Foxhound’s “hellish” work environment was criticized. It pushed employees to work excessive 60-hour ark weeks beyond the 49-hour legal limits to meet unsustainable production targets. Workers were banned from talking limited to three toilet breaks in grueling 14-hour work shifts and meted out with corporal punishments like push-ups if they were too slows. Short-term revenues were prioritize over long-term considerations resulting in the neglect of staff welfare. Conditions were so dire, it drove 18 employees to suicide and attempted suicides.
To cut costs and maintain profit margins, workers were underpaid and chemicals used to clean touchstones of mobile devices were bustiest with a cheaper chemical- N-hexane. This toxic chemical can cause eye, skin and respiratory tract irritation, with prolonged exposure leading to nerve damage and paralysis. In order to avoid financial costs, Foxing had blatantly disregarded basic human rights to a safe working environment. Factory audits have surfaced the same unethical problems year after year, showing that Foxing considers ethics to be more as a public relations tool to “avoid embarrassment’.
Foxhound’s unethical behavior was dictated by the theory of relativism, utilitarianism and egoism. According to War-on-want, a non-profit organization that fights international poverty, sweatshops are prevalent in manufacturing-oriented China, with 150 million Chinese subject to morally repugnant working conditions. It is considered an acceptable business practice. According to labor activists, although conditions are harsh in Foxing, it is “one of the best’ when compared amongst competitors.
Measuring itself against the domestic industry justified Foxhound’s actions under the theory of relativism 1, and led to CEO Terry Go defending Foxing because there is “nothing wrong with sweatshops… As long as we don’t break any laws”3. Forcing employees to work faster and longer hours to achieve unsustainable production targets could be rationalized under the utilitarianism theory . With faster production, cost per unit was lowered, generating more revenue for Foxing and its immediate customers, thus securing future contracts.
Management could enjoy bon uses and promotions, while factory workers stood to retain their jobs the following year. On a broader scale, global end-consumer demands were satisfied and GAP of directly related economies- China, Taiwan, U. S. Were boosted. Based on a cost-benefit analysis, Foxing concluded that the cost of the above-mentioned unethical problems suffered by its employees was low compared to the utility of other stakeholders in the competitive environment and micromanagement hence, justifying its actions.
Egoism also comes into play as it has been reported that Foxhound’s management and business associates enjoy lavish lifestyles, with the most prominent being CEO Terry Go. He owns a EYE million luxurious penthouse suite in Taipei, a castle in Czech Republic, a Million private jet and was previously known to “invest” in young girlfriends. The component cost of a KGB phone 5 mounts to SUDS 99 and is retailed at SUDSIEST, yet Foxing only gets a slim margin of SUDS per unit. Apple is Foxhound’s biggest customer, accounting for 40-45% of its revenues 8.
Hence, Foxing has low bargaining power. To fund the extravagant lifestyles of management like Terry Go from thin profit margins, it cuts cost by cutting employee wages. In its Hangout factory, wages falls short of the living wage by CANYON’S. Factories in other provinces face the same fate. Management’s extravagant lifestyle juxtaposed against employees struggling to make ends meet is indicative of their selfish intentions to maximize personal benefit at the expense of treating employees fairly. Most of the actions taken in response to Foxhound’s ethical violations are compliance-based programs.
Regulatory terms on minimum wage and working hours in the 2006 Company Law and 2008 SACK Guide Opinion are vague and permissively 2, seeming to be more of a ‘Window-dressing’ response to economic pressure to improve China’s tarnished international image. Although Apple has partnered with U. S. -based Fair Labor Association to carry out frequent audits and correct labor violations, progress has been slows. Less than 15 suppliers have been terminated although Apple has found breach in hundreds of audits.
Non-compliance should not be tolerated just because suppliers promise to try harder next time. Stricter enforcements are needed to see Foxing make major improvements. In order to create a moral commitment to ethical conduct beyond legality, integrity-based programs need to be put in place. The intentions of Apple intentions are not clear. However, by not giving any attention to working conditions at Foxhound, Apple acted in “indirect blindness”2 and increased likelihood of Foxing acting unethically.
Apple can increase involvement in its supply chain by altering payment schemes and aligning incentives. Apple should increase the profits it shares with Foxing so they can treat their workers well. Squeezing supplier’s profits by forcing a price cut year after years, only forces it to cut safety. Foxing is concerned that ethical practices increases costs without necessarily boosting revenues. To encourage participation, Apple needs to address Foxhound’s concerns of increased costs and highlight benefits, hence changing Foxing management’s attitudes towards ethical business practices.
Apple should invest monetary and knowledge resources in innovative processes to improve employees’ quality of life. Better satisfied employees are less likely to quit, addressing Foxhound’s problem of high employee turnover 17, and lowering risks of Foxing not meeting its production targets. Apple can benchmark itself to ethical companies, and implement a supplier scoring system similar to Struck’ Coffee and Farmer Equity Program (CAFE)11. Under this system, Foxing will be incentive to improve with increased margins arising from better prices and guaranteed quantities purchased in the medium term.