Shanghai:
Under intense scrutiny after several suicides at its factories in southern China this year, Foxconn Technology, a major supplier to Apple, Dell and Hewlett-Packard, has decided to stop operating its own dormitories for workers.
On Friday, the company said that it was essentially outsourcing its living arrangements to two Chinese real estate companies. The firms will take over the operations of 153 dormitories that house half of its 420,000 workers in Shenzhen.
The decision is the first time one of China's biggest exporters has pledged to abandon what most manufacturers say is an integral part of China's factory model -- a system that depends on housing migrant workers near factories that specialize in low-cost, around-the-clock assembly line operations.
Some of the world's leading electronics brands are investigating the circumstances surrounding the spate of suicides at Foxconn, one of the world's largest contract electronics manufacturers. Many companies are pressing Foxconn to improve living and working conditions at its huge operations in Shenzhen.
Health experts say the suicide rate at Foxconn is not above the national average of 14 suicides per 100,000 people this year, but the 10 deaths were a sharp increase from each of the last few years, when there were only one or two suicides. Labor rights groups said they believed that Foxconn's military-style management system and the company's highly regimented and even abusive working conditions were contributing factors in the deaths.
A group of prominent Chinese sociologists released an open letter this month calling for China to "put an immediate end to a development model that sacrifices basic human dignity." The letter was written in response to the suicides at Foxconn.
Whether Foxconn is really abandoning worker dormitories, however, is unclear. Some analysts are skeptical that Foxconn, a division of the Hon Hai Group of Taiwan, can afford to surrender control of its dormitories. They say the company may simply be trying to evade responsibility for poor living conditions by outsourcing the dorms to other companies.
"That's the logic apparel companies relied on 15 years ago when they said 'it's not our manufacturing plant so it's not our problem' if working conditions are poor,' " said Pietra Rivoli, a professor of international business at Georgetown University and the author of "The Travels of a T-Shirt in the Global Economy."
"But it didn't work then," she said. "And I don't see how this is going to absolve Foxconn of responsibility in the eyes of most observers of the supply chain."
In the aftermath of the suicides, Foxconn has been forced to cope with a wave of bad publicity at home and overseas. Since then, the company has hired sociologists, psychiatrists and Buddhist monks to advise the company's managers and counsel its assembly line workers. The company has also announced three separate wage increases and promised radical reforms. The company's chairman promised to do everything possible to stop the suicides, and Foxconn even placed safety nets on tall buildings at its two Shenzhen campuses to prevent workers from taking their own lives.
In recent weeks, Foxconn executives have repeatedly said the company was ill equipped to manage such huge factory towns or the social lives of so many young migrant workers. Many of them are between the ages of 18 and 25 years old and have come from some of the country's poorest provinces.
In its announcement Friday, Foxconn went even further, saying it would give up its "college campus style" dormitory system in Shenzhen in the hope that outside management companies could better integrate its workers into the local community and relieve some of the pressures of factory life.
"Providing employees with basic necessities including a safe and convenient place to live at the work site might have been sufficient in the past," Terry Cheng, an executive vice president said in a statement released late Friday. "But this arrangement no longer satisfies the needs of the young migrant workers of today."
The decision is a sharp turnabout for Foxconn, which has an extensive one-square mile campus in Shenzhen with high-rise dormitories, restaurants, banks, recreational facilities and a hospital.
Professor Rivoli at Georgetown said she would be surprised to see factories in China move away from control over their factories because, despite poor conditions, it was considered a highly effective and efficient way to lower costs and meet export production controls.
"It's the command and control model that has been very effective for China," she said in a telephone interview Friday. "In this low-end, export-oriented assembly, there's this idea that between the company and the workers, there's this 24-hour relationship and that this is how things get done."