Friday, February 17, 2012

How Apple's Chinese Workers are like Oompa-Loompas

In Ronald Dahl’s adventure Charlie and the Chocolate Factory, the Oompa-Loompas escape from their natural predators in Loompaland by accepting Willy Wonka’s invitation to work at his factory. There, these short-statured, orange-skinned people live happily, free from being eaten by the Whangdoodles, Hornswogglers, and Snozzywangers. They sing songs, make chocolate, and get paid in their favorite food, cacao beans.  I like to pretend that my smartphone is made by Oompa-Loompas in that socially responsible factory. 

But that’s not the case as we discovered in a recent New York Times article in which Apple received a large black eye for manufacturing their iPads and iPhones in China in what was described as troubling working conditions, characterized by low wages and excessive overtime. Of course, Apple isn’t the only manufacturer stooping to these practices and sourcing to low bidders like Foxconn. HP also uses this manufacturer and, in fact, I’m hard pressed to find an electronic device marketed in the U.S. that isn’t made by workers stacked in tech dorms in China. 

So does this mean consumers should stop buying iPads? No, but it does create a hurdle for Apple devotees, who don’t want to disguise their devices or be perceived as loyalists to a big bad company. So what actions will they take? The answer is in the October 2011 Cone/Echo Global CR Opportunity Study, which reported that consumers worldwide (and they surveyed over 10,000 people) are demanding a higher level of social responsibility from the companies they buy from. Many reported using their loyalty and purchasing power to advance these demands. As Apple’s consumers utilize their power to press for the company to evaluate external suppliers like Foxconn, what actions do you think the company will take and how will those actions impact sourcing and manufacturing in China?  We’ll watch and see. 

Corporate responsibility critics complain that the time and money spent “doing good” detracts from the business mission, which is to sell people the products they want and make money doing it. But Doug Guthrie, (no relation), Dean of the George Washington University School of Business, in his Forbes article, Corporate Social Responsibility: Cheaper Than a Pension Fund, provides a historical case for corporations leading the way to the rise of CSR. “They (companies) put the agenda into play in the first place, actively defining the system and what constituted socially responsible corporate behavior.” 

As evidenced by the negative reaction to China’s manufacturing practices, the Cone/Echo survey, and Dr. Guthrie’s educated view, brand marketers (and their CEOs) should realize that CSR does not stand on its own as an act of altruism or as a public relations stunt. CSR is a method of creating and maintaining brand legitimacy and it impacts every aspect of the business even vendor employment practices, as the Apple “incident” has shown. 

The moral of the story is to take CSR seriously and examine your company’s actions at every audience touch point. Be prepared to discuss and defend what the public sees and perceives, remembering that customers today are more engaged and knowledgeable than any other time in capitalism’s history. If there’s a weak point, fix it, because the value of that action will pay off in brand credibility...which will mean dollars to the bottom line. 

Also don’t discount Willy Wonka’s Chocolate Factory as only a child’s story. It is a great example of the benefit of corporate social responsibility because by protecting the Oompa-Loompas in his factory, Willy Wonka achieved three key goals. First, he defined a strong platform for branding the uniqueness of his product, integrating the company identity with his rare employees. Chocolate made exclusively by Oompa-Loompas. Second, his actions portrayed the company as a benefactor and we all know that philanthropy is a “good” thing. And third, he created an exceptional economic advantage, significantly lowering his manufacturing costs and giving him a considerable edge over his competitors. His workers were housed in dormitories on-site and got paid beans.