Inside Foxconn’s ‘iPhone City’: how Apple’s biggest contractor fell victim to China’s zero-Covid policy
- The vast Foxconn compound in Zhengzhou – known as ‘iPhone City’ – can accommodate up to 300,000 workers who live on-site in dormitories
- This human link in Apple’s iPhone supply chain has broken down as a direct result of China’s strict ‘dynamic zero’ Covid-19 policy
In a widely cited anecdote about the power of the Chinese workforce, a manager at an iPhone factory was once able to rally 8,000 workers from their dormitories to do a 12-hour shift at short notice, with nothing more than an offer of a cup of tea and some biscuits. Apple urgently required a refit on a new iPhone model, and within a week production was back on track.
The unrivalled discipline, efficiency and reliability of Chinese workers, as illustrated by the anecdote, convinced Apple – the largest US consumer electronics company – to outsource its iPhone assembly to China – and stick with that decision despite rising labour costs, human rights controversies and more recently intensified rivalry between Beijing and Washington.
Foxconn Technology Group’s factory in Zhengzhou, capital of central Henan province, was designed to take advantage of China’s highly organised labour force. The vast compound – known as “iPhone City” – can accommodate up to 300,000 workers who live in on-site dormitories in nearby residential high-rise buildings. This army of young workers – men and women in their 20s and 30s – have made China an integral part of Apple’s supply chain.
While most countries in the world, including those in Asia, have abandoned strict pandemic controls in favour of living with the virus, the Chinese government has doubled down with mass testing, snap lockdowns and strict quarantines.
The fear among the fleeing Foxconn workers was a reaction to years of Chinese state propaganda that tried to justify draconian pandemic controls by emphasising the health threat posed by the virus. Even after the milder Omicron variant became dominant, state propaganda had been pushing the line that Covid-19 was deadly and can cause permanent damage to health.
When Zhengzhou, a city of 10 million, began to report confirmed cases in the first week of October, the fear and panic eventually spread to the Foxconn compound, which was operating on a 24-hour shift to meet peak season demand after the new iPhone 14 series was unveiled in September. For workers, many of whom are migrants from other towns and smaller cities in Henan, peak season is the best time to maximise earnings by working overtime.
According to several employees who spoke to the South China Morning Post, concern about the virus started to spread when the factory imposed daily PCR testing requirements on workers starting October 10. To them, it was a sign that the pandemic situation was dangerous even though the Henan Health Commission reported only six confirmed “asymptomatic” cases that day. Foxconn did not release any internal Covid-19 data, while the provincial and municipal health authorities did not report location-specific Covid-19 information.
The arrangement, designed to reduce risk of contagion, backfired as many workers complained about the poor quality of the pre-prepared meals, and the chaos that came with distribution of the food. Life at the compound quickly changed after Foxconn introduced closed-loop production that cut workers’ contact with the outside world – the same “bubble” approach used by Tesla and other factories in Shanghai in March during a two month lockdown. Foxconn’s workers were told to strictly follow the “traffic” lines drawn between dorms and the assembly lines.
Workers worried about being trapped inside the “bubble” amid a Covid-19 outbreak, and they began to post pleas on social media. Foxconn management broke its silence on October 26, when it confirmed that a “small number of employees” were infected. For some, the situation was too risky even though the company gave out Chinese medicine that was said to be effective against the virus.
One worker, who declined to be identified, told the Post that she left the Zhengzhou campus on the afternoon of October 30, trekking three hours before getting a ride back to her hometown of Nanyang, a city about 300 kilometres away from the factory. “I got the ride after I joined numerous WeChat groups, asking if anyone was driving to Nanyang,” she said. “I was lucky to eventually get a carpool ride. A lot of people had to walk along the highway.”
The worker said she left the factory over fears of being infected, given that a typical Foxconn dormitory houses eight people, sharing four bunk beds and a toilet. In addition, the lack of adequate cleaning services made the situation unhygienic, with garbage such as dumped plastic meal boxes piled high outside the dormitories, according to photos and videos shared by workers.
Other grievances included anger over alleged arrangements whereby the company asked some workers to share dormitories with colleagues who had been confirmed as having Covid-19, according to two workers who asked not to be identified due to the sensitivity of the matter. Foxconn denied this allegation and said all dormitories had been disinfected before new hires moved in.
The exodus of workers had an immediate impact on production. Apple broke its silence on November 6, saying that the Zhengzhou plant was operating at “significantly reduced capacity” and that there would be a delay in shipments of the iPhone 14 Pro and iPhone 14 Pro Max models. Ivan Lam, a senior analyst at Counterpoint Research, noted that the disruption would be significant, as the Zhengzhou factory was responsible for producing 80 per cent of the basic iPhone 14 model and 85 per cent of the iPhone 14 Pro model.
The Covid-19 fiasco at Foxconn’s plant in Zhengzhou provided fresh impetus to the argument that China was becoming too risky to rely on for hi-tech manufacturing, amid increasing calls for “reshoring”, “friend shoring” and even “ABC” – anywhere-but-China. New investments by Apple’s own suppliers in countries such as Vietnam and India seemed to provide further evidence that China was dismantling its own advantages by sticking to the zero-Covid-19 approach.
Although Foxconn chairman Liu Young-way said recently that the biggest chunk of the firm’s capital investment next year would go to China, the worker revolt has triggered alarm bells given that a major crisis at an iconic factory like Foxconn would be the last thing Beijing wants as it tries to convince foreign investors that the country is open for business.
Local authorities have gone to extreme measures to help Foxconn resume production, even though the entire area was put under strict lockdown. Foxconn’s Zhengzhou facility, which accounts for 80 per cent of the city’s exports – or 800 billion yuan (US$111.72 billion) – plays a vital role in the local economy which is grappling with a property slump. Foxconn also generates more than 1 million jobs in a city of 10 million.
As Foxconn began to offer additional cash bonuses to persuade workers to stay, the local government dispatched thousands of staff – many in hazmat suits – to help the factory conduct PCR tests of workers. Provincial authorities even rallied the Communist Party’s grass roots governance apparatus to help recruit more workers. In one local county, veterans from the People’s Liberation Army were being encouraged to work for Foxconn, in what some saw as a form of conscription rather than job hiring.
Mei Xinyu, a researcher affiliated with China’s Ministry of Commerce, said resuming production at Foxconn Zhengzhou was seen as a key battle that needed to be won so China could defend its status in the global economy.
Mei went so far as to compare the significance of the “Foxconn battle” to the Battle of Chongchon River in the Korean war in 1950, when the Chinese army thwarted an offensive mounted by UN forces under General Douglas MacArthur.
Official local media had painted a rosy picture of the production resumption after more than 100,000 applicants registered their intention to work for Foxconn. However, according to Post interviews with labour agents and workers on the ground, the picture is bleak as China’s Covid-19 controls have made things extremely complicated. For example, every new hire has to be placed in a designated area for quarantine and health monitoring for four days, and limited space at quarantine facilities forced the hiring process to be suspended for three days.
Foxconn said in a statement that “the allowance has always been honoured based on contractual obligations”. Later, the company said an “input error in the computer system” was responsible for miscalculations in allowances.
Meanwhile, workers inside the bubble have to strictly follow daily routines and special routes from their dormitories to the factory floor. One worker told the Post that some people chose to camp on the factory floor rather than return to their dormitory. Fears over catching the virus and complaints about poor management remain. It was only this week that Foxconn announced the reopening of all dining halls but strict social distancing rules were imposed.
To this day, neither the Zhengzhou authorities nor Foxconn have said how many workers have been infected or are under quarantine, and Covid-19 controls make it nearly impossible for independent reporting on the ground.
Regardless, the contrast could not have been more stark; from 8,000 workers willing to do an extra 12-hour shift after an offer of tea and biscuits, to today’s situation where thousands have fled assembly lines despite the offer of cash bonuses. China’s manufacturing miracle, facilitated by an immense supply of cheap but skilled labour, favourable local government incentives and foreign capital, is quickly being undone by three years of Covid-19 controls.