Labour report alleges violations by China iPhone supplier

Apple and its supplier Foxconn admitted they have been using too many temporary workers to staff an iPhone factory in central China, as a labour rights group accused them Monday of a number of workers rights violations.

China Labor Watch said it had its investigators working inside the factory in the central Chinese city of Zhengzhou -- which makes around half of the iPhones produced worldwide -- assessing working conditions inside the plant run by the Taiwanese electronics company Foxconn.

The CLW report claims the Zhengzhou Foxconn factory is trying to save money by hiring "dispatch" or temporary workers, hired mostly in peak seasons and offered bonuses as an incentive, and who they don't have to pay compensation to when their contract ends.

But the US-based rights group CLW says many workers were "cheated out of their bonuses".

In August 2019 as many as half of the workforce were dispatch workers, says CLW, which exceeds the legal maximum in China of 10 percent.

CLW also claims a large number of high school students are working at Zhengzhou Foxconn, with working conditions the same as regular workers, including hours of overtime.

"Apple and Foxconn know that the issue with dispatch workers is in violation of labour laws, but because it is profitable to hire dispatch workers, they haven't addressed the issue," said Li Qiang, executive director of China Labor Watch.

However, US tech giant and iPhone creator Apple said it had looked into the claims made in the report and found "most of the allegations are false".

"We have confirmed all workers are being compensated appropriately, including any overtime wages and bonuses, all overtime work was voluntary and there was no evidence of forced labour," Apple said in a statement.

"We did find during our investigation that the percentage of dispatch workers exceeded our standards and we are working closely with Foxconn to resolve this issue."

In a separate statement Foxconn said a review of operations in Zhengzhou had identified "some workforce compliance issues", which it was addressing.

Foxconn said it had found that the number of temporary workers was "not consistent with company guidelines."

"At no time did we find any evidence of forced labour and we can confirm that this facility currently has no interns working overtime," the statement said.

The CLW report also says "verbal abuse is fairly common at the production site", claims the report, which also says that while workplace injuries are rare, managers will "often trick workers into hiding the truth" when accidents do happen.

Zhengzhou, the capital of Henan province, is a major source of factory labour in China and has been a Foxconn manufacturing hub for years.

Foxconn employs more than one million workers in China and is the largest private employer in the country where cheap labour helped fuel the company's meteoric rise.

It came under the spotlight several years ago following allegations of employee suicides, labour unrest and the use of underage interns at its factories.

In August Foxconn admitted it had found cases of employed Chinese high school students in illegal overtime work making the Amazon Alexa devices at its factory in the southern city of Hengyang.

New iPhones to share limelight as Apple revs up services
San Francisco (AFP) Sept 10, 2019 - Along with its new iPhones, Apple is stepping up on content and services for its devices for its big media event Tuesday.

Apple was expected to introduce three upgraded iPhones and a successor to its more affordable iPhone XR as it looks to hold its share of the premium smartphone market where prices are hovering around $1,000.

But services, subscriptions and online content will likely share the stage with the company's glitzy hardware as Apple seeks to shift its focus away from a smartphone market which is showing little growth.

"I think it is going to be the first year the event is going to also be about services," Creative Strategies analyst Carolina Milanesi said.

"We might get to see what Apple looks like as a company when they are talking about services and hardware as one product."

Richard Windsor of research firm Radio Free Mobile said Apple is coasting on the iPhone because of its strong quality but is not likely to see strong growth from either hardware or services.

"There is not much upside because services revenue will take years to reach a scale where it can really move the needle company-wide," Windsor said.

"Unfortunately, the market wants fireworks from Apple on cue every year meaning that no growth will dampen share price performance."

- TV+ turned on? -

Apple recently released a smartphone-generation credit card in the US and is keen to launch its TV+ streaming service before Disney goes live with a rival service in November.

They unveiled streaming video plans along with news and game subscription offerings as part of an effort to shift its focus to digital content and services to break free of its reliance on iPhone sales.

The company also plans to launch a new game subscription service called Apple Arcade by the end of this year.

Apple managed to grow its overall revenues, albeit by a modest one percent, to $53.8 billion, even as iPhone revenues plunged nearly 12 percent in the April-June period.

The company delivered strong growth from digital content and services that include its Apple Pay and Apple Music, along with wearables and accessories like the Apple Watch and Air Pods.

Some of those accessories could also get upgrades on Tuesday.

- China wild card -

Analysts warn that Apple still faces challenges as rivals chip away at the smartphone market, in which the iPhone's share is less than 12 percent.

As the iPhone maker refines its handsets, other makers are pushing into new areas such as 5G devices and folding smartphones.

Wedbush Securities analyst Dan Ives said in a note to investors that he expected a "trifecta of iPhone 11s" that will help the company "put a fence around" its user base.

About a third of the 900 million iPhone users around the world are in an upgrade "window," meaning a strong potential for handset sales, according to Ives.

"While China remains a wild card, we are bullish into Apple's future" in the coming year, Ives said.

International Data Corporation (IDC) forecast that this will remain a challenging year for iPhone sales, mostly due to a mature market and lack of handsets tailored for budding 5G telecom networks.

IDC expected Apple to hit the market with 5G iPhones next year, and have an edge due to a better understanding of the market.

China accounts for about 17 percent of Apple sales overall, and has tremendous room for growth, according to Techsponential analyst Avi Greengart.

The trade war between the US and China has complicated Apple's effort to gain ground in that market, where gains by local titan Huawei have come partly at the California-based company's expense.

"Apple needs Chinese consumers to treat the iPhone as a preferred premium brand at a tricky geopolitical moment," Greengart said.

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