Thursday, March 01, 2012

The Dark Side of Apple's Success...

Yesterday, Apple's market valuation crossed US$500B making it the most valuable company[Link]. This is a milestone in Apple's incredible comeback from the brink in 1996. I remember the stock price slumping to US$7 and Michael Dell was asked what he would do if he was running Apple. He said he would close it and return the remaining cash to shareholders. Today Apple's stock trades at US$542. No other company in the world has made such a stunning comeback. No other company is as profitable as Apple. Apple today has US$100B in cash. Apple makes US$13.3B in profits vs US$3B for Walmart.

Many years ago, Apple owned factories in Ireland and Singapore. The worker on the assembly line making Apple's iMacs  was an employee of Apple and had a share of Apple's success. Today, Apple\s manufacturing is outsourced to companies in China. The devices are made by lowly paid workers, squeezed by a middleman who profits by exploiting workers in a country where human rights and workers' right is not well respected.

"But those popular devices come at a human price — some of the low-paid workers who built them got their skin burned off or jumped to their deaths. Would you be willing to boycott Apple to stop the carnage?" 

"....Of these, the most .horrible reported by the Times was Lai Xiaodong — a college educated manager who was planning to marry. Mr. Lai’s face was burned off along with the skin on 90% of his body thanks to a May 2011 explosion at an iPad factory caused by a well-known problem — an abundance of aluminum dust — where he managed a team of workers polishing iPad screens. Mr. Lai took two days to die of his burns."- Forbes[Link]

Apple is by no means the only company that outsource its manufacturing, but it is the most profitable and most powerful. If Apple does not do something about this situation, no other company will. Labor cost only form a tiny fraction of the cost and Apple has a profit margin of more than 70% on each handset sold[Link]. Apple CEO Tim Cook took home US$378M in compensation last year [Link] and this disparity between him and the worker in Shenzhen working 12 hour shifts shows the dark side of outsourcing. There is a human cost to satisfy our insatiable thirst for beautiful electronic products and we should forget this when we think of buying the iPad 3 to be launched next month.


Anonymous said...

"The devices are made by lowly paid workers, squeezed by a middleman who profits by exploiting workers in a country where human rights and workers' right is not well respected."
Lucky Tan

But despite all these, China is quite peaceful what. The ruling communist party is still in power and strong what.

And also there are a lot of rich Chinese who come to Singapore to buy property using cash and park their money.

And for the talented ones, Singapore even awarded them scholarships to study here.

So you see, every country, Singapore included, has bright and dark sides lah.

And be it democracy or communist system, dark or bright or whatever, as long as the government is strong and stable, everything will be OK.

Anonymous said...

But those lowly paid workers, if not for Apple devices, they would have no work and will starve.

So which is better?

In life, sometimes it is the choice of the lesser of 2 evils. Or choose the best available.

Voiceless said...

A taxi driver told me a few days ago that Sporeans are very selfish and dont care about the sufferimgs of others. We justfiy our cowardice by saying we choose the lesser of tawo evils and that a strong govt is sign of stability bla bla bla bla bla bla bla....

Anonymous said...

Sinkies are all cowards and boh chee.

That's why S'pore will never be great. By 2050 S'pore will be either part of M'sia or Indonesia, or satellite town of China.

Anonymous said...

I wonder if there is a similar "dark side" to Singapore's success?

Anonymous said...

There is always a dark side.

The difference is whether you choose also to look at the bright side or just focus on the dark side.

A balanced view will serve everyone best, not one where the focus is on the extremities. These are best served by organisations such as NGOs.

Anonymous said...

"I wonder if there is a similar "dark side" to Singapore's success?"
Anon 2/3/12 08:17

Of course there is. But as long as it affects 40% or less, it should be OK.

Which country on earth has 100% "bright side"?

Maybe only in Heaven.

Anonymous said...

For the sake of being able to buy good quality products at cheap prices, I can close one, if not, both eyes to any wrong that is far away from me.

I am part of the 99% aspiring to join the 1%.

Anonymous said...

I don't have a iphone, ipad, or ipod yet and also don't intend to get one.

Not that I can't afford but I am happy and satisfied with what I have now.

I suppose I am a very small minority or else Apple would not have been such a successful company.

Anonymous said...

@ ANON: 2/3/12 08:51
"A balanced view will serve everyone best, not one where the focus is on the extremities. These are best served by organisations such as NGOs."

Which Singapore NGOs are you talking about?

(Government Organized NGOs)
(Business Organized NGOs)

In the interest of transparency, I'd like to see all the CEOs of these NGOs declare their political party affiliations.

None so stupid as the idiots who believe in their own bullshit.

Ling said...

But Foxconn does a lot of work for many technology companies.

Isn't it wrong to single Apple out when there are so many other companies who use Foxconn too? Microsoft(Xbox 360), Acer, Dell, Cisco, Nokia, Nintendo(Wii), HP, Sony, Toshiba, etc.

Their contracts are massive and numerous, there is almost no way to avoid their reach. Even if we avoid using a smartphone or some other electronic device, many of us are still indirectly reliant on Foxconn products located in the bank, our workplace, our ISPs, the hospital, etc.

Instead of trying to force them to close down, it's better to encourage Foxconn to improve working conditions and implement measures to up worker's morale.

I've heard some of their workers are underaged and they use Hexane, which is toxic, to clean touch screens.

Anonymous said...

"In the interest of transparency, I'd like to see all the CEOs of these NGOs declare their political party affiliations."
Anon 2/3/12 10:21


Look at the many opposition candidates in GE 2011. Which one is a CEO or senior officer of a big or well known company? Or rather how many are even CEOs or senior company people?

Ng Eng Hou said...

Behind every success story, there is always the dark side. Behind Singapore's success, there are also the dark side we may not know. Take for example, the ever extending SMRT line which makes traveling much easier (if it doesn't break down) comes at a huge costs. Many houses, many well-doing business are being forcefully reallocated driving a number of them out of business and the dirt cheap prices paid on this forceful acquisition 'impoverish' some people.

Nothing Is Free, There Is Always A Price To Pay For Everything!

Anonymous said...


People are jealous of success
People feel somewhat inadequate that they failed to see opportunities or take advantage of situations that helps them achieve their goals & objectives.

If I noticed that I could claim ERP costs successfully and others found out about my success, would you follow or complain to the authorities about it? ( even if I did not break any laws?)

People aspire to be successful, yet when others achieve it first and repeats it again & again, jealousy builds up and accusations of wrong doing, cheating,unethical practices will surface.

Imagine if Liverpool wins every match and wins every FA cup, UEFA and World Cup.
Will you start looking for dirt?

Anonymous said...

Anonymous 2/3/12 10:03
I hope it wasn't reality distortion or peer pressure which made you think you are the undesired uncool minority. Apple became successful getting cheap produce from sweat shops and selling vague desires to the gullible, the clueless, the less secured segment of society.. crowd following jack and joneses who overpays to look modern, updated and valuable.

Anonymous said...

Indeed. Whatever bargain we think we are getting now, there is a price to pay somewhere, someday, somehow, by someone.

Weighing the value of the iPhone gadget we are have on our hands with the price tagged to it by Apple is understating the actual 'price' paid for it.

Anonymous said...

This is evil capitalism. Well the situation in Singapore is worst. Not only are the lowly paid getting ridiculously low wages, they have to struggle with the extremely high cost of living in Singapore. Wages in China may be low, so is the cost of living. This has been going on for the last 20 years and despite all the criticisms and complains, are we making any headway ?

Parka said...

Here's a section of an article with Steve Jobs answering Barack Obama.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

By the way, all people running companies will reply the same.

A business exist solely for the purpose of making money. Once you take that purpose away, it will cease to exist.

Just because it cannot help your countrymen, doesn't mean they are not helping other people, such as those who have jobs because of Apple.

If you've not started a business, you won't understand the mentality. It's not about selfishness or patriotism. It's all about business.

Parka said...

Oh, the link to the article is from New York Times

Anonymous said...

I think I understand.

As long as I start a business, I can justify any form of anti-social behaviour.

Anonymous said...

The problem with businesses and gahmen is the elites are self serving and at times lacked humanity. For example, my friend's manager asked his colleagues to work late but refused to let them eat what was left over for a buffet seminar organized by his company. Every day his boss preach recycling and saving the earth. Printing a piece of paper is stressful as may kena foxtrot. But he himself drives to eat lunch everyday unless got buffet from seminars. He rather waste the food than let his staff eat knowing they are working late for the past two weeks.

SC said...

The invention of business is not too far away from us. But it's original purpose has long been forgotten due to the self-centeredness of the business owners as we come along this far.

In the strong culture of capitalism, its no surprise to see such a comment being made - "A business exist solely for the purpose of making money.". But this comment, to which some see it as the wisdom of how our world works, is only as narrow minded as capitalism is. It is such a narrow-mindedness that creates so many suffering around the world.

Profit should never be the goal or reason a company exists. An organization that is healthy, creates value that extends far beyond money and into all points of its operation; from suppliers to employees and from customers into communities.

Business originated from the needs of the communities and fulfilling those needs with values is the reason of the longevity of a business.

Although there are so many varying screwup factors in our global societies now - fake demands, unreasonable increase in operating cost, unleveled operating field - that makes running businesses hard, but the purpose of a business cannot be confused as solely profit driven.

Anonymous said...

Only hope Apple will share some of these crazy wealth with the less fortunate of this world.

Do something really good with this wealth or they may end up like former day when they nearly go bust.

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