Apple's mess in China: What you need to know (FAQ)

Apple says it's got a third-party group looking for issues at manufacturing partners it uses. Read CNET's FAQ to find out how we got here and what the next steps are.

Josh Lowensohn Former Senior Writer
Josh Lowensohn joined CNET in 2006 and now covers Apple. Before that, Josh wrote about everything from new Web start-ups, to remote-controlled robots that watch your house. Prior to joining CNET, Josh covered breaking video game news, as well as reviewing game software. His current console favorite is the Xbox 360.
Josh Lowensohn
7 min read
A worker at an Apple supplier facility in Chengdu, China.
A worker at an Apple supplier facility in Chengdu, China. Apple

With the working conditions at overseas factories still in the public eye, Apple says it's picking up the pace on when we'll see the results of its first third-party audits.

Earlier today, the company said that the Fair Labor Association (FLA), a nonprofit labor rights group Apple joined last month, is already in China doing its first round of auditing at Foxconn factories in Shenzhen and Chengdu, China.

The first results from those audits will go up on the FLA's site next month, with reports on additional suppliers used by Apple and other technology companies to follow later this year.

That announcement by the two groups comes as a surprise. Apple did not tip its hand until today when the company announced it had made a request to the FLA and that investigators from the organization were already on the ground at their facilities in China.

To learn more about Apple's overseas labor situation keep reading. CNET has compiled a list of frequently asked questions on the topic:

What is the Fair Labor Association?
A nonprofit labor rights organization that aims to "end sweatshop labor and improve working conditions worldwide." The group was founded in 1999, and is comprised of companies, educational institutions, and other organizations.

Officially, it's an offshoot of the Apparel Industry Partnership--the group that came together in 1996 to create labor policy and an auditing system for companies that made clothing and footwear. Besides Apple, some of its other big name members include Adidas, Nike, Patagonia, and Hanes.

FLA says its members are required to adhering to the group's Workplace Code of Conduct, a series of rules, regulations and standards that bar things like forced and child labor, as well as discrimination and harassment. That's backed up by an auditing process, the results of which are posted on the FLA's site for the public to see. The FLA will also come to companies with its results ahead of publishing, providing them with time to lay out a plan to make fixes.

When did all this start?
Overseas manufacturing facilities have been the subject of controversy for years, with Foxconn, which is the world's largest component maker, garnering much of the attention. In 2009, for instance, there were reports of workers there committing suicide, which eventually led to investigations and the introduction of a suicide hotline and nets to catch would-be jumpers. The company was also slammed by critics for allegedly employing underage laborers, providing poor living conditions at its dormitory housing, and overworking employees.

More recently though, it was a pair of reports from The New York Times published last month that lambasted Apple for poor labor and safety issues in its supplier facilities, as well as using cut-throat business practices that prohibited those manufacturers from making improvements. Those stories coincided closely with the release of Apple's own supplier responsibility report near the beginning of January, which was based on more than 200 audits. The release of that report, which found issues with working hours and compliance with environmental standards, was joined with the announcement that Apple was becoming a member of the FLA.

So Apple already does its own audits on its suppliers? What does it need the FLA for?
The FLA provides third-party audits, which Apple said would "provide even greater transparency into our supply chain." That's as opposed to Apple and Foxconn's own audits, which are more open to scrutiny. Apple also gets the bonus PR boost of being the first technology company to become a member of the FLA, whose participating companies are mostly made up of those in the textile industry.

Wait, wasn't the FLA already going to run audits on Foxconn and other suppliers Apple already uses? What's the news then?
The news is that those audits are already going on--like right now, and that the FLA will have its first report out on its findings from Foxconn sometime next month. Furthermore, it will add to that with reports from its audits at Quanta and Pegatron, followed up by a full report on Apple's publicly published list of suppliers. Previously, the two groups only said that Apple has joined the FLA, and that the group would be reporting findings of its audits on the FLA site at some point in the future.

A box filled with signatures asking Apple to improve working conditions in overseas factories is delivered to the company's Grand Central Terminal store in Manhattan.
A box filled with signatures asking Apple to improve working conditions in overseas factories is delivered to the company's Grand Central Terminal store in Manhattan. Roger Cheng/CNET

So why all this now?
Since the New York Times series, there have been follow-ups. One of those from CNN last week included an interview with an anonymous Foxconn worker, describing working conditions at the factory as mundane and oppressive. A few days later, a group of hackers known as Swagg Security took aim at Foxconn, breaching the company's network security and gathering up what it claimed to be a full list of Foxconn employee logins and passwords. There were also two high-profile Internet petitions calling on Apple to improve working conditions, which were physically printed out and hand-delivered to a number of Apple's retail stores last week.

What do critics say of the new audits?
Consumer watchdog group SumOfUs, which authored one of the petitions that was handed to Apple last week, said the company hasn't gone far enough.

"Instead of actually solving the problem, they're trying to whitewash it--hiring a business-funded group with a long track record of serving as a corporate mouthpiece," Taren Stinebrickner-Kauffman, executive director of SumOfUs.org, said in a statement today. "Apple consumers want real action to improve workers' lives, not more spin. We're not going to be satisfied until the workers who make our iPhones have safe and healthy working conditions."

Mike Daisey traveled to Shenzhen, China in 2010 to view the working conditions at Foxconn.
Mike Daisey traveled to Shenzhen, China in 2010 to view the working conditions at Foxconn. Ursa Waz

Meanwhile, actor Mike Daisey, who wrote and acted in "The Agony and the Ecstasy of Steve Jobs," a play based on his own experience of visiting China and viewing factories in Shenzhen, viewed today's news as a sign that Apple is listening to criticism, and making changes.

"We will have to see how those reports turn out, but this is a welcome change from their position that they were simply furious--they are instead starting the process of stepping up, and this is a testament to so many who have made their voices heard," Daisey wrote on his blog.

Editor's note, March 19, 2012: "This American Life" announced late last week that it's retracting a story it did recently about working conditions at Foxconn that included an interview with Mike Daisey as well as an excerpt from his monologue "The Agony and the Ecstasy of Steve Jobs." It said it was doing so because of "numerous fabrications" it found. CNET's Josh Lowensohn has the details in this story. Daisey's own statement is on his Web site. A recent investigative report by The New York Times looked at working conditions in Apple's supply chain in China.

How do U.S. companies fare globally in comparisons of working conditions in their factories around the world?
With technology component manufacturing, it's difficult to make comparisons since much of that industry has either moved, or been built up overseas. In fact, Apple says that these suppliers, many of which are located overseas, make up 97 percent of what the company spends on making its devices--a figure that includes materials, assembly and manufacturing costs. For this particular audit, Apple says the manufacturing facilities being inspected are where "more than 90 percent" of the company's products are assembled.

In the U.S., it's also far more common to have independent unions to represent workers, and negotiate collective bargaining agreements designed to set wages, working hours, benefits and regulations on working conditions--all with the threat of a strike if demands are not met. That includes the AFL-CIO and Change to Win Federation.

According to data released last month by the Bureau of Labor Statistics (pdf), some 16.3 million workers were represented by a union in 2011. Drilling down to just manufacturing jobs, 10.5 percent of those employed were members of unions, with a slightly higher 11.2 percent represented by unions.

Where can I find these audit reports when they're published?
On the FLA's site, where the group hosts a number of other reports, most recently an updated investigation of Style Avenue's factory in El Salvador (pdf). The group typically offers both an excutive summary, as well as a full version of each report in PDF form. Apple itself publishes a supplier responsibility report every year, the most recent of which covers 2011 and was published last month.

Does Apple need to do anything based on those reports?
To continue to be a member of the FLA, it does. As per the group's remediation policy, Apple needs to resolve whatever maladies are found during the auditing process:

The FLA requires that companies work with the factories to ensure that violations of the Code are corrected through the development and implementation of a remediation plan. The FLA reports on remediation efforts through the tracking charts. In addition, the FLA conducts verification audits to confirm ongoing progress in a sample of audited factories.

Apple has also stated on its own supplier responsibility site that it will "terminate the relationship" of any violations the company finds "egregious" or that the supplier is "incapable of preventing."