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     Mar 31, 2012

Apple deepens roots in China
By Martin J Young

HUA HIN - Apple boss Tim Cook and Chinese Vice Premier Li Keqiang met this week to resolve some issues the company's supplier has been linked to in China. Of greatest concern to leaders in Beijing is the treatment of the local labor force by contractors of the world's most valuable technology company.

Taiwanese company Foxconn, a supplier to Apple and other technology firms, has a poor record in China when it comes to rights and conditions in the workplace, and employee suicides are at an all-time high. Li called on multinationals operating in China to pay more attention to caring for workers.

Cook, who visited a Foxconn factories on Wednesday, said that Apple would strengthen comprehensive cooperation with the Chinese side and conduct business in a law-abiding and honest


manner. Later in the week, Li guaranteed the company intellectual property rights protection.

Foxconn produces the components for Apple's iPhone and iPad, which costs almost double an average month's salary in the factories and rakes in massive global profits for the company, recently propelling it above ExxonMobil to become the most valuable firm in the world by market capitalization.

Apple agreed to independent inspections of its Chinese manufacturing facilities last year and has just received results of a Fair Labor Association assessment at its factories. The FLA called for shorter working weeks, overtime cuts and pay increases at Apple manufacturing plants where it discovered "significant issues" with working conditions.

According to a survey by the group, more than 43% of 35,500 randomly selected employees said they had experienced or witnessed an accident, ranging from hand injuries to factory vehicle accidents. The month-long investigation also discovered over 60-hour working weeks and substandard salaries. A cost of living survey is to follow as 64% of employees surveyed said their incomes did not meet their basic needs.

Tim Cook visits iPhone production line at Foxconn factory this week. Photo: AFP

The company also faces a heated legal battle with a local firm over the iPad trademark which could result in a ban on sales of the popular tablet device within the country. A representative from Proview Technologies stated this week that it would continue to pursue lawsuits against Apple regardless of the recent schmoozing by the chief executive officer and Chinese politicians.

Apple's troubles do not end in China, with complaints about the new iPad piling up from other countries where disgruntled users discovered that the device does not work on certain 4G networks as advertised.

The problems have arisen due to different frequencies used in different countries for data networks, Apple's definition of "4G" is limited to those used in the US, specifically on its partnered carriers of AT&T and Verizon. Consumer protection groups in Australia and Sweden have issued complaints against Apple for misleading customers who purchased the new iPad under the impression it would work on their local 4G network.

This week, Apple agreed to offer a refund to consumers in Australia who were mislead by the iPad's labelling and advertising. In Sweden, which has widespread 4G coverage, the device does not work as it only uses the 700MHz and 2100MHz frequencies common in the US.

Consumers in Germany are also disgruntled with the new iPad as it is incompatible with its new 4G networks. Other countries have also been affected, but France, Spain and the United Kingdom are still waiting for Fourth Generation data networks to be rolled out. In Japan, consumers who purchase the new iPad are being told that it only works on 3G networks.

There have also been unrelated complaints about the much-hyped device driving up charges on wireless data plans and overheating.

China Telecom and Nokia launched the first CDMA Windows phone in the country this week. The Nokia 800C handset from the company's Lumia range hit the world's largest smart-phone market with hopes of battling rival devices from Apple and Google's Android. It will offer high-speed Internet connectivity on the country's leading 3G network and will be followed by a number of other models in Nokia's smart-phone lineup.

The company is wooing local technology businesses and entrepreneurs to develop apps for a market which it claims is up for grabs and Microsoft said this week that they will offer grants for Windows Phone app startups.

Nokia faces some stiff competition, Samsung Electronics - which is partnered with Google, runs on three major carriers in China and accounted for a dominating 24.3% market share in the fourth quarter. Nokia was second with 19.6% and Apple, despite all the hype, had a 7.5% market share, according to research firm Gartner Inc.

As many as 140 million smart-phones will be sold in China this year, an increase year-on-year of over 80%, which will accelerate the country past the US as the worldís largest smart-phone market.

If Microsoft and Nokia want digital dreams of success to become a reality they will need to heavily integrate the Windows operating system with Chinese social networking platforms for a uniquely local experience since many of the global sites - such as Twitter and Facebook - are regularly blocked by the country's "Great Firewall".

Martin J Young is an Asia Times Online correspondent based in Thailand.

(Copyright 2012 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)


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