Overseas Factories: American Businesses Profit While Government Loses


Last week, Apple announced that it would be launching an environmental investigation in five of its most prominent factories in China, many of which are still recovering from the repercussions of nine suicides earlier this year.

Addressing these concerns may help maintain Apple's image as a conscientious company, but it also undermines the U.S. goals of making China a more reliable business partner. Days after President Barack Obama met with Chinese Party Premiere Wen Jiabao to discuss economic strategy on the sidelines of the East Asian summit in Indonesia, a bipartisan congressional committee unanimously signed off on a report that found China to be “a mercantilist and authoritarian state that is determined to appropriate not only U.S. jobs but also U.S. advanced technology through illegal subsidies, suppression of worker rights, and deals with U.S. industry.” Obama discussed with Wen Jiaobao allowing the RMB to appreciate, raising worker's wages, standardizing business practices, and lessening exploitation among factory workers. When American businesses neglect these shady practices, Chinese factories have no motivation to change their business practices, since they can continue to profit under the current system unencumbered.

Terry Gou, the president of Apple's main factory in China, has expressed his disinterest in opening a factory in America, citing his fear of lawyers and getting sued. His attitude suggests there would be no investigations of either the suicides or environmental concerns in his Chinese factories without pressure from Apple. 

It's a seemly great gesture for Apple to launch these kinds of investigations and project a conscientious image. China is Apple's top consumer, and where the majority of their products are manufactured, and both investigations were launched in response to controversy and from requests by Chinese human rights groups. It seems that they were launched to appease their top market and protect their business practices instead of out of genuine desire to improve factory conditions. Regardless of their motivations, Apple is the first company to launch these kind of investigations into factory conditions, though they aren't the only American company to mass produce in China.

Instead of focusing on individual companies taking accountability, there would be a larger, more uniform change to factory conditions if the Chinese government worked with the U.S. government to come up with a set of standards for the entire industry. Businesses working independently undermine U.S. goals and makes Chinese factories less likely to conform to these goals since they can make more money by conducting businesses individually and away from the government regulations. As consumers, we need to realize that businesses frequently work in ways to protect their financial interests, which has the potential to obstruct U.S. political relations.

Photo Credit: WordRidden