Friday, February 24, 2012

Why Apple CAN Improve Chinese Labor Practices

This NY Times article, The Dilemma of Cheap Electronics, about Chinese factory labor versus prices on Apple products deserves a reply and here is mine:

The answer is simple because each new piece of electronics gets priced at whatever the manufacturer chooses, and there are many new pieces of electronics year after year.

Apple can easily say the iPad 3 will cost $100 more, and make sure that $100 is in the cost of the factory labor. Because a new technology is being introduced, people will buy it regardless of the price. Yes, undoubtedly there is market research telling Apple at what dollar figure American consumers are price resistant, but of all the companies, Apple is the least concerned with price. Apple sets the new standard of pricing with each new product.

Work from this premise and you realize that every American company with factory workers in China can raise their prices easily. And that approaching Apple, the least price-sensitive company, is the right tactic.

The next part of the problem is to shake down the Chinese factory owners who are making huge profits off the backs of their workers. That's harder to control. No doubt the owners will want the same percentage of profit as in the past. In other words, $99 out of every $1 price rise, or whatever the outrageous figure is. Making that profit and loss statement look different is a much harder trick to pull off, but the threat of going somewhere else is Apple's great leverage.

Bottom line, Apple has the power, and Apple ought to be pressed to make things better. Why not? Every Apple product we buy means a number of Americans who don't have factory jobs. Apple owes its customers some portion of peace of mind about the people it does employ in factories.