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It's Time to Rethink Chinese Tech Manufacturing: Page 2

Posted February 24, 2011
By

Mike Elgan

Mike Elgan


(Page 2 of 2)

While the central Chinese government has enormous control over the actions of individual Chinese people, it has far less control over powerful regional oligarchs, who straddle business and politics and run their own private fiefdoms with impunity. Some of these high-ranking party members either own businesses outright, or accept huge bribes from those who do own the factories to look the other way on zoning, environmental standards and labor practices.

And third, Chinese manufacturers are in a position where the best "solution" is not to solve anything, but do a better job lying about abuses and violations.

Pressure to adhere to environmental, safety and labor standards, while simultaneously offering the lowest possible prices, often motivates Chinese factories to innovate in the area of faking documents, lying to their clients and staging fake conditions to showcase to visiting inspectors. They believe it's the only way to win bidding wars for contracts, and they may be right.

Western companies monitor factories through official audits. These auditors request documents, such as billing records, accounting documents and various certifications that demonstrate chemicals used, salaries paid and compliance with environmental and safety regulations.

But in China, an enormous industry of consulting companies has arisen whose sole purpose is to help factories pass those audits by any means necessary. They bribe officials, make fake documents and generally do whatever it takes to convincingly lie to the auditors.

Why More Gadgets Should Be Built Outside China

The most amazing and inexplicable fact in all this is how everyone has become convinced that US factories can't and don't make things anymore, and that China manufactures everything. In reality, the United States is the world's top manufacturing country.

While Chinese manufacturing favors cheap gadgets, clothing, toys and other consumer items, US manufacturing is skewed toward higher value products, like airplanes and weapons. And there's no question that Chinese manufacturing has grown faster and is still growing faster than in other countries. But the idea that the country that manufactures more goods that any other can't manufacture goods is bizarre. It can be done. It will just cost a little more.

And there are many other potential manufacturing locations besides China and the US.

Why do companies offshore manufacturing to China? One reason is that labor is cheap. The average -- not the minimum, the average -- hourly wage in China is $1.36 per hour (in the United states, it's $32 per hour).

Another reason is that many Chinese manufacturing companies cheat and lie, facts clearly exposed in Apple's report.

The saddest part of this very sad story is that the factories audited by Apple represent the very best in Chinese manufacturing, and Apple itself is probably doing far more to address abuses than most other companies. The rest of the industry in China is characterized by abuses far worse.

Many of the devices covered by gadget blogs and lusted over by consumer electronics fans are incredibly cheap products sold on ecommerce sites like Alibaba (recently embroiled in a massive fraud scandal) or via catalogs like Brando.

These sites sell hundreds of thousands of no-name consumer electronics built using standards far below those at Foxconn.

Consumer electronics as cheap as these unbelievably cheap no-name gadgets made in China tend to be manufactured by factories that abuse workers, employ children, poison the environment and lie about it all.

The bottom line is that there's no such thing as a cheap gadget. We can either pay with a few extra dollars, or we can let impoverished youth in China pay with their lives, their health and their happiness.

Besides, cheap devices don't enable people to save money. Most people spend the same money as they otherwise would – but then buy more gadgets.

I think it's time we realize that we don't need more gadgets. We need more concern about where our phones, tablets and other consumer electronics come from.


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