Foxconn Suicide Scandal: Deeper in the Fox Hole

The 13 suicide attempts this year by Chinese workers for manufacturing giant Foxconn have attracted international attention and condemnation of Foxconn for exploiting and mistreating workers.

While most reports focus on sweatshop accusations and the economic implications of the case, some China experts suspect that the widespread publicity is the result of political intervention in favor of Foxconn’s Chinese competitors.

“It’s an old trick for the Chinese communist regime to prey on Taiwanese businesses,” said Kao Weipang, head of Taiwan’s Victims of Investment in China Association (VICA). “When I saw the unanimous criticism on Chinese government controlled media, I knew this is not just about suicides. They are trying to break Terry Gou.”

Terry Gou, 60, is the founder and CEO of Taiwan-based Hon Hai Precision Industry Co. The Taiwanese tycoon opened his first Chinese factory in 1988 in Shenzhen, a special economic zone north of Hong Kong. Since then, Foxconn quickly evolved into the world’s largest manufacturer of electronics and computer components. It has stable contracts from Nokia, Sony, Apple, Dell, and many more, and 800,000 employees, 300,000 of which are in Shenzhen.

Foxconn Runs Up Against Beijing

In 2008, the nightmare for Foxconn began when Gou complained to Beijing authorities about its major local competitor BYD. BYD is headed by Wang Chuanfu, a member of the Standing Committee of the National People's Congress—the most powerful body of the Communist Party.

The tension between Foxconn and BYD started in 2003 when, according to Foxconn, BYD poached more than 400 key employees from Foxconn’s Nokia team. Internal company documents and information flowed to BYD with them. Foxconn also accused BYD of copying its business model.

In 2006, Terry Gou sued BYD for stealing trade secrets. BYD won the suit and countersued Foxconn for bribery and falsifying evidence, resulting in the arrest of some Foxconn employees.

During the same period, BYD captured a significant amount of businesses from Foxconn by undercutting their Taiwanese competitor. In 2008, BYD outperformed Foxconn in revenue and earnings per share. In 2009, Warren Buffett’s Berkshire Hathaway bought 10 percent of BYD for $230 million.

Gou decided to seek help from the central government, which, according to a former high-level Foxconn manager, was Gou’s fatal mistake. “Since then,” the retired manager said, “Terry Gou has had a very hard time surviving there.”

Kao Weipang of VICA said such communications with the central government often cause danger.

“As far as I know, over the years no Taiwanese victim has ever got justice [from higher authorities],” said Kao.

Suspicious suicides

Some facts surrounding the Foxconn suicides have raised questions about whether they were indeed suicides, or perhaps murder. For example, the ninth victim who allegedly jumped to his death, was reported to have four knife wounds on his body.

Some of the victims, as well as other Foxconn workers, have been violently abused and harassed by Foxconn’s security staff. The Foxconn empire has a reputation for having strict, heavy-handed security.

Multiple bloggers identifying themselves as former Foxconn employees, have stated that company security personnel frequently detain and abuse employees, but are never held accountable.

Last January, a Reuters reporter who was taking pictures of the factory complex from the main road was manhandled by security guards. The reporter called local police who intervened, but the security guards were not questioned or detained. The police gave the reporter the option of filing a complaint, but according to Reuters, was told, "You're free to do what you want. … But this is Foxconn and they have a special status here. Please understand."

Taiwanese attorney Winifred Tung, described in a recent interview with Radio Taiwan International how many Taiwanese business have been plundered by spies sent by Chinese authorities to acquire core technologies. Security personnel often play a role in this industrial espionage.

Tung said it is hard to know who security guards really work for. “When they come in to apply for the job, you don’t know who else is also paying them,” said Tung.

Also suspicious about the suicides was the amount of coverage they received in Chinese state-run media in April and May. The criticism from the Party's mouthpiece media, Xinhua, was particularly harsh.

Tung says this is a strong and clear message. “Chinese media do report negative news from time to time,” Tung observed. “But such sharp criticism usually appears in the media in regions outside of where the incident in question occurred. But this time, the coverage is nationwide.”

The reports mostly focused on the social issues surrounding the suicide cases, such as low pay, high suicide rates, the household registration system, and the suppression of workers’ unions. The same topics have dominated discussions in international media as well.

Then suddenly, reports and discussions about Foxconn were banned from Chinese media and major websites. This happened as commentators started looking beyond Foxconn management problems toward underlying issues with the nation’s political, administrative and legal systems.

For Terry Gou himself, the attack may have been unexpected given Foxconn’s huge contributions to China’s GDP. But for the regime, the Taiwanese company may have outlived its usefulness, and may be seen as nothing more than a barrier to its government-backed competitor. As a Chinese saying goes, “when the rabbit is caught, the dog can be cooked for dinner.”