Heart of the matter

PUBLISHED : Saturday, 12 June, 2010, 12:00am
UPDATED : Saturday, 12 June, 2010, 12:00am

I wasn't going to talk about Foxconn again. But, after hearing what its owner, Terry Gou, said at its parent company's annual general meeting in Taipei this week, I had no choice. The company, hit by a string of staff suicides at its Shenzhen factory, increased pay by 30 per cent this month, and will raise it by a further 66 per cent by October at the earliest, bringing assembly-line workers' basic monthly salary to 2,000 yuan (HK$2,280).

Gou told shareholders that the company should not be blamed for the suicides and insisted that workers were treated well.

He pointed out that investigations showed there was no clear link between the deaths and work-related issues. There have been 10 suicide deaths at Foxconn this year, and two attempted suicides. Gou argued that if there had been any wrongdoing by his company, the central government would have shut down the factory, and reiterated that its management was sound and legal.

He recognised that the firm might have to shoulder some moral responsibility, saying he had to carry the '12 crosses', referring to the 10 deaths and two attempted suicides. He admitted that many employees worked long hours, which might have caused a great deal of job stress, but pointed out that it was mostly their choice.

He told shareholders the company would stop paying compensation to families of employees who committed suicide, as a move to discourage future attempts. Gou reasoned that the huge payout, equivalent to almost 10 years' wages, might have been an unintentional motivation for the suicides. He even displayed a suicide note from a worker to illustrate his point. He said the company would instead fund a loan scheme for staff. Those who have worked there a minimum of five years will be eligible to apply for a loan of up to 200,000 yuan from the company.

But the most absurd thing was his threat to relocate the manufacturing work to Taiwan after setting up a fully automated facility there. He also said the company might consider selling its staff dormitories to the mainland government and rent them from the government. Eventually, he said, the company would hand over the welfare management of its staff to local authorities because such social responsibility should be the job of the local government.

Foxconn operates some 20 factories on the mainland and has more than 800,000 workers on its payroll. It has built its global success by exploiting workers, paying them low wages for years. It uses a militant management system to maximise productivity, without giving employees proper care and attention. It cannot shirk its social responsibility by outsourcing personnel management to the government.

What it needs to do is reduce the size of the existing operation by breaking it up into smaller units to make it easier to manage. It should also soften its management approach and add a healthy dose of the human touch.

It looks like Gou was trying to 'kill three birds with one stone' by introducing the pay rise and other measures. First, he wants to redeem the company's reputation; second, he hopes the higher salaries will attract better workers; and finally, his threat to relocate to Taiwan and sell its staff quarters are meant to be scare tactics to put pressure on the local government. Gou is hoping that because the government would not want to see Foxconn pull out of Shenzhen or reduce its investment, it would do more to stop the media from bashing the company.

In reality, labour conditions in Taiwan, such as high wages and stringent labour laws, mean it will be too costly for Foxconn to move there. The company may have done its part in damage control but, as the world's biggest electronics firm, it has a duty to ensure the highest standards of social responsibility.

It was downright cold-hearted for Gou to say workers killed themselves for money. It was even worse to hear some local commentators suggesting that families of the deceased should not be compensated in order to discourage the act. Have they lost their morality and humanity? Shame on them.

Albert Cheng King-hon is a political commentator