I do not believe the credibility of this article. It would be out of character for a self-respecting Chinese businessman to allow such meddling. People here in the West might think that Chinese business leaders are like the peons of some banana republic. But this is far from reality if you ever interacted more intimately with Chinese business people.
I never heard of a company allowing even a partner, to meddle in the manner described. If ever there was any concession on the Chinese part, to save fact, what could have happened would be a renegotiation of the contract to allow such changes in wages.
However, it is highly unlikely because companies, like Foxconn has manufacturing contract business with other Western companies. There would be unrest in China, which is not unheard of these days, if there is such a disparity in wages within the same company.
Originally Posted by BenRoethig
How about they just forget these slavelabor foreign partners and start building their products stateside again? They'd have tighter controls on their products and score some good P.R.
Labor is about 40-70% of cost. It can even be higher in certain settings. Let's just grab numbers out of thin air.
If labor in China may be around $2; at 10h/d; 6days a week and 50 weeks per year, that is around US$6000, more than twice the estimated average annual income of a person in China. No health insurance, no liability insurance (workmen's compensation), etc.
Just consider $8/h minimum wage [When Republicans had their way, with the support of many business lobby groups, they were successful in ensuring that the minimum wage was lower than this in 2007***]. However, even with $8/h, at 8h/d; 5days a week and 50 weeks per year, that is $16000 per year before taxes, before health insurance, before SS deductions. This will be still poverty level in the US. That is why many family breadearners work two jobs and weekends just to make ends meet.
Many states like CA, especially in unionized settings. have minimum wage much higher than the above,
Do the math. More than likely at $8/h, the labor cost alone will more than wipe out the profit of Apple.
In the ;ate 1980s, the cost of Apple computers even before adjusting for inflation cost more than the basic MacBook Pro. I paid $1500 for my first Mac "classic" in 1988 and paid $5000 for my 200MB Mac in 1994. I think even at the time, Apple already started manufacturing in other countries.
Aside from the astounding progress in technology, the basic MacBook Pro, is a fraction of the first Mac, after inflation adjustment, primarily because manufacturing is done abroad. And, yet many consider Macs to be overpriced.
We consumers demand $200-400 computers, and consider Apple products overpriced -- that is the main problem.
Even if Apple gains a temporary PR, if it is possible to bring back manufacturing in the US, imagine mass media (and Apple haters) delight once the first union strike happens.
It is unlikely that your wishis going to happen in our lifetime, especially in a global economy -- unless the trade among nations change and consumers will be willing to pay higher prices for their gadgets, to have decent wages in the US.
Any lower minimum wage levels previously set by U.S. state legislatures will be superseded by the new federal law that boosts the minimum wage from $5.15 to $7.25 per hour.
The wage raise will happen gradually, being completed in two years. "Within 60 days, those who make $5.15 an hour will receive $5.85. Within a year, it will be $6.55. Within two years, it will be $7.25" according to Monique Newton of MyrtleBeachOnline.