Haunted Empire: Apple After Steve Jobs

by Yukari Iwatani Kane

  But even as Cook tried to forge his own path, he was still influenced by Jobs. Shortly after he became CEO, Cook told a confidant that he got up every morning reminding himself to just do the right thing and not think about what Steve would have done.

  Outside of Apple, Jobs was everywhere as the biography by Isaacson hit bookstores. Peering out from the cover, Jobs’s intense eyes seemed to be watching. The book, based on more than forty interviews with Jobs, became a springboard for a new dissection of his life. CBS’s 60 Minutes ran a long segment. Then came more books about Apple and Jobs and plans for at least two movies.

  The company that Cook now steered had inspired the world, but it now faced an array of challenges, from increased regulatory scrutiny to patent warfare. Some of the empire’s most confounding problems were developing on the other side of the world. In China, where so many toiled to keep the lines of production rolling, the costs of Apple’s success were becoming impossible to ignore. Falling twelve stories in the middle of the night, a man named Sun Danyong had become an implicit challenge to the moral authority of Apple and Foxconn, one of the twenty-first century’s tragic victims of the global economy.

  7

  Joy City

  Sun Danyong had been groomed for martyrdom.

  A quiet young man from a remote mountain village in the southwestern province of Yunnan, he was known at home as Little Yong. As a boy he did well in school, but his farmer parents were so poor that he had to reuse the same notebook multiple times by erasing his old notes. When he was accepted into the prestigious Harbin Institute of Technology, he could only afford to get there by standing the entire way on the 2,800-mile train journey from home. At school, he was thinly clothed even in the dead of winter and only ordered half a dish at mealtimes. Upon graduation, Sun couldn’t find an ideal job in his home province, so he took one with Foxconn in the southern city of Shenzhen near Hong Kong. He didn’t like being so far from home, but he had been thrilled about working for a prestigious company that made products for Hewlett-Packard, Dell, and Apple.

  “You two don’t have to be so tired anymore,” he had told his proud parents when he got the job. “It is time for you to enjoy life a little bit.”

  At Foxconn, Sun was placed in the product communications department, where he was entrusted with sending iPhone prototypes to Apple. The job wasn’t difficult but carried much responsibility.

  His nightmare unfolded in mid-2009, about a year after he started. That July, one of sixteen iPhone 4 prototypes in his possession went missing. A record of Sun’s statement, his communications with his friends, an interview with Foxconn’s head of security, and surveillance cameras on the premises have provided an extraordinary record of what happened next.

  Members of the security staff arrived at Sun’s department to investigate. According to a statement Sun made to investigators, he had picked iPhones from the production line and sealed them with a security strip on the previous Thursday. Because his manager hadn’t issued the sending documents, he held on to the package until the next day. That was a mistake. According to company procedure, he should have placed it in the storage room for safekeeping.

  When someone arrived to take receipt of the samples the following afternoon, Sun opened the carton so the person could check its contents. Sun then made a second mistake by stepping away. When he returned, he was told that a phone was missing. A concerned Sun checked the production line and the location where he had kept the box. He conducted another search over the weekend before reporting the missing phone to his manager the following Monday. As the last known person to handle the prototype, Sun came under immediate suspicion for stealing the device. China had an active black market industry, so Apple was extraordinarily strict about the handling of its products. Foxconn employed an army of guards who kept a careful eye on the factory lines.

  But a colleague disputed part of Sun’s account, saying that he had been present during the handover of the samples. The head of security, Gu Qinming, called Sun into the office again that night to explain the discrepancy. Gu later admitted that he became angry during the interrogation when Sun refused to deviate from his story. In an account that was corroborated by camera footage, Gu pulled Sun’s right shoulder before sending him into a small room next door to think things over. Until that point, Sun had remained calm. When Gu informed him that the police would be questioning him the next day, he looked up nervously and rubbed his hands together. The cameras showed Sun finally leaving the office at 10:41 p.m.

  It’s unclear where he went next. He was receiving concerned texts from his girlfriend about his whereabouts, so he probably didn’t go home. He more likely ended up at an Internet café because a little over an hour later, he logged on to the Chinese instant messaging service, Tencent QQ, to tell friends of his humiliation.

  “I’ve never taken anything away,” he wrote. “The sample lost has nothing to do with me.”

  When a friend asked if he had been framed, Sun mused, “I’ve thought carefully. There are only two possibilities for the loss of the sample. One is that somebody unintentionally took it away before I packaged it. The other is that somebody intentionally took it away that evening or the next day.”

  The twenty-two-year-old also spoke about how he wasn’t interested in filching the iPhone even though he was poor.

  “It’s such a headache. I don’t know how to handle it,” he said. “Even in the police station, let alone a company, force is not allowed according to law . . . how can you detain me in your place and use violence against me?”

  As he typed, Sun grew increasingly agitated.

  “It is my responsibility that a sample was lost. I can accept that and I feel very sorry. But I didn’t fucking take it away!”

  In message after message, his indignation poured forth.

  “These fucking dogs! They are inhuman!”

  In many of his texts, he lashed out at his managers and the company. More alarming was the way Sun’s anger gave way to a grim foreboding.

  “My colleagues, it is my last time to speak the truth. It is not me who took the N90 sample,” he wrote at 1:11 a.m., using the iPhone 4’s code name. When a friend suggested that they get together sometime, Sun replied, “I hope so.”

  At 1:19:18 a.m., he sent out a message directed at the security chief. “Dear Head Gu Qinming, I’ve been bullied by you to speechlessness. I hope you will get your retribution soon. Your ability to beat me and the new phone that’s about to come out is only because Foxconn is so strong, not because you are strong.”

  After worrying about the student loans he hadn’t paid off, Sun sounded eerily resigned as he wrote to his friend at 1:26:27 a.m.:

  “I’m going to leave, Gao Ge, have a good rest. Thinking about not being bullied by others and not being a scapegoat tomorrow, I feel much better.”

  A short while later security cameras showed Sun heading toward his apartment building and looking in before he entered the elevator of the building next to it. He got off on the twelfth floor. Before the door closed, the CCTV in the elevator captured him, clad in a white shirt, jeans, and sneakers—standard work attire at Foxconn. Sun was standing on his toes and looking out one of the windows in the corridor.

  Some time around then, he sent a text message to his girlfriend, still awake and anxiously waiting for him at home even though it was well past midnight. “Sweetheart, I’m sorry. Go home tomorrow! I got into trouble. Please don’t tell my family and don’t try to contact me. It is the first time that I have ever begged you. Promise me you won’t! I really feel so sorry.”

  Cameras showed Sun jumping off the building at 3:33:52 a.m. When his father and older brother collected his remains, Foxconn handed them a promissory note for 360,000 yuan (about $57,810) in compensation. Sun had left behind very little: an induction cooker, a cheap laptop, and some books. Among them was a translated copy of Thomas Friedman’s The World Is Flat: A Brief History of the Twenty-First Century.

  When Sun’s suicide became pub
lic, the Chinese media seized on it as evidence of the extreme pressures that workers suffered at the hands of Foxconn and Apple.

  Apple issued a statement, expressing shock and regret. “We require that our suppliers treat all workers with dignity and respect,” the company said. Foxconn also issued an apology, promising to do its best to help the family, review its management process, and provide counseling for employees. The company suspended the security chief Gu, who claimed he was branded a murderer on the Internet, and nothing more was ever said about the missing iPhone.

  At first, the companies treated the incident as an isolated case, but it turned out to be the harbinger of an alarming pattern. Over the next two years, at least eighteen more suicides followed at Foxconn’s factories, including that of Ma Xiangqian, the worker who leapt to his death after being demoted to cleaning toilets. Foxconn was slow to take the problem seriously because the number represented such a tiny fraction of the 681,000 workers under its employment. In terms of percentage, the suicides were about an eighth of China’s overall rate and far below that of many countries, including the United States.

  To the media, these statistics didn’t matter. Given the high profiles of Apple and Foxconn, the suicides were headline news. Foxconn, officially called Hon Hai Precision Co., was a Taiwanese manufacturing behemoth that did business with most of the world’s best-known electronics brands. In August 2007, shortly after the iPhone went on sale, Hon Hai’s market capitalization was $43 billion, equal to that of its ten biggest global rivals combined. Apple was worth over $115 billion. But Hon Hai’s staggering achievements were not reflected in the workers’ wages. A November 2009 pay stub showed one worker’s monthly earnings: 2,145 yuan, or about $320. That included $135 in basic salary, $68 from working 60.5 hours of weekday overtime, and $110 from 75 hours of weekend overtime. Many Chinese were already resentful about how the world took advantage of their cheap labor to make high-end products for overseas markets. It was easy for them to interpret the suicides as yet another sign of how they were being exploited.

  By Chinese standards, Foxconn was far from a sweatshop. The conditions overall were a vast improvement for the workers, most of whom came from unimaginably poor families in remote areas of China. As low as their wages seemed, Foxconn workers were at the top of the industry’s pay scale. In the Longhua Science & Technology Park, the company’s walled facility in Shenzhen, the enormous campus encompassed dormitories and canteens, where the kitchen cooked three tons of pork and thirteen tons of rice a day for 369,000 workers. The company also periodically provided entertainment, inviting Taiwanese pop stars to give concerts or hosting a talent show in which the CEO himself was known to dance. Employment there was so sought after that hundreds, sometimes thousands, lined up daily at Foxconn’s recruitment centers.

  In 2010, Foxconn started a program called “Stars of Foxconn” to acknowledge top workers. The parents of the winners, who had been nominated by their peers, were invited to one of Foxconn’s campuses at the company’s expense to attend a special awards ceremony and banquet, where they were treated to dishes like braised Yellow River carp with baked noodles, tempura shrimp, and mushrooms in abalone sauce. The award recipients were also given a one-week trip to Taiwan, during which they visited Hon Hai’s headquarters and saw sights like the famous Ali Mountain and Sun Moon Lake.

  Factory work, however, was factory work: repetitive, stressful, and mind-numbing. Most of the workers were between sixteen and twenty-five, adrift from the support network that high schools and universities provided and unprepared to fend for themselves in the impersonal work environment. They’d been drawn to the city by dreams of a more glamorous life, and the long hours and limited options were crushing.

  Foxconn ran the facilities as though they were military installations. Workers were foot soldiers, and CEO Terry Gou was their general. In Asia, Gou was a legend. In 1974, he had borrowed part of the initial investment of $7,500 from his mother to start a small company that made plastic channel knobs for black-and-white televisions. Through perseverance, charisma, and cunning, he turned the business into the preeminent contract manufacturer. His personal hero was the thirteenth-century Mongolian conqueror Genghis Khan, and he wore on his right wrist a beaded bracelet from the temple dedicated to the great emperor. Gou embraced a code of aphorisms, compiled in a book that read like a capitalist’s version of Chairman Mao’s Little Red Book. Some of the sayings could have been channeled from Sun Tzu, outlining precepts for the art of corporate war. Others struck a quasi-mystical note.

  Leadership is a righteous dictatorship.

  Unless the sun ceases to rise, there are no aspirations that cannot be realized.

  Suffering is the identical twin of growth.

  The true heroes give their lives on the battlefield. They don’t return for medals.

  The book contained 108 of these sayings.

  The kung-fu masters of Shaolin Temple only attain their omnipotent skills after years of tedious, grueling, and mundane training.

  People who live in earthquake zones are often the most alert.

  Every rooster believes that it is him who summons the sun every morning.

  Gou had done whatever it took to succeed. He expected the same level of commitment and self-discipline from his people, be they executives, corporate employees, or factory drones. Longtime veterans and business partners talked about how the company lured new recruits into the grind even at its corporate headquarters in Taiwan. There was a saying among them: The first year was the honeymoon. In the second year, they worked you like a tiger. And in the third year, they worked you like a dog. The company sweetened the trap by offering stock options that didn’t vest for several years.

  No one questioned Gou’s work ethic. The CEO immersed himself in the job with almost puritanical devotion. His Shenzhen office was little more than a functional, one-story bungalow with cement floors. On many nights after the suicides, he slept there in a makeshift bed hung with mosquito netting. To all who worked for him, the message was clear:

  I am one of you. Your hardships are my hardships. Our shared sacrifices are our bond.

  If any of the general’s troops had ever dared impertinence, they might have noted that the egalitarian gestures were built upon a rich man’s conceit. Out on the factory line, many of his minions earned barely enough to scrape by. Raking in the profits through their labors, Gou had become one of the wealthiest men in Taiwan. Yes, he sometimes chose to sleep in spartan settings. But he also slept in a luxury apartment in the most exclusive neighborhood of Taipei and a castle in the Czech Republic. His workers slept in dorms, as many as eight to ten in a room.

  Motivating the hordes who toiled for Foxconn—and managing the sprawl of its operations—was a monumental challenge. The scale of it was difficult for outsiders to comprehend. Around the world, from China to Brazil, Foxconn employed more than a million people, a figure that dwarfed the manufacturing workforce of the entire American auto industry. Logistical headaches multiplied as the company mobilized and trained hundreds of thousands of employees—many teenagers—and then watched them closely to ensure that the smartphones, tablets, and computers were manufactured on time without defect. The challenge required staggering discipline.

  In a Confucianist society where hierarchies were ingrained and people felt a strong sense of duty to their collective group, it wasn’t surprising that pressure from the corporation would filter down through the ranks with increasing weight. As demand rose for Apple’s products, Foxconn was pressed to keep pace with orders from the other side of the world. That meant workers had to work more overtime, often through weekends and holidays.

  Foxconn couldn’t hire people fast enough.

  For a long time, the world had paid little attention to conditions inside the factories. Foxconn’s customers, including Apple, were focused on product quality and manufacturing schedules. Consumers were too busy playing with their shiny new toys to wonder where the devices had come from.

 
The luxury of detachment had prevailed until the summer of 2006, when a British newspaper, the Daily Mail, published an article about the deplorable conditions under which Apple’s iPods were being made. The piece alleged that workers at Foxconn’s iPod factory in Shenzhen slept one hundred people to a room at the time, with only a few possessions and a bucket to wash their clothes. Workers, the story reported, toiled fifteen hours a day for a mere twenty-seven British pounds, or about fifty U.S. dollars, half the amount weavers earned in Liverpool and Manchester in 1805, adjusting for inflation. The newspaper said the workers’ collective share of iPod sales was less than 2 percent.

  “It’s the nature of big business today,” said one expert, “to exploit any opportunity that comes their way.”

  The revelations spread through the blogosphere. Though Apple declined to comment on the report, the shock waves reverberated internally. The allegations weren’t a surprise to some in the operation group’s rank and file who had worked with the factories and had been troubled by what they had seen: shantytowns rising outside the factory walls, people defecating into a nearby canal.

  Apple had a strict code of conduct designed to safeguard human rights, worker health, safety, and the environment. Every supplier was required to sign it, but there was no process to make sure the rules were being followed. The whole point of outsourcing manufacturing was that you didn’t have to deal with factory management issues.