FoxConn and Principles of the UN Global Compact - Case Study Example

Case Study Analysis of FoxConn Introduction Foxconn is a Taiwanese electronics company which was founded in 1974. It is the world’s largest manufacturing company of electronic components and the largest exporter in Greater China. The company has an estimated 1.2 million employees within its ranks. Its factories are spread in parts of Asia, South America and Europe where these factories assemble around 40 per cent of consumer electronic products globally. The company has a commitment of delivering high-quality components for a range of industries (Lerbinger 2013). The vision of the company is to ensure that its clients receive the highest quality service at a low total cost. In recent times, Foxconn has hit headlines for the right and wrong reasons. This paper is a case study analysis of Foxconn of the company’s compliance with the Principles of the UN Global Compact in a wide range of areas such as human rights, labor rights, environment, and anti-corruption. Human rights In terms of upholding human rights, the company has failed miserably. This is because it is has been widely reported that a number of serial suicides have happened in its factories both in Taiwan and China. However, most the information collected by independent sources indicates that the deaths have mainly occurred in the Shenzhen factories (Noronha 2013). The independent sources include media reports and independent investigation reports from various non-governmental organizations. These reports delved into the living and working conditions of the employees, health and safety, compensation, working hours, and workers’ communication with management. According to news reports, a total of 18 deaths were reported from January to November 2010 in Foxconn’s Shenzhen factories. These events amounted to abuse of human rights and they raised wide public concern about working conditions in Foxconn’s factories. In recent times, the company has been labeled as a sweatshop. In addition, the company has earned a toxic reputation for the militaristic labor discipline in its gargantuan factories. The extent to which the company has registered a string of deaths among its workers has focused international scrutiny on its Longhua factory campus in Shenzhen, which has an army of 400,000 employees. A majority of these employees are migrant youths from China’s hinterland (Mullally 2015). The deaths that occurred between 2009 and 2010 and dozens of others narrowly averted are often considered to be as a result of the brutal labor conditions, heightened by an oppressive desire brought on by the sharp market demand for Apple’s iPad. In Taiwan, the company is considering to move its manufacturing activities to Chengdu and Chongqing provinces as these are locations that are farther from the scrutiny of human rights groups. In addition, the company intends to take advantage of cheap and government subsidies that happen to be plenty in these provinces. It can be said that the firm has often being complicit in human rights abuses; thereby, it does not abide with the Principles of the UN Global Compact (Rasache & Kell 2010). Nevertheless, the company has released a 76 pages long report which covers a wide range of issues such as employee issues, community and supply chain management, and environmental issues. Regarding is the issues of children being part of the company’s workforce, the company defended itself in the report by saying that all its hiring entities follow laid down rules that include respect for human rights and prohibition of child labor (Armitage 2013). Furthermore, the report goes ahead to say that the company adheres to people-oriented management and fair treatment of its employees in terms of promotion, compensation, and unemployment of employees. In the section of occupational health and safety, Foxconn defended itself by saying that it had put in place preventive and diagnostic measures to protect the health of its employees (Bonds 2014). The report went on further to state that the company undertakes periodic inspections at the workplace and physical examination for 75,000 employees. Based on its total workforce, only 8 per cent of its employees have benefited from the exercise. The company also claims that it has carried out 17,000 periodic chemical inspections at areas where volatile organic compounds, dust, and noise were likely to threaten the health of its employees (Crabbs 2014). In order to allay fears of human right abuse, FoxConn claims that it gives undivided attention to the mental health of its employees. For this reason, the company established counseling clinics and a care centre giving its employees an opportunity to seek professional advice as well as counseling services, which helps them to maintain a stable mental health (Liang & Khilji 2012) . Generally, the report portrays the image of a responsible company by presenting a lot of positive pictures, which all indicate that FoxConn is a company that cares about its employees and wider society. Not a single line in the report covers the series of deaths that have happened within the confines of the company’s premises. The report only goes further to confirm the allegation brought up by media reports, human rights groups because the company deliberately withholds unpleasant information. (Hanlon 2014). Labor rights The attempt to strengthen labor rights in a globalizing and liberalizing economic world is extremely difficult. Although a number of labor movements have joined hands in their quest to ensure that companies respect and adhere to the labor rights of the employees, they face two complex issues. How do you control transnational capital? What is the relationship between labor movements located in different parts of the word? The Principles of the UN Global Compact advocates for the long-term prosperity of the global economy, and this often calls for companies to comply with the global labor standards (Atzeni 2013). FoxConn is not known for respecting labor rights as it subjected its employees to long working hours coupled with low wages and poor working conditions. In order to run away from the glare of the public eye, FoxConn is known for the habit of relocating its factories to China in order to take advantage of lower production costs further abusing the labor rights that exist. The company often takes advantage of Chinese migrants who will not only work for low wages, but in poor working conditions and low levels of occupational health and safety as well. It is this factor that has helped China to emerge as the faster-growing economy. The dark side of this growth is the blatant abuse of labor rights which is often as a result of globalization and foreign direct investment by companies such as FoxConn. Since FoxConn has its largest manufacturing plant in China, it has injected a lot of money in the form of foreign direct investment. For this reason, the Chinese government has gone the extra mile to develop a highly skilled and well-trained workforce to undertake those tasks that are considered as technical and complex. However, the government also mobilizes less skilled workers to undertake routine repetitive operations in order to manufacture high-quality products that are often sold at low prices. This is done at the expense of workers who are forced to work in deplorable conditions and with low wages. In fact, the wage level paid by FoxConn for manufacturing labor in its China subsidiaries is less than one-tenth of that in the Asian Tigers. The abuse of labor rights by FoxConn cannot be emphasized any further. In fact, the Chinese government participates in the race to the bottom by not putting in place labor laws or formalizing the necessary legal protection for workers. It is as a result of this abuse and total disregard of labor rights by both FoxConn and the Chinese government, which triggered labor strikes and suicides at Foxconn. This experience is an illustration of the extent the company has gone to disregard labor rights by practicing unethical and illegal labor practices towards the non-skilled employees. Environment Foxconn manufacturing activities have had a negative effect on environmental quality. The company’s pollution of the environment is against the climate change which has been an important issue across the globe. According to report by The New York Times, it discovered that Foxconn factories which are involved in the manufacture of Apple products such as tablets, smartphones, and tablets, are a threat to the environment. The company had to come clean after it was accused of contaminating rivers with toxic waste emanating from its plants. It is claimed that the company dumped water with elements of a black-green color as well as a chemical odor (Berger 2010). However, the company has always insisted that it is compliant with the set emission standards, but instead pointed its hands at other companies which it claims uses the same rivers to dispose its water wastes. Nonetheless, environmental groups have pointed out that the disposal of water wastes into the rivers is the leading cause of heavy-metal pollution especially in parts of China. It is the activities of electronic companies such as Foxconn that have contributed to the pollution of up to 60 million acres of arable land. More often than not, Foxconn prefers to have its factories in countries that don’t have too strict environmental standards. It is important for the company to assess its products on its whole life cycle. In this case, its products as well as the technology it uses to manufacture these products should be compatible with environmental regulations and incentives. This is dependent on how the company’s products are designed for recycling and how much of the recycled content the product includes. As per the Principles of UN Global Compact, electronic companies such as Foxconn need to develop a footprint of the life cycle environmental and carbon dioxide emissions of their products. The company should find ways to cut costs and gain competitive advantage through environmentally responsible manufacturing practices. As a result the company should work towards developing environmentally friendly manufacturing processes and products that meet ISO 14000 standards (Marinova et al 2008). A lot of companies are responding to this trend by having supply chains that deliver electronic products with a minimal impact on the environment since a lot of environmental organizations are holding them accountable. By investing in environmentally friendly technologies, it often comes with immense business opportunities. This is because companies that are considered to support environmental safeguards are often compatible with profit making. Anti-corruption In many countries, corruption is way of life and the concept of greasing the wheels is expected in return for favors. The international framework on corruption has two faces. It is commonly presented as a success story. Of concern, is the ever growing diversity and quantity of the norms, initiatives, and actions at regional or global levels, by way of evidence that the fight against corruption is a model of successful internationalization of law (Kameswari 2006). Corruption and government protectionism of companies such as Foxconn has often being a stumbling block to effective safety oversight, causing many industrial accidents. It is employees working in companies such as Foxconn that have political connections who are likely to be abused. Reports from non-governmental labor organizations continue to highlight abuses and poor working conditions in various companies (Bardoza 2013). The company has also been a victim of corruption where a number of its employees were suspected to have accepted some form of enticement from supply chain partners. In this case, the workers were being bribed in order to authorize illegal payments to the company’s supply chain partners. The company should denounce any form of corruption within its ranks and file because it is through this vice that the company loses millions of dollars through fictitious payments made by its employees to non-existent suppliers. Companies such as Foxconn have added fighting corruption to their agenda, and international standards have progressively solidified. There exists international anti-bribery frameworks within which the corporate self regulation must operate. In this framework, the private sector is far from absent from the picture, but it is targeted directly or indirectly by certain provisions. With many businesses internationalizing their markets, they should desist from the idea bribing government authorities or being victims of extortion. When a company such as Foxconn supports anti-corruption publicly, it helps to build on its reputation by displaying a commitment to rule of law. In addition, the company’s management can send representatives to consult and advise international conference on how best others can support anti-corruption (Manacorda et al 2014). However, the fight against corruption can often be as source of conflict if one stakeholder has a different point of view to that of others on how anti-corruption strategies should be implemented. It is these divergent views, poor communication among stakeholders, hidden agendas as well as a lack of trust, that have derailed that have derailed the anti-corruption campaign in countries such as China and Taiwan. Nevertheless, the anti-corruption strategy must be taken up by all and sundry for it to succeed. On this end, it is important to strengthen laws and build a political will with the help of major collaborative initiatives that focus on improving transparency. 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