Company in iPod Labor Fuss Eases Claims

A maker of Apple Computer's iconic iPod said Thursday it has cut its demand for defamation damages over a report it mistreated its workers to a symbolic 1 yuan (12 U.S. cents) following a wave of bad publicity.

Hongfujin Precision Industry Co. said it was reducing its demands for damages from a pair of Chinese journalists from 30 million yuan ($3.8 million) "to avoid blurring the issue because of the great public attention on the target of the injunction."

The company also said it was withdrawing its request that the court handling the case freeze the journalists' personal assets.

The dispute highlights challenges big companies face in living up to their codes of conduct while outsourcing most of their production. It also reflects the pressures Chinese journalists confront in doing their jobs.

The case provoked an open letter from journalists' advocacy group Reporters Without Borders demanding that Apple's chief executive, Steve Jobs, intervene.

It also sparked a flurry of Internet and media comment.

"The public's right to know is in danger when sprawling corporate power, aided by distorted legal procedures, attempt to stifle freedom of the press," the state-run newspaper Shanghai Daily said in a commentary Thursday.

Apple said Wednesday it was working behind the scenes to help resolve the dispute.

A wholly owned subsidiary of Taiwan's Foxconn Technology Holdings — and a supplier to many big name brands including Intel Corp., Dell Inc. and Sony Corp (SNE). — Hongfujin issued a statement saying that any compensation it receives in the case would be donated to charity.

"Of this entire episode, what the company had asked for is simply the right to protect her reputation, to preserve the Chinese dignity," it said. "Any claim to us is more for its symbolic meaning than anything" (else), it said.

Hongfujin, reportedly China's biggest export manufacturer last year with overseas sales totaling $14.5 billion, filed the suit in the southern city of Shenzhen, where its factory is located. It named two journalists at the state-run newspaper China Business News, which ran stories alleging that some workers on iPod assembly lines worked 15-hour days under harsh conditions for low pay.

Foxconn and Hongfujing have vehemently denied the abuse allegations. A statement defending the company's labor policies detailed amenities it says are offered 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.

The Shenzhen Intermediate Court froze the personal assets of the two, reporter Wang You and editor Weng Bao, pending the trial.

Reacting to Hongfujin's move, China Business News said Thursday that it reserved the "right to countersue." The newspaper has staunchly backed Wang and Weng, saying they had evidence to support their claims.

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

The allegations of harsh conditions at the iPod maker's Shenzhen factory 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.

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.

Wang and Weng 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.