Apple: Efforts Being Made to Resolve China Labor Dispute at iPod Plant

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Apple Computer (AAPL) said Wednesday it was trying to settle a dispute over alleged labor abuses at an iPod factory in China, an awkward case highlighting the challenges big companies face in living up to their codes of conduct while outsourcing most of their production.

The case also reflects the pressures Chinese journalists confront in doing their jobs.

The dispute involves a defamation lawsuit filed by Hongfujin Precision Industry Co., a major exporter owned by a Taiwanese company, against two journalists at the state-run newspaper China Business News who ran stories alleging that some workers on iPod assembly lines were paid only US$50 a month while working 15-hour shifts.

Hongfujin is suing the two, reporter Wang You and editor Weng Bao, for 30 million yuan (US$3.8 million;euro3 million) in the Intermediate Court in the southern city of Shenzhen, which froze the journalists' personal assets pending the trial, according to local media reports.

The case has provoked criticism in the Chinese media and an open letter from the journalists' advocacy group Reporters Without Borders demanding that Apple's chief executive, Steve Jobs, to intervene.

"We believe that all Wang and Weng did was to report the facts and we condemn Foxconn's reaction," said the letter, signed by Robert Menard, secretary-general of the Paris-based group. "We therefore ask you to intercede on behalf of these two journalists so that their assets are unfrozen and the lawsuit is dropped."

Hongfujin is a wholly owned subsidiary of Taiwan-based Foxconn Technology Group.

"Apple is working behind the scenes to help resolve this issue," an Apple spokesman, Jill Tan, said Wednesday. She said she could not comment further.

Court officials in Shenzhen refused comment Wednesday.

Apple's iconic iPod players are made abroad, mainly in China. The Cupertino, California-based company has sold more than 50 million iPods since the product debuted in 2001.

The allegations of harsh conditions at the iPod maker's factory in Shenzhen originally surfaced in a report in June by the British newspaper, the Mail on Sunday.

Apple responded by promising to immediately investigate conditions at the factory. It issued a report earlier this month saying that it found some violations of its stringent code of conduct but no serious labor abuses. It pledged to immediately redress some problems with overtime, employee accommodations and administrative issues.

The report discounted allegations of forced overtime, noting that a chief complaint among workers was a shortage of overtime during slack periods.

Staff who answered the phone at Hongfujin refused to take any media inquiries.

Earlier, Foxconn issued a lengthy statement denying the allegations and defending its labor policies. The statement detailed amenities it says the company offers to employees, including free medical care, "complimentary professional laundry services," soccer fields, libraries and an Internet cafe.

"Foxconn has been recognized by Shenzhen government as a role model," it said.

Foxconn is a trade name for Taiwan's Hon Hai Precision Industry Co. It claims many customers, including Intel Corp., Dell Inc. and Sony Corp. It is one of many Taiwanese companies with operations on the Chinese mainland, despite the political divide that has persisted since China and Taiwan split amid civil war in 1949.

Hongfujin was reportedly China's biggest export manufacturer last year, with overseas sales totaling US$14.5 billion (euro11.3 billion).

China Business News, a respected publication backed by several big media groups, has given Wang and Weng its unconditional backing, saying the two have evidence to support the allegations.

"Our newspaper will definitely back Wang You and Weng Bao since what they did was not a violation of any rules, laws or journalistic ethics," said an official in the newspaper's publicity department. Like many Chinese, he gave only his surname, Yang.

The financial magazine Caijing, meanwhile, accused the Shenzhen court of violating the law in freezing the journalists' assets.

Wang and Weng were not available for comment Wednesday. However, they have set up a blog recounting their ordeal and reflecting on the risks associated with doing their jobs.

"This is the toughest time I have faced since I entered the media business 10 years ago," Weng wrote.

Chinese journalists working in the state-controlled media have always had to cope with censorship and stonewalling by officials and threats and beatings from local henchmen. In recent years, companies have become increasingly aggressive in taking legal action against unfavorable reports.

At the same time, some reporters have come under fire for violating journalistic ethics for taking money in exchange for running favorable reports, or withholding unfavorable ones.