Apple Inc. and Chinese Workforce Challenges

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Introduction

Apple is an American multinational corporation operating from California (“Apple Info” 8). The company was founded by three entrepreneurs. They include Steve Jobs, Steve Wozniak, and Ronald Wayne. The aim was to develop and sell personal computers. It was initially incorporated as Apple Computer Inc. However, it was later renamed as Apple Inc.

Today, the company produces and sells computer hardware and software, as well as other consumer electronics. Some of its most popular brands include the iPhone, iPad, iPod, and Mac desktops and notebooks. The products are of high quality and attractive to consumers. Apple also produces consumer software for its brands which includes the OS X and IOS operating systems, iTunes media player, Safari web browser, and the iLife and iWork creativity and productivity suites. As such, Apple Inc. is one of the most successful and healthy IT brands in the United States and beyond. It is a leader in the electronic industry (Mallin and Finkle 65).

The high quality of Apple’s products is attributed to the adoption of technology and emphasis on innovation in the company. The entity focuses on building a loyal customer base by fostering relationships with consumers. The company’s link with the consumers is so strong to the extent that people save money for years just to buy an Apple product (Mallin and Finkle 66).

In spite of the tremendous success experienced by the company, the company faces many problems that threaten its profitability. With the increasing complexity of business in the industry, Apple problems range from policy and regulations to technological and information overload. In this paper, the author takes an in-depth look at one of the major challenges facing Apple in China with the aim of offering a new solution to the problem.

Apple Inc. in China

Apple manages its businesses primarily on a geographical basis. According to the company, its reportable operating segments are generally based on the nature and the location of its customers. America forms Apple’s largest geographical market segment. It accounts for 36.75 percent of the total revenue collected by the company (Mallin and Finkle 65).

Traditionally, China is also a large consumer of Apple’s products. However, with the recent economic crisis in the region, the growth of this company in this market has gone down from 48.61% in 2011 to 30.76% in 2012 (“Apple Info” 2). In spite of this, the continent remains the second-largest geographical segment for Apple. It accounts for 23.1% of the total revenue (“Apple Info” 9). The Greater China segment includes China, Hong Kong, and Taiwan. With regards to the smartphone, China and Asia form the largest market in the world.

To this end, 26.5% of these gadgets are sold in the region (“Apple Info” 8). In China, Apple’s tablets control 79% of the market share (“Apple Info” 7). The fact is reassuring to potential investors given that the tablet market in China is expected to expand in the coming years. The company has contracts with the second and third largest mobile couriers in China. It is also believed that Apple is trying to reach out to China Mobile, the largest telecommunications company in the country as a marketing strategy (“Apple Info” 7).

It is important to note that China not only provides a large customer base for apple products but also plays host to the company’s major manufacturing plants (“Apple Info” 4). They are mainly located there because most of the components on the iPhones and iPads are manufactured in the country. Assembling the phones in the United States would hence cause huge logistical challenges in shipping. It would also impact negatively on the ability of the company to change suppliers (“Apple Info” 4). Chinese plants are also larger and more flexible compared to those in the US. As such, they can hire and personnel with ease. The country also has a large supply of qualified engineers than those found in the United States. Labor in this Asian economy is also cheaper and more willing to work (Lashinsky 12).

Challenges Facing Apple Inc. in China

The company’s expansion into China has created billions in profits. However, the company has also faced numerous new challenges as a result of its expansion into the country. Some of the issues have greatly threatened the company’s growth and image (O’Grady 129). The company also exposed itself to new external factors that it would not directly face in the United States. For instance, the company was exposed to recurrent labor problems in China. The problems are associated with society’s desire to maintain the status quo.

Outsourcing factors work on very thin margins. The major reason is that the aim of most high tech is to maximize their profits. As such, they try to cut back on labor costs (“Apple Info” 3). Firms from the Western nations are unable to decipher the operations of their business partners. It is mainly because labor legislations in the US dissuade firms from regulating outsourced subsidiaries. Such regulations would make them joint employers and increase the risks of legal suits (O’Grady 34). In the China segment, Apple has particularly to deal with the low morale of its foreign staff.

Low Morale of Workers in Apple Inc., China

May et al. provide a working definition of morale among employees (77). It is regarded as the emotions and attitudes of workers towards their employer and the work in general (May et al. 56). The level of morale among the workforce informs their productivity. For example, workers who are contented with their work have high levels of self-esteem. On their part, firms with a workforce that is dissatisfied with their work have low levels of morale (May et al. 288). The contemporary labor market is undergoing major transformations.

Consequently, managers must learn to handle their employees differently. A number of strategies can be adopted to boost morale among employees. One of them includes increased flexibility and innovativeness among the leaders. Employees who lack motivation are less efficient. In addition, they are more likely to skip work compared to their motivated counterparts. As a result, firms incur huge losses as a result of such a labor force. Keeping employee morale high is hence of great importance in maintaining a highly productive and loyal workforce.

As seen earlier, Apple is largely affected by low employee morale. However, it is important to note that only the China segment of the company is affected. Most of these employees feel undervalued by the company and attend to their duties only because they have to. The employees in China have been known to drag themselves to work and positive indicators such as laughter is a vague fantasy for them (Chan, Pun, and Selden 115). The employees increase the profit margin of the firm. However, their low morale leads to reduced productivity and increased turnover. As a result, Apple Inc. is unable to attain its goals in the Chinese segment.

Causes of Low Morale at Apple Inc., China

Researchers have often attributed low morale to poor management practices. However, this has not always been the case. It was especially important to note that Apple’s workers in the United States are reported to have the most positive and dedicated employees with high morale while their counterparts in China score the lowest morale in the industry (Chan, Pun and Selden 115). In the section, the author explores some of the factors that have led to such inconsistencies in Apple Inc.

Inhumane Labor Practices

Apple Inc. has often faced heavy criticism for the poor working conditions at its contracted manufacturing plants in China (Lashinsky 23). In 2006, the mail alleged that sweatshop conditions existed in factories in China. It was especially in areas where Foxconn and Investec operate. The companies are contracted to produce the iPod for Apple Inc. According to the article, Foxconn employed over 200,000 workers who worked and lived in the factory and regularly performed more than 60 hours of labor per week. The workers were paid a mere $100 per month (Mallin and Finkle 73). In addition, they were accommodated within the establishments. The management charged them for rent and food. The employees used more than 50 percent of their salaries on living expenses. After the story came to light, Apple worked on improving the working conditions.

However, this was only done on paper. It is mainly because, in 2010, workers in China planned to sue iPhone contractors over poisoning from a cleaner used to clean LCD screens (Mallin and Finkle 72). The employees were not informed that they were likely to fall sick. In a later investigation by BBC in 2014, it was proven that Apple’s contractors in China still imposed excessive working hours on their employees, and other problems still persisted. Apple heavily disagreed with BBC report that conditions hadn’t improved since the Foxconn suicides of 2010. Apple claimed that the company was working hard to improve the conditions of their employees (Chan, Pun, and Selden 110). Such inhumane conditions have greatly affected the employee’s morale since the employees feel used by the company as only a means to an end. The long working hours prevent the employees from being able to pursue other talents and duties.

Unhealthy Working Conditions

Some of the employees working inside Apple’s plants in China spoke out on the unhealthy working conditions in the company when interviewed by BBC. The clip showed how employees producing some of the iconic products of the firm work under deplorable conditions (Chan, Pun, and Selden 112). However, Apple claimed that suppliers in China had improperly disposed of hazardous waste and falsified records. In 2010, more than 40 employees were poisoned at the Lianjian establishment. They had been exposed to poisonous chemical hexane (Mallin and Finkle 65). It is used by the company to wipe clean the iPad display screens and speed up efficiency.

To reduce costs, the contracted company had failed to provide proper aeration during the cleaning procedure. Another report by an independent labor union in China claimed that workers in one of Apple’s contracted company lived in overcrowded dormitories lined with the mound and crawling with bedbugs (Chan, Pun, and Selden 112). The company was also reported to use hazardous substances such as mercury and arsenic yet no one informed the employees of the location of these substances in the production chain. Such conditions have led to low morale among the workers since the working conditions are inhumane. Employees who fall sick constantly as a result of poisoning lose their positive attitude towards their jobs leading to even suicides as was seen in the suicides of 2010 at Foxconn (Chan, Pun and Selden 112).

Lack of Open Communication

Communication and morale among employees are closely related. For example, the lack of open lines of communication between the employer and the workforce leads to reduced productivity (Chan, Pun, and Selden 106). The reason is that most workers have ideas and suggestions that can be used to improve the operations and products of the firm. In Apple, all decisions affecting the company’s segments are made from the headquarters in the United States (May et al. 83). The local subsidiaries in China are not consulted even with regard to problems that directly affect them.

As such, there is a low perceived organizational support among Chinese employees. They feel that the firm disregards their contributions and opinions. It is a great failure on the part of Apple. It is mainly because the workers in the contracted companies have a better experience with the components of the device and can offer the best design and architecture improvement ideas (Chan, Pun and Selden 112). Lack of communication access with the management makes the workers feel neglected and used. They lack the incentive to put in more effort into their jobs than they are paid for. As such, Apple risks missing out on innovative ideas. In addition, discontentment among employees increases.

Wasted Potential

According to Mallin and Finkle, there are several causes of low morale among employees (68). One of them is the wastage of talent (Mallin and Finkle 67). Many people apply for jobs at Apple’s contracted companies with the hope of working and helping grow the leading company in the electronics industry. However, they are discouraged when they feel that they are overqualified for the tasks given to them. In addition, failing to establish a link between skill sets and job requirements may also lead to reduced morale.

When this occurs, boredom sets in. The workers start planning on how to exit the firm (Chan, Pun, and Selden 114). Such employees who would have ultimately helped in making the products better and less faulty end up leaving the organization with their innovations. Most workers expect to progress within the firm. They may desire for more challenging tasks. Apple Inc. in China is unable to offer this. Overworking the employees kills the urge for new tasks. The failure to capitalize on the talent of the workforce leads to reduced morale.

Poor Leadership

Apple Inc. earned about $40 billion in profits in 2015 (“Apple Info” 5). Its final quarter in that year, during which the company pulled in $18 billion, was the most lucrative quarter in the history of mankind. The company was predicted to earn over $50 billion in its next financial year (“Apple Info” 5). Mr. Tim Cook, the current CEO of the company, has steered the firm to new heights of success.

As such, many people regard him as a good leader. However, a critical analysis of the situation in the organization reveals that this may not be the case. The reason is that the reported low levels of morale among the workforce mean that the management has failed to address the underlying causes. It might be as a result of his management style or pure ignorance. Additionally, the causes of poor morale in China have persisted over many years with no real changes in sight (Lashinsky 12).

Effects of Lack of Morale on Apple Inc., China

As seen earlier, when employee morale is high, productivity rises and when low productivity falls and it’s particularly harder to maintain talent. Lack of morale in Apple’s China segment has however had a more rampant effect on the company as seen below.

Selling of Product Information to other Companies

Apple Inc. was involved in a legal tussle that lasted for more than 12 months. However, the ruling made by the Federal Appeals Court favored the firm. Samsung was prohibited from cloning certain features of the iPhone (Lashinsky 52). Samsung was ordered to make adjustments to some of its products. For example, the company was told to remove the autocorrect feature in its products (“Apple Info” 10). It is not the only time that Apple’s products have been heavily copied. In 2014 during the release of the iPhone 6, an emerging Chinese smartphone maker Digione claimed that Apple’s iPhone 6 and 6 Plus copied the design of its own smartphone line (“Apple Info” 10).

The device is sold under the giant’s brand in China. It is regarded as a low-end phone. The company apparently filed the patents earlier than Apple. While the company’s complaint may be genuine, many people believe that the patents of the iPhone 6 may have been leaked by the workers at the processing sites hence allowing the company to file the same patent application as Apple. Xiaomi is also a startup company that is heavily inspired by Apple’s product design. In 2015, the company made more sales than tech giants such as Samsung and Apple in China (Chan, Pun, and Selden 112). Dissatisfied employees are often involved in the selling of such information that allows product copying. Overworked workers with low morale are not loyal to their employers and hence easily sell important information to competitors without an ounce of guilt.

Constant Lawsuits

Apple has found itself at the center of endless lawsuits over the past few years. In 2010, Chinese employees were making arrangements to take iPhone contractors to court. Their major concerns included poisoning from a product used to wipe LCD screens. Some of the workers even claimed that they were not informed of the possible occupational hazards they faced in working in the plant (Chan, Pun, and Selden 112). While this was a justified lawsuit and did not necessarily result from low morale, it has been proven that employees with higher morale seek to solve their disputes internally. It has also been proven that employees with low morale are more motivated to sue their employers than satisfied workers (O’Grady 246). When Apple was sued over patent lights of the iPhone 6 by Diogenes, the company is said to have suspected that the product was leaked to the company by one who its employers. Such acts of disloyalty result from employees with poor morale levels.

The solution to the Low Morale in Apple Inc., China

Improved Working Conditions

As is evident above, low morale can do more harm than good to a company (O’Grady 246). As such, Apple Inc. needs to boost the morale of the employees as soon as possible. First and foremost, we suggest that the company should dedicate a significant amount of its profits to bettering the working and living conditions of its employees. It is mainly because as seen earlier, the low morale among the workers in this segment is caused by the poor working conditions in which they work. Apple’s approach to production should not be guided by capital gains. On the contrary, the process should be informed by the need to come up with quality products using a small but highly qualified and satisfied workforce.

Research has shown that a qualified and highly motivated workforce can produce better results and products in the same amount of period that a larger but lowly motivated workforce would take (May et al. 246). Additionally, since its employees in the contracted companies live within the premises, they should be provided with better housing conditions hence allowing them sufficient rest.

Better Labor Practices

The company should renegotiate the number of hours worked by its employees in a single day to acceptable levels. Workers in some of the companies such as Pegatron on the outskirts of Shanghai work for up to 16 hours a day (O’Grady 129). Some of the workers have also claimed to have worked over 18 days in a row despite repeated requests for a day off. It is my suggestion that Apple should draft its own set of standards spelling out how factory workers should be treated and the acceptable labor practices they should be subject to.

The company should also ensure that quality concerns are addressed by putting in place strict rules that are to be followed by manufacturers during the production phase. If a given stakeholder fails to adhere to any of the principles, the company may decide to terminate its engagement with the producer. Such practices will ensure the workers work under acceptable conditions. With better working hours, the morale of the employees will be raised as they will feel appreciated and respected by the company.

Awarding Loyal Employees

The company can use this strategy. Workers need to feel appreciated for their contributions to the firm (“Apple Info” 2). In spite of Apple being headquartered in the United States, the company should ensure that it meets its employees once in a while and reward extraordinary employees. For instance a simple thank you delivered in person by the company’s CEO can go a long way in raising the morale of the employees. The productivity of the firm is likely to rise even higher. Consequently, Apple Inc. can record more profits in the Asian markets.

Conclusion

Apple Inc. is one of the most successful companies in the electronic industry. While the United States segment of the company gets most of the credit for the company’s success, it’s evident that the largest contributors in the manufacturing industries in China are hardly recognized. Their morale is greatly lowered since as a result of the neglect they are forced to work in inhumane labor conditions and dangerous and unhealthy situations. It is clear how low morale in an organization can lead to huge losses both directly and indirectly. However, the analysis of the company’s segment in China reveals that most of this problem resulting in low morale can be remedied.

Works Cited

Apple Info 2016.

Chan, Jenny, Ngai Pun, and Mark Selden. “The Politics of Global Production: Apple, Foxconn and China’s New Working Class.” New Technology, Work and Employment 28.2 (2013): 100-115. Print.

Lashinsky, Adam. Inside Apple: How America’s Most Admired-and Secretive- Company Really Works, New York: Business Plus, 2012. Print.

Mallin, Michael, and Todd Finkle. “Apple Inc.: Product Portfolio Analysis.” Journal of the International Academy for Case Studies 17.7 (2011): 63-74. Print.

May, Kyle, Julia Hout, Jacob Reidel, Human Wu, Archie Coates and Jeffrey Franklin. Apple. 4th ed. 2012. Brooklyn, New York: CLOG. Print.

O’Grady, Jason. Apple Inc.: Corporations that Changed the World, Westport, Conn.: Greenwood Press, 2008. Print.

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