Foxconn sues two Chinese journalists over iPod city story

You're a huge business worried about your recently tarnished image -- what's the first thing you do? If you answered sue the hell out of the journalists who reported possible sweatshop labor tactics going down in your factories, congratulations, you might be prepared for a fast-paced career at Foxconn, proprietor of iPod city! We don't normally like to get all meta on you guys, but not only did Foxconn attempt to sue for US $3.77 million Wang You and Weng Bao, the journalist and editor at China Business News that published the iPod City story, the company went so far as to have the Chinese courts freeze their assets, locking them out of their cars and homes -- you know, a totally appropriate reaction to the journalistic community for trying to expose corporate malfeasance. (Did we tell you Microsoft hired a lone sniper to take us out after FairUse4WM?) So our hats go off to you Foxconn, for setting the bar so very high for moral business practices and fair treatment of others; now more than ever we're totally convinced that you're totally and completely innocent of all charges leveled against you by the press.

[Via iLounge]

[Bob @ Aug 29th 2006 12:15PM]

redic.

[Surg @ Aug 29th 2006 12:23PM]

That's weird...

[Poopmaster @ Aug 29th 2006 12:42PM]

This is China, guys. Communist government, remember? Just because FoxConn sues some journalists doesn't mean that they can freeze their assets -- that doesn't follow. The ChiComm gov't froze their assets. Realistically you'd think there would be some upper bounds to defamation charges, but who knows how China's court system works?

[Zo @ Aug 29th 2006 12:49PM]

Apple fanatics typically espouse themselves as being ethically, morally, stylistically, intellectually and generally -- financially superior to others.

Where are the Apple fanatics who are boycotting iPods, iTunes and Macs until Apple does something to fix this situation?

Oh, what is that I hear....beep...beep...beep...beep

Backing up are we?

[Jake @ Aug 29th 2006 12:50PM]

I've already sent emails to Newegg and Zipzoomfly asking them to stop selling Foxconn products. This is blatant strong-arm, David-vs-Goliath, and I'm encouraging Newegg et al that they don't want to be on the wrong side.

Work? Prolly not, but its worth a shot. I can say I tried to do the right thing, even if they aren't willing to.

[vinay @ Aug 29th 2006 1:10PM]

you know the ipod is probably just the tip of the iceburg, it makes you wonder what walmart has going on down there

[Bob Smith @ Aug 29th 2006 1:35PM]

Personally, I don't see what the problem is. If FoxConn believes that what the journalists printed was intentionally/recklessly false, then I think it is entirely appropriate to sue for damages, and an asset freeze can be perfectly legitimate in this situation. I certainly don't see this as a David and Goliath situation...individuals have always had the ability to cause massive financial damage to large corporations (for example, the Wendys finger-in-chili woman). Now, whether FoxConn can prove intentional falsehoods is another matter.

[crackpipe @ Aug 29th 2006 1:45PM]

Guys. Read the "real" article before making assumptions>

"Foxconn's subsidiary in Shenzhen reportedly petitioned the city's Intermediate People's Court on July 10 to freeze the property of Wang You, a reporter for China Business News, and Weng Bao, an editor at the newspaper. The locked-up assets include apartments, a car and bank accounts."

"The lawsuit charges that a story written by Wang tarnished the company's reputation.

Wang's June 15 report claimed that most employees in Foxconn's Shenzhen factory worked more than 12 hours a day and earned only about 1,000 yuan a month. They also had to stand for long hours at their jobs and were not allowed to talk to others, the report alleged."

Uh find a factory in China where this isn't true.

[bongo @ Aug 29th 2006 1:55PM]

Well if their assets are frozen, how can they be expected to hire an attorney (if they are even allowed to in that country) to defend themselves? Seems pretty strong-army to me.

[fix what situation @ Aug 29th 2006 2:10PM]

Until Apple fixes what situation? I guess you didn't read the reports?

As to Foxconn, if someone reports false information about your company that could materially damage your business, I can see why you would consider sueing. I can also see that you might want to not take the option of suing and instead let it blow over. But it's really up to Foxconn.

Vinay, Wal-Mart doesn't own any factories in China any more than Apple does. Wal-Mart buys from contract manufacturers, just as Apple does. And Wal-Mart is less tied to theirs than Apple even, because they don't even design the stuff that is made in China, they just buy it.

That's a very informative trade union link. A trade union that has never been to the plant nor spoken to any of the employees says the conditions at the plant are unacceptable. That's very helpful.

[badnegro @ Aug 29th 2006 2:45PM]

@Ken

You're out of your farking mind if you think the Chinese government is some kind of shrinking violet. Dolt.

Jesuslord is anyone out there really that dumb?..

[John @ Aug 29th 2006 3:10PM]

haha, the reporters name is "Wang You"

[DZ @ Aug 29th 2006 4:39PM]

With a name like John, you shouldn't be laughing too hard.

[Ken @ Aug 29th 2006 4:57PM]

Funny, but Apple *has* been doing something about this. They hired Verité to go in and audit Foxconn's factories and begin to deal with this. I've worked with Verité in the past, and they are a nonprofit that's quite dedicated to improving labor standards - especially in China. And a few notes to Poopmaster: the "ChiComm gov't" has far less power in the face of wealthy corporations than you would believe. Times are changing. Next time you say "Communist government, remember?" it's possible that people won't remember that at all.

[K_G @ Aug 29th 2006 5:47PM]

Bob Smith..Using your example, Wendys would have been OK to sue every media outlet that mentioned that finger in chili story and seize their assets prior to trial. Now, Foxconn definitely has the right to sue but to seize assets and make the reporters homeless and remove their ability to earn an income is punishment prior to trial...and this is only a civil suit as well. Since Foxconn seems to be mostly a contract supplier, it is hard to see exactly what damage has been done to their reputation...Have they lost customers from this..or did they gain some..."you guys are total bastards right?...Great, then you must be the cheapest!'...

I was neutral about this before (siding that with "this probably happens in most Chinese factories" camp), but this clearly show to me that Foxconn is a bad organization and I'm writing Apple to tell them they aren't getting any more of my cash until I hear that they have dropped Foxconn as supplier.

[Nick @ Aug 29th 2006 6:21PM]

I find it unbelievable that most commenters here think that FoxConn is bullying the writers. The writers fabricated a story and they deserve to be punished in some way. Instead, you folks are ragging on Apple and FoxConn. What a strange sense of justice you have.

[Bob Smith @ Aug 29th 2006 6:34PM]

@K_G

You entirely misunderstood my example. My point was simply that individuals can inflict harm on large corporations, and that there is no David v. Goliath here. You also seemed to misunderstand the bit about INTENTIONAL FALSEHOODS. Organizations that report news in good faith are not generally subject to defamation suits.

Regarding your comment about damages, given the amount of bad publicity Apple has received regarding this fiasco, I strongly suspect that Foxconn may lose at least a few potential contracts from companies seeking to avoid being tarred with the same brush.

Finally, asset freezes are regularly used in many situations in the US (and other countries), and are not generally considered punishment prior to trial. Rather they are a means to ensure that the defendant doesn't hide/make off with assets the plaintiff needs for compensation. If you want to protest asset freezes generally, you might want to start with legal systems that are a bit closer to home than China...

[workin in china is alot of fun @ Aug 29th 2006 9:51PM]

Jake: There will be very little chance Newegg will stop selling Foxconn products. FYI, Newegg is a Taiwanese owned company with businesses in Shanghai, Taiwan, as well as the US. As many of you have read in most reports, Foxconn is part of a Taiwan-based IT manufacturer called Hon Hai Precision Industry Co. If you do a bit more digging, you will find out that Hon Hai Precision is owned by a rich and most likely influential person in Taiwan.

To make a long explanation short or else this will be extremely off-topic. Big Taiwanese companies are very influential on the mainland. They offer many kick-backs to local officials and help drive the local economy. Just like if one of Dick Cheney's subsidaries got into some legal trouble, he'd probably get the backing of the supreme court. heh. who knows. but you get my point. money = power. they would sue your pet gold fish if they wanted to. they would sue your aunt's brothers' cousins' step-sons' wifes' legally blinded and mildly retarded half sister.

[Jeff Lewis @ Aug 29th 2006 9:55PM]

Well, except that in this case, there's already a prior case where FoxConn tried to use this same tactic to shut down the press and failed, and even in the report that Apple received after it requested an investigation after the Daily Mail (Britain) published a similar story four days before the China Business News article, the result was 'more or less in compliance with the code - but some violations were noted'. So they were hardly found to be 'squeaky clean' - most likely they were as close to the edge of the code as they could legally be.

The question that begs is 'whose code'?

If slum level work conditions are acceptable in China, that doesn't make it acceptable for Western consumers. One of the few powers the consumer has - if not the ONLY power they have - is the right to vote with their pocketbooks - but they can only do that when informed of the situations over which they might take exception.

That - in theory - is what the press is for - and why in the west, we grant the press with extra immunity that the average person does not get. Like protection against libel in cases where there's uncertainty.

Of course, this is China - so the rules will be different - but hey, if you want to tell the world how to run its human rights practices, it's probably a bad idea to turn around and buy things from people engaging in violations of those practices just because you want a cheap iPod...

Oh wait - you're not even getting a cheap iPod.

Now THERE'S the rub...

[Youyou @ Aug 29th 2006 11:40PM]

hahaha, guys, i am from Shenzhen,china. there are maybe 6,000,000 workers in Shenzhen like those in foxconn. most of them won't complain and they are ok with it. $50 a month is already enough for them. why do you think people will call china "world factory"? without the cheap labor, you american's life might be tougher than you think. $200 for a LCD monitor? I don't think so~

[Vanilla Spice @ Aug 30th 2006 1:02AM]

Thank you, Bob Smith, for your clarity, impartiality and understanding of the issues involved. Perhaps if someone at Engadget had your nous, they wouldn't have published a piece filled with so much misplaced proactivism and unwarranted condemnation.

[K_G @ Aug 30th 2006 2:30AM]

Yes, Bob, I’m aware that asset freezes are not uncommon in western countries, but many of those western countries also have somewhat balanced legal systems and usually some form of protection for the press. My suspicious that a country that is communist dictatorship, the odds that the legal system is balanced are, umm, not so good. When a company goes after assets of individuals in the press when there is no clear indication of any damage as of yet, in my opinion, is repressive. Foxconn could lose contracts for any number of reasons, and if it is because of the bad PR, well too bad for them. If they wanted guaranteed security, they should have written it into their contracts. If Foxconn wants to sue the daylights out of the reporter’s newspaper, fine…I’m sure they can have a fine talk about who can out bribe/out threaten the other, but going after the reporters is just an attempt to silence the already strongly muzzled Chinese press. But sometimes it doesn’t pay to sue, especially when you do commodity work and service western firms vulnerable to the fickle public opinion of westerners. Personally, I wasn’t put off by the initial reports (if Chinese workers want to work that way, I’m not going to say they can’t) but I’m not going to give Apple money which in turn will be used by Foxconn to attempt to silence the press further in China.

[yea christian america comes to the rescue! @ Aug 30th 2006 2:51AM]

Like youyou says there's a reason why people work there. Foxconn is known for paying double even triple the job market rate. To recruit and keep the best people. On top of that bonuses and stock options. Which is why people put up with Foxconn's military style management. Otherwise there's plenty of companies in china to switch to.

As for disapproving of a companies practices try reading the label of any of your home products. Not just Ipod, there are no more computers being produced in the US. Not by US companies at least. If you read a label and it says Assembled in USA that's exactly what it is "Assemebled" in the US. Which means some foreign company made the parts shipped them over and then assembled that product. Now Made in USA means likely that some foreign company "Made" the product in the US. Which almost 99.99999% of all electronic products are not made in US. Even the US Government only stands by the "Assembled" in USA label.
By a business stand point it makes perfect sense. If I have to pay $1180 dollars to make one laptop to sell for $1200. Then one day some guy comes along and says to me hey I can make the same laptop for you assuming all the risk of overhead, of inventory fluctuation, of employees and their training, of plant sites. And I can make the same laptop for only $1000. What do you think the companies will do? That's basically all these big name brand companies are marketing companies. Some not even that simply holding companies. Why do you think a T-shirt with the label Armani costs $100. Is it made out of some super material that is suddenly so superior from the same material that we have been using for the last 7000 years for linen, 5000 years for silk, cotton, and wool? Where are they made? India? Indonesia? Maylasia? Pakistan? These are certainly countries that are shining examples of worker equality.

You want to know why it is so? You want to know how to fix it? Dont buy it. Dont want it. All these companies all these name brands are driven by america and western societies idea of happiness. I want it, I need it, Here! More! Fast! I want my music to download from 20 different people from 20 different places faster than a snap of my fingers! Ha! I want my laptop to be super fast, hold more pictures, play more songs be super light, super strong, last a long time, and cost real cheap. I want to be able to talk to anyone with a phone number from anywhere in the world at anytime. I want my wheat grem herbal tea to taste great, be organic, cost cheap, and right away! Doesn't matter what it is and where you get it from as long as you want it. People will think of a way to make it as cheap as possible. That's the democratic capalitic way. God Bless America! :/