Nokia 1209 handset. The plastic casing is molded by Foxconn Technology. The speaker is made by Hon Hai Precision [part of Foxconn], as are the keypad and printed circuit-board connector. The printed circuit board is made by Foxconn Advanced Technology. The TFT LCD screen is made at Chimei Innolux, an affiliate 2.7 percent-owned by Gou. In all, about 70 percent of the phone's components are made by a Foxconn-related company.
As he squeezes costs throughout his empire, Gou also takes huge risks on behalf of his major clients. In Chongqing, in central China, Foxconn is spending $1 billion on a factory that will produce 30 million machines a year just for Hewlett-Packard. When Apple's iPhone4 was nearing production, Foxconn and Apple discovered that the metal frame was so specialized that it could be made only by an expensive, low-volume machine usually reserved for prototypes. Apple's designers wouldn't budge on their specs, so Gou ordered more than 1,000 of the $20,000 machines from Tokyo-based Fanuc. Most companies have just one. "Terry is a strong leader with a passion for excellence," says Tim Cook, Apple's chief operating officer. "He's a trusted partner and we are fortunate to work with him." The Longhua plant now produces 137,000 iPhones a day, or about 90 a minute.
Surely you didn't think your iPhone was put together by a bunch of hipster tech nerds in Cupertino, did you?
-- Paul Waldman