NY Times January 25, 2012
In China, Human Costs Are Built Into an iPad
By CHARLES DUHIGG and DAVID BARBOZA

The explosion ripped through Building A5 on a Friday evening last May, 
an eruption of fire and noise that twisted metal pipes as if they were 
discarded straws.

When workers in the cafeteria ran outside, they saw black smoke pouring 
from shattered windows. It came from the area where employees polished 
thousands of iPad cases a day.

Two people were killed immediately, and over a dozen others hurt. As the 
injured were rushed into ambulances, one in particular stood out. His 
features had been smeared by the blast, scrubbed by heat and violence 
until a mat of red and black had replaced his mouth and nose.

“Are you Lai Xiaodong’s father?” a caller asked when the phone rang at 
Mr. Lai’s childhood home. Six months earlier, the 22-year-old had moved 
to Chengdu, in southwest China, to become one of the millions of human 
cogs powering the largest, fastest and most sophisticated manufacturing 
system on earth. That system has made it possible for Apple and hundreds 
of other companies to build devices almost as quickly as they can be 
dreamed up.

“He’s in trouble,” the caller told Mr. Lai’s father. “Get to the 
hospital as soon as possible.”

In the last decade, Apple has become one of the mightiest, richest and 
most successful companies in the world, in part by mastering global 
manufacturing. Apple and its high-technology peers — as well as dozens 
of other American industries — have achieved a pace of innovation nearly 
unmatched in modern history.

However, the workers assembling iPhones, iPads and other devices often 
labor in harsh conditions, according to employees inside those plants, 
worker advocates and documents published by companies themselves. 
Problems are as varied as onerous work environments and serious — 
sometimes deadly — safety problems.

Employees work excessive overtime, in some cases seven days a week, and 
live in crowded dorms. Some say they stand so long that their legs swell 
until they can hardly walk. Under-age workers have helped build Apple’s 
products, and the company’s suppliers have improperly disposed of 
hazardous waste and falsified records, according to company reports and 
advocacy groups that, within China, are often considered reliable, 
independent monitors.

More troubling, the groups say, is some suppliers’ disregard for 
workers’ health. Two years ago, 137 workers at an Apple supplier in 
eastern China were injured after they were ordered to use a poisonous 
chemical to clean iPhone screens. Within seven months last year, two 
explosions at iPad factories, including in Chengdu, killed four people 
and injured 77. Before those blasts, Apple had been alerted to hazardous 
conditions inside the Chengdu plant, according to a Chinese group that 
published that warning.

“If Apple was warned, and didn’t act, that’s reprehensible,” said 
Nicholas Ashford, a former chairman of the National Advisory Committee 
on Occupational Safety and Health, a group that advises the United 
States Labor Department. “But what’s morally repugnant in one country is 
accepted business practices in another, and companies take advantage of 
that.”

Apple is not the only electronics company doing business within a 
troubling supply system. Bleak working conditions have been documented 
at factories manufacturing products for Dell, Hewlett-Packard, I.B.M., 
Lenovo, Motorola, Nokia, Sony, Toshiba and others.

Current and former Apple executives, moreover, say the company has made 
significant strides in improving factories in recent years. Apple has a 
supplier code of conduct that details standards on labor issues, safety 
protections and other topics. The company has mounted a vigorous 
auditing campaign, and when abuses are discovered, Apple says, 
corrections are demanded.

And Apple’s annual supplier responsibility reports, in many cases, are 
the first to report abuses. This month, for the first time, the company 
released a list identifying many of its suppliers.

But significant problems remain. More than half of the suppliers audited 
by Apple have violated at least one aspect of the code of conduct every 
year since 2007, according to Apple’s reports, and in some instances 
have violated the law. While many violations involve working conditions, 
rather than safety hazards, troubling patterns persist.

“Apple never cared about anything other than increasing product quality 
and decreasing production cost,” said Li Mingqi, who until April worked 
in management at Foxconn Technology, one of Apple’s most important 
manufacturing partners. Mr. Li, who is suing Foxconn over his dismissal, 
helped manage the Chengdu factory where the explosion occurred.

“Workers’ welfare has nothing to do with their interests,” he said.

Some former Apple executives say there is an unresolved tension within 
the company: executives want to improve conditions within factories, but 
that dedication falters when it conflicts with crucial supplier 
relationships or the fast delivery of new products. Tuesday, Apple 
reported one of the most lucrative quarters of any corporation in 
history, with $13.06 billion in profits on $46.3 billion in sales. Its 
sales would have been even higher, executives said, if overseas 
factories had been able to produce more.

Executives at other corporations report similar internal pressures. This 
system may not be pretty, they argue, but a radical overhaul would slow 
innovation. Customers want amazing new electronics delivered every year.

“We’ve known about labor abuses in some factories for four years, and 
they’re still going on,” said one former Apple executive who, like 
others, spoke on the condition of anonymity because of confidentiality 
agreements. “Why? Because the system works for us. Suppliers would 
change everything tomorrow if Apple told them they didn’t have another 
choice.”

“If half of iPhones were malfunctioning, do you think Apple would let it 
go on for four years?” the executive asked.

Apple, in its published reports, has said it requires every discovered 
labor violation to be remedied, and suppliers that refuse are 
terminated. Privately, however, some former executives concede that 
finding new suppliers is time-consuming and costly. Foxconn is one of 
the few manufacturers in the world with the scale to build sufficient 
numbers of iPhones and iPads. So Apple is “not going to leave Foxconn 
and they’re not going to leave China,” said Heather White, a research 
fellow at Harvard and a former member of the Monitoring International 
Labor Standards committee at the National Academy of Sciences. “There’s 
a lot of rationalization.”

Apple was provided with extensive summaries of this article, but the 
company declined to comment. The reporting is based on interviews with 
more than three dozen current or former employees and contractors, 
including a half-dozen current or former executives with firsthand 
knowledge of Apple’s supplier responsibility group, as well as others 
within the technology industry.

In 2010, Steven P. Jobs discussed the company’s relationships with 
suppliers at an industry conference.

“I actually think Apple does one of the best jobs of any companies in 
our industry, and maybe in any industry, of understanding the working 
conditions in our supply chain,” said Mr. Jobs, who was Apple’s chief 
executive at the time and who died last October.

“I mean, you go to this place, and, it’s a factory, but, my gosh, I 
mean, they’ve got restaurants and movie theaters and hospitals and 
swimming pools, and I mean, for a factory, it’s a pretty nice factory.”

Others, including workers inside such plants, acknowledge the cafeterias 
and medical facilities, but insist conditions are punishing.

“We’re trying really hard to make things better,” said one former Apple 
executive. “But most people would still be really disturbed if they saw 
where their iPhone comes from.”

The Road to Chengdu

In the fall of 2010, about six months before the explosion in the iPad 
factory, Lai Xiaodong carefully wrapped his clothes around his college 
diploma, so it wouldn’t crease in his suitcase. He told friends he would 
no longer be around for their weekly poker games, and said goodbye to 
his teachers. He was leaving for Chengdu, a city of 12 million that was 
rapidly becoming one of the world’s most important manufacturing hubs.

Though painfully shy, Mr. Lai had surprised everyone by persuading a 
beautiful nursing student to become his girlfriend. She wanted to marry, 
she said, and so his goal was to earn enough money to buy an apartment.

Factories in Chengdu manufacture products for hundreds of companies. But 
Mr. Lai was focused on Foxconn Technology, China’s largest exporter and 
one of the nation’s biggest employers, with 1.2 million workers. The 
company has plants throughout China, and assembles an estimated 40 
percent of the world’s consumer electronics, including for customers 
like Amazon, Dell, Hewlett-Packard, Nintendo, Nokia and Samsung.

Foxconn’s factory in Chengdu, Mr. Lai knew, was special. Inside, workers 
were building Apple’s latest, potentially greatest product: the iPad.

When Mr. Lai finally landed a job repairing machines at the plant, one 
of the first things he noticed were the almost blinding lights. Shifts 
ran 24 hours a day, and the factory was always bright. At any moment, 
there were thousands of workers standing on assembly lines or sitting in 
backless chairs, crouching next to large machinery, or jogging between 
loading bays. Some workers’ legs swelled so much they waddled. “It’s 
hard to stand all day,” said Zhao Sheng, a plant worker.

Banners on the walls warned the 120,000 employees: “Work hard on the job 
today or work hard to find a job tomorrow.” Apple’s supplier code of 
conduct dictates that, except in unusual circumstances, employees are 
not supposed to work more than 60 hours a week. But at Foxconn, some 
worked more, according to interviews, workers’ pay stubs and surveys by 
outside groups. Mr. Lai was soon spending 12 hours a day, six days a 
week inside the factory, according to his paychecks. Employees who 
arrived late were sometimes required to write confession letters and 
copy quotations. There were “continuous shifts,” when workers were told 
to work two stretches in a row, according to interviews.

Mr. Lai’s college degree enabled him to earn a salary of around $22 a 
day, including overtime — more than many others. When his days ended, he 
would retreat to a small bedroom just big enough for a mattress, 
wardrobe and a desk where he obsessively played an online game called 
Fight the Landlord, said his girlfriend, Luo Xiaohong.

Those accommodations were better than many of the company’s dorms, where 
70,000 Foxconn workers lived, at times stuffed 20 people to a three-room 
apartment, employees said. Last year, a dispute over paychecks set off a 
riot in one of the dormitories, and workers started throwing bottles, 
trash cans and flaming paper from their windows, according to witnesses. 
Two hundred police officers wrestled with workers, arresting eight. 
Afterward, trash cans were removed, and piles of rubbish — and rodents — 
became a problem. Mr. Lai felt lucky to have a place of his own.

Foxconn, in a statement, disputed workers’ accounts of continuous 
shifts, extended overtime, crowded living accommodations and the causes 
of the riot. The company said that its operations adhered to customers’ 
codes of conduct, industry standards and national laws. “Conditions at 
Foxconn are anything but harsh,” the company wrote. Foxconn also said 
that it had never been cited by a customer or government for under-age 
or overworked employees or toxic exposures.

“All assembly line employees are given regular breaks, including 
one-hour lunch breaks,” the company wrote, and only 5 percent of 
assembly line workers are required to stand to carry out their tasks. 
Work stations have been designed to ergonomic standards, and employees 
have opportunities for job rotation and promotion, the statement said.

“Foxconn has a very good safety record,” the company wrote. “Foxconn has 
come a long way in our efforts to lead our industry in China in areas 
such as workplace conditions and the care and treatment of our employees.”

Apple’s Code of Conduct

In 2005, some of Apple’s top executives gathered inside their Cupertino, 
Calif., headquarters for a special meeting. Other companies had created 
codes of conduct to police their suppliers. It was time, Apple decided, 
to follow suit. The code Apple published that year demands “that working 
conditions in Apple’s supply chain are safe, that workers are treated 
with respect and dignity, and that manufacturing processes are 
environmentally responsible.”

But the next year, a British newspaper, The Mail on Sunday, secretly 
visited a Foxconn factory in Shenzhen, China, where iPods were 
manufactured, and reported on workers’ long hours, push-ups meted out as 
punishment and crowded dorms. Executives in Cupertino were shocked. 
“Apple is filled with really good people who had no idea this was going 
on,” a former employee said. “We wanted it changed, immediately.”

Apple audited that factory, the company’s first such inspection, and 
ordered improvements. Executives also undertook a series of initiatives 
that included an annual audit report, first published in 2007. By last 
year, Apple had inspected 396 facilities — including the company’s 
direct suppliers, as well as many of those suppliers’ suppliers — one of 
the largest such programs within the electronics industry.

Those audits have found consistent violations of Apple’s code of 
conduct, according to summaries published by the company. In 2007, for 
instance, Apple conducted over three dozen audits, two-thirds of which 
indicated that employees regularly worked more than 60 hours a week. In 
addition, there were six “core violations,” the most serious kind, 
including hiring 15-year-olds as well as falsifying records.

Over the next three years, Apple conducted 312 audits, and every year, 
about half or more showed evidence of large numbers of employees 
laboring more than six days a week as well as working extended overtime. 
Some workers received less than minimum wage or had pay withheld as 
punishment. Apple found 70 core violations over that period, including 
cases of involuntary labor, under-age workers, record falsifications, 
improper disposal of hazardous waste and over a hundred workers injured 
by toxic chemical exposures.

Last year, the company conducted 229 audits. There were slight 
improvements in some categories and the detected rate of core violations 
declined. However, within 93 facilities, at least half of workers 
exceeded the 60-hours-a-week work limit. At a similar number, employees 
worked more than six days a week. There were incidents of 
discrimination, improper safety precautions, failure to pay required 
overtime rates and other violations. That year, four employees were 
killed and 77 injured in workplace explosions.

“If you see the same pattern of problems, year after year, that means 
the company’s ignoring the issue rather than solving it,” said one 
former Apple executive with firsthand knowledge of the supplier 
responsibility group. “Noncompliance is tolerated, as long as the 
suppliers promise to try harder next time. If we meant business, core 
violations would disappear.”

Apple says that when an audit reveals a violation, the company requires 
suppliers to address the problem within 90 days and make changes to 
prevent a recurrence. “If a supplier is unwilling to change, we 
terminate our relationship,” the company says on its Web site.

The seriousness of that threat, however, is unclear. Apple has found 
violations in hundreds of audits, but fewer than 15 suppliers have been 
terminated for transgressions since 2007, according to former Apple 
executives.

“Once the deal is set and Foxconn becomes an authorized Apple supplier, 
Apple will no longer give any attention to worker conditions or anything 
that is irrelevant to its products,” said Mr. Li, the former Foxconn 
manager. Mr. Li spent seven years with Foxconn in Shenzhen and Chengdu 
and was forced out in April after he objected to a relocation to 
Chengdu, he said. Foxconn disputed his comments, and said “both Foxconn 
and Apple take the welfare of our employees very seriously.”

Apple’s efforts have spurred some changes. Facilities that were 
reaudited “showed continued performance improvements and better working 
conditions,” the company wrote in its 2011 supplier responsibility 
progress report. In addition, the number of audited facilities has grown 
every year, and some executives say those expanding efforts obscure 
year-to-year improvements.

Apple also has trained over a million workers about their rights and 
methods for injury and disease prevention. A few years ago, after 
auditors insisted on interviewing low-level factory employees, they 
discovered that some had been forced to pay onerous “recruitment fees” — 
which Apple classifies as involuntary labor. As of last year, the 
company had forced suppliers to reimburse more than $6.7 million in such 
charges.

“Apple is a leader in preventing under-age labor,” said Dionne Harrison 
of Impactt, a firm paid by Apple to help prevent and respond to child 
labor among its suppliers. “They’re doing as much as they possibly can.”

Other consultants disagree.

“We’ve spent years telling Apple there are serious problems and 
recommending changes,” said a consultant at BSR — also known as Business 
for Social Responsibility — which has been twice retained by Apple to 
provide advice on labor issues. “They don’t want to pre-empt problems, 
they just want to avoid embarrassments.”

‘We Could Have Saved Lives’

In 2006, BSR, along with a division of the World Bank and other groups, 
initiated a project to improve working conditions in factories building 
cellphones and other devices in China and elsewhere. The groups and 
companies pledged to test various ideas. Foxconn agreed to participate.

For four months, BSR and another group negotiated with Foxconn regarding 
a pilot program to create worker “hotlines,” so that employees could 
report abusive conditions, seek mental counseling and discuss workplace 
problems. Apple was not a participant in the project, but was briefed on 
it, according to the BSR consultant, who had detailed knowledge.

As negotiations proceeded, Foxconn’s requirements for participation kept 
changing. First Foxconn asked to shift from installing new hotlines to 
evaluating existing hotlines. Then Foxconn insisted that mental health 
counseling be excluded. Foxconn asked participants to sign agreements 
saying they would not disclose what they observed, and then rewrote 
those agreements multiple times. Finally, an agreement was struck, and 
the project was scheduled to begin in January 2008. A day before the 
start, Foxconn demanded more changes, until it was clear the project 
would not proceed, according to the consultant and a 2008 summary by BSR 
that did not name Foxconn.

The next year, a Foxconn employee fell or jumped from an apartment 
building after losing an iPhone prototype. Over the next two years, at 
least 18 other Foxconn workers attempted suicide or fell from buildings 
in manners that suggested suicide attempts. In 2010, two years after the 
pilot program fell apart and after multiple suicide attempts, Foxconn 
created a dedicated mental health hotline and began offering free 
psychological counseling.

“We could have saved lives, and we asked Apple to pressure Foxconn, but 
they wouldn’t do it,” said the BSR consultant, who asked not to be 
identified because of confidentiality agreements. “Companies like H.P. 
and Intel and Nike push their suppliers. But Apple wants to keep an 
arm’s length, and Foxconn is their most important manufacturer, so they 
refuse to push.”

BSR, in a written statement, said the views of that consultant were not 
those of the company.

“My BSR colleagues and I view Apple as a company that is making a highly 
serious effort to ensure that labor conditions in its supply chain meet 
the expectations of applicable laws, the company’s standards and the 
expectations of consumers,” wrote Aron Cramer, BSR’s president. Mr. 
Cramer added that asking Apple to pressure Foxconn would have been 
inconsistent with the purpose of the pilot program, and there were 
multiple reasons the pilot program did not proceed.

Foxconn, in a statement, said it acted quickly and comprehensively to 
address suicides, and “the record has shown that those measures have 
been successful.”

A Demanding Client

Every month, officials at companies from around the world trek to 
Cupertino or invite Apple executives to visit their foreign factories, 
all in pursuit of a goal: becoming a supplier.

When news arrives that Apple is interested in a particular product or 
service, small celebrations often erupt. Whiskey is drunk. Karaoke is sung.

Then, Apple’s requests start.

Apple typically asks suppliers to specify how much every part costs, how 
many workers are needed and the size of their salaries. Executives want 
to know every financial detail. Afterward, Apple calculates how much it 
will pay for a part. Most suppliers are allowed only the slimmest of 
profits.

So suppliers often try to cut corners, replace expensive chemicals with 
less costly alternatives, or push their employees to work faster and 
longer, according to people at those companies.

“The only way you make money working for Apple is figuring out how to do 
things more efficiently or cheaper,” said an executive at one company 
that helped bring the iPad to market. “And then they’ll come back the 
next year, and force a 10 percent price cut.”

In January 2010, workers at a Chinese factory owned by Wintek, an Apple 
manufacturing partner, went on strike over a variety of issues, 
including widespread rumors that workers were being exposed to toxins. 
Investigations by news organizations revealed that over a hundred 
employees had been injured by n-hexane, a toxic chemical that can cause 
nerve damage and paralysis.

Employees said they had been ordered to use n-hexane to clean iPhone 
screens because it evaporated almost three times as fast as rubbing 
alcohol. Faster evaporation meant workers could clean more screens each 
minute.

Apple commented on the Wintek injuries a year later. In its supplier 
responsibility report, Apple said it had “required Wintek to stop using 
n-hexane” and that “Apple has verified that all affected workers have 
been treated successfully, and we continue to monitor their medical 
reports until full recuperation.” Apple also said it required Wintek to 
fix the ventilation system.

That same month, a New York Times reporter interviewed a dozen injured 
Wintek workers who said they had never been contacted by Apple or its 
intermediaries, and that Wintek had pressured them to resign and take 
cash settlements that would absolve the company of liability. After 
those interviews, Wintek pledged to provide more compensation to the 
injured workers and Apple sent a representative to speak with some of them.

Six months later, trade publications reported that Apple significantly 
cut prices paid to Wintek.

“You can set all the rules you want, but they’re meaningless if you 
don’t give suppliers enough profit to treat workers well,” said one 
former Apple executive with firsthand knowledge of the supplier 
responsibility group. “If you squeeze margins, you’re forcing them to 
cut safety.”

Wintek is still one of Apple’s most important suppliers. Wintek, in a 
statement, declined to comment except to say that after the episode, the 
company took “ample measures” to address the situation and “is committed 
to ensuring employee welfare and creating a safe and healthy work 
environment.”

Many major technology companies have worked with factories where 
conditions are troubling. However, independent monitors and suppliers 
say some act differently. Executives at multiple suppliers, in 
interviews, said that Hewlett-Packard and others allowed them slightly 
more profits and other allowances if they were used to improve worker 
conditions.

“Our suppliers are very open with us,” said Zoe McMahon, an executive in 
Hewlett-Packard’s supply chain social and environmental responsibility 
program. “They let us know when they are struggling to meet our 
expectations, and that influences our decisions.”

The Explosion

On the afternoon of the blast at the iPad plant, Lai Xiaodong telephoned 
his girlfriend, as he did every day. They had hoped to see each other 
that evening, but Mr. Lai’s manager said he had to work overtime, he 
told her.

He had been promoted quickly at Foxconn, and after just a few months was 
in charge of a team that maintained the machines that polished iPad 
cases. The sanding area was loud and hazy with aluminum dust. Workers 
wore masks and earplugs, but no matter how many times they showered, 
they were recognizable by the slight aluminum sparkle in their hair and 
at the corners of their eyes.

Just two weeks before the explosion, an advocacy group in Hong Kong 
published a report warning of unsafe conditions at the Chengdu plant, 
including problems with aluminum dust. The group, Students and Scholars 
Against Corporate Misbehavior, or Sacom, had videotaped workers covered 
with tiny aluminum particles. “Occupational health and safety issues in 
Chengdu are alarming,” the report read. “Workers also highlight the 
problem of poor ventilation and inadequate personal protective equipment.”

A copy of that report was sent to Apple. “There was no response,” said 
Debby Chan Sze Wan of the group. “A few months later I went to 
Cupertino, and went into the Apple lobby, but no one would meet with me. 
I’ve never heard from anyone from Apple at all.”

The morning of the explosion, Mr. Lai rode his bicycle to work. The iPad 
had gone on sale just weeks earlier, and workers were told thousands of 
cases needed to be polished each day. The factory was frantic, employees 
said. Rows of machines buffed cases as masked employees pushed buttons. 
Large air ducts hovered over each station, but they could not keep up 
with the three lines of machines polishing nonstop. Aluminum dust was 
everywhere.

Dust is a known safety hazard. In 2003, an aluminum dust explosion in 
Indiana destroyed a wheel factory and killed a worker. In 2008, 
agricultural dust inside a sugar factory in Georgia caused an explosion 
that killed 14.

Two hours into Mr. Lai’s second shift, the building started to shake, as 
if an earthquake was under way. There was a series of blasts, plant 
workers said.

Then the screams began.

When Mr. Lai’s colleagues ran outside, dark smoke was mixing with a 
light rain, according to cellphone videos. The toll would eventually 
count four dead, 18 injured.

At the hospital, Mr. Lai’s girlfriend saw that his skin was almost 
completely burned away. “I recognized him from his legs, otherwise I 
wouldn’t know who that person was,” she said.

Eventually, his family arrived. Over 90 percent of his body had been 
seared. “My mom ran away from the room at the first sight of him. I 
cried. Nobody could stand it,” his brother said. When his mother 
eventually returned, she tried to avoid touching her son, for fear that 
it would cause pain.

“If I had known,” she said, “I would have grabbed his arm, I would have 
touched him.”

“He was very tough,” she said. “He held on for two days.”

After Mr. Lai died, Foxconn workers drove to Mr. Lai’s hometown and 
delivered a box of ashes. The company later wired a check for about 
$150,000.

Foxconn, in a statement, said that at the time of the explosion the 
Chengdu plant was in compliance with all relevant laws and regulations, 
and “after ensuring that the families of the deceased employees were 
given the support they required, we ensured that all of the injured 
employees were given the highest quality medical care.” After the 
explosion, the company added, Foxconn immediately halted work in all 
polishing workshops, and later improved ventilation and dust disposal, 
and adopted technologies to enhance worker safety.

In its most recent supplier responsibility report, Apple wrote that 
after the explosion, the company contacted “the foremost experts in 
process safety” and assembled a team to investigate and make 
recommendations to prevent future accidents.

In December, however, seven months after the blast that killed Mr. Lai, 
another iPad factory exploded, this one in Shanghai. Once again, 
aluminum dust was the cause, according to interviews and Apple’s most 
recent supplier responsibility report. That blast injured 59 workers, 
with 23 hospitalized.

“It is gross negligence, after an explosion occurs, not to realize that 
every factory should be inspected,” said Nicholas Ashford, the 
occupational safety expert, who is now at the Massachusetts Institute of 
Technology. “If it were terribly difficult to deal with aluminum dust, I 
would understand. But do you know how easy dust is to control? It’s 
called ventilation. We solved this problem over a century ago.”

In its most recent supplier responsibility report, Apple wrote that 
while the explosions both involved combustible aluminum dust, the causes 
were different. The company declined, however, to provide details. The 
report added that Apple had now audited all suppliers polishing aluminum 
products and had put stronger precautions in place. All suppliers have 
initiated required countermeasures, except one, which remains shut down, 
the report said.

For Mr. Lai’s family, questions remain. “We’re really not sure why he 
died,” said Mr. Lai’s mother, standing beside a shrine she built near 
their home. “We don’t understand what happened.”

Hitting the Apple Lottery

Every year, as rumors about Apple’s forthcoming products start to 
emerge, trade publications and Web sites begin speculating about which 
suppliers are likely to win the Apple lottery. Getting a contract from 
Apple can lift a company’s value by millions because of the implied 
endorsement of manufacturing quality. But few companies openly brag 
about the work: Apple generally requires suppliers to sign contracts 
promising they will not divulge anything, including the partnership.

That lack of transparency gives Apple an edge at keeping its plans 
secret. But it also has been a barrier to improving working conditions, 
according to advocates and former Apple executives.

This month, after numerous requests by advocacy and news organizations, 
including The New York Times, Apple released the names of 156 of its 
suppliers. In the report accompanying that list, Apple said they 
“account for more than 97 percent of what we pay to suppliers to 
manufacture our products.”

However, the company has not revealed the names of hundreds of other 
companies that do not directly contract with Apple, but supply the 
suppliers. The company’s supplier list does not disclose where factories 
are, and many are hard to find. And independent monitoring organizations 
say when they have tried to inspect Apple’s suppliers, they have been 
barred from entry — on Apple’s orders, they have been told.

“We’ve had this conversation hundreds of times,” said a former executive 
in Apple’s supplier responsibility group. “There is a genuine, 
companywide commitment to the code of conduct. But taking it to the next 
level and creating real change conflicts with secrecy and business 
goals, and so there’s only so far we can go.” Former Apple employees say 
they were generally prohibited from engaging with most outside groups.

“There’s a real culture of secrecy here that influences everything,” the 
former executive said.

Some other technology companies operate differently.

“We talk to a lot of outsiders,” said Gary Niekerk, director of 
corporate citizenship at Intel. “The world’s complex, and unless we’re 
dialoguing with outside groups, we miss a lot.”

Given Apple’s prominence and leadership in global manufacturing, if the 
company were to radically change its ways, it could overhaul how 
business is done. “Every company wants to be Apple,” said Sasha Lezhnev 
at the Enough Project, a group focused on corporate accountability. “If 
they committed to building a conflict-free iPhone, it would transform 
technology.”

But ultimately, say former Apple executives, there are few real outside 
pressures for change. Apple is one of the most admired brands. In a 
national survey conducted by The New York Times in November, 56 percent 
of respondents said they couldn’t think of anything negative about 
Apple. Fourteen percent said the worst thing about the company was that 
its products were too expensive. Just 2 percent mentioned overseas labor 
practices.

People like Ms. White of Harvard say that until consumers demand better 
conditions in overseas factories — as they did for companies like Nike 
and Gap, which today have overhauled conditions among suppliers — or 
regulators act, there is little impetus for radical change. Some Apple 
insiders agree.

“You can either manufacture in comfortable, worker-friendly factories, 
or you can reinvent the product every year, and make it better and 
faster and cheaper, which requires factories that seem harsh by American 
standards,” said a current Apple executive.

“And right now, customers care more about a new iPhone than working 
conditions in China.”

Gu Huini contributed research.
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