Terry Gou tries to justify Foxconn working conditions

Terry Gou, head and founder of Foxconn, attempted to justify the suicides and poor working conditions of his factories in an interview with Bloomberg Businessweek last week, even going so far as to say he was initially unconcerned about the deaths and that he didn’t feel he should be taking responsibility.

There have been 11 suicides at Foxconn plants in China this year alone, prompting outcries around the world from customers, journalists, human rights activists, and the companies that Foxconn make parts for, which includes Apple, Dell, and HP.

Under mounting pressure from the outside world Foxconn made some measures to curb the rising tide of suicides, including placing nets around its dormitories, hiring counsellors, hiring monks, introducing mandatory sports activities and eventually raising the wages of its staff – providing they signed a no suicide pact and passed an evaluation.

However, Gou revealed that the first several suicides did not bother him.

“I should be honest with you,” he told Bloomberg Businessweek. “The first one, second one, and third one, I did not see this as a serious problem. We had around 800,000 employees, and here [in Longhua] we are about 2.1 square kilometers.”

It was only after the fifth suicide that he decided to act and make changes, saying that at the time: “I didn’t think I should be taking full responsibility.” Now he said he feels guilty.

Yet while he decided to act after the fifth suicide, several more occurred before Foxconn began to implement the changes needed to improve the working conditions in Shenzhen. It was only after the ninth suicide that these occurred, four more after Gou started taking it seriously.

The poor working conditions at Foxconn were first exposed in 2006, where it was revealed that employees were forced to work overtime due to extremely poor wages, often working shifts of 12 hours or more, and eating on the go.

They stayed in factory-run dormitories where dozens of people were crammed into a single room, sleeping in triple-bunk beds. Some workers complained of cockroaches in the dormitories and no running water for days to bathe themselves.

Reports even revealed that the employees often didn’t know the names of their roomates or workmates. 

The Bloomberg interview provides insight into how Gou thinks and what he believes makes a “good” employee. Some of his aphorisms include: “a harsh environment is a good thing”, “hungry people have especially clear minds”, and “work itself is a type of joy.”

While at one point Gou claims that his factories are not sweatshops, his personal philosophy attempts to justify the harsh environment of a sweatshop. 

One undercover reporter exposed that Foxconn would only hire people around the age of 20, luring them in with the offer of overtime. It was revealed that the mindset of workers in China was very different to that in the West, because only factories who offered this kind of excessive overtime were considered good places to work, as the tiny wages offered could not sustain individual people or families.

Employees were forced to sign affidavits to waive the legal limit on overtime, incurring the scrutiny of even the Chinese government.

One 19-year-old girl told Bloomberg Businessweek that her 12-hour shifts assembling a motherboard for Nokia phones is very stressful. She said that she knows counsellors are available, but she doesn’t think they will help. “When I speak to my parents, I try to sound happy. I don’t speak about my stress,” she said.

A 23-year-old man working there revealed that all the attempts to improve morale recently are “superficial”, because once back in work for 12-hour shifts “people who are depressed will get depressed again.”

Another employee said: “This factory is too big. Low-level and mid-level management aren’t educated, and they aren’t nice to people. I blame Gou for this. It’s always about the boss trying to squeeze money.”

One former executive of the company said that at one meeting Gou ordered another executive to remain standing for 10 minutes in front of everyone because his answer to a question was not satisfactory. We don’t know if he brought out the dunce cap.

Gou exhibits moments which seems in stark contrast to his behaviour at the top. It’s said he often gives bonuses to executives out of his own wallet, rather than company funds. He also only has an official salary of 1 New Taiwanese Dollar, or roughly $0.03, which is in stark contrast to salaries top dogs in the West often take. That said, with a 12 percent stake in Foxconn, worth in the region of $4 billion, and a $300 million stake in Chimei Innolux, he probably doesn’t really need the extra dosh.

He is no stranger to philantropic work. He set up his own charity organisation called the YongLin Foundation, which is chaired by his daughter Shirley Kuo. The organisation has helped both disadvantaged children and cancer research.

Gou is a colourful character, having worked his way to the top from relatively little. He started out with a $7,500 loan from his mother and now Foxconn is expected to make around $85 billion in 2010. 

His drive to becoming successful is both a boon and a bane. Success comes at a cost, and while Gou has clearly taken some of that cost upon himself, a lot of it has been shouldered by his thousands of employees, without whom Foxconn could neither surive nor profit.

Gou expressed interest in building factories in the US, but has been cautious about the idea as he worries that America has too many lawyers and doesn’t want to get sued every day. 

While the Bloomsberg piece gave some insight into Gou, it was particularly laudatory at times, giving rise to accusations by some commenters that Gou only agreed to the interview if it painted him and Foxconn in a good light.

“I believe this is first time in history of businessweek that an individual/company paid a fortune for a 8 page advertisement, that does not look like an advertisement,” said one commenter called Ashish. Another suggested it was a “whitewash” of the facts.