Largest iPhone factory in the world is being undermined by China's Covid-19 government

Beijing: A manager at an iPhone factory once managed to rally 8,000 workers from their dorms to work a 12-hour shift on short notice with nothing more than the offer of a cup of tea and some biscuits, according to a widely-cited anecdote about the strength of the Chinese workforce. Within a week, production of a new iPhone model that Apple urgently needed was resumed.

According to the anecdote, Chinese workers have unmatched discipline, efficiency, and dependability, which persuaded Apple, the largest US consumer electronics company, to outsource iPhone assembly to China and to stick with that choice in the face of rising labour costs, human rights protests, and more recently, an intensified rivalry between Beijing and Washington.

The factory owned by Foxconn Technology Group was built in Zhengzhou, the provincial capital of central Henan, with the intention of utilising China's highly organised labour force. Up to 300,000 employees can live on-site in dormitories in nearby residential high-rise buildings at the enormous "iPhone City" complex. Men and women in their 20s and 30s who make up this army of young workers have made China a crucial link in Apple's supply chain.

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The strict "dynamic zero" Covid-19 policy in China has caused the human link in this chain to fail. Tens of thousands of Foxconn employees attempted to leave during the last weekend of October as they feared contracting the virus. 

Workers clashed with security personnel at the compound earlier this week because they were dissatisfied with the compensation they were promised if they returned, and it turned into a riot.

While the majority of nations, including those in Asia, have relaxed strict pandemic controls in favour of tolerating the virus, the Chinese government has intensified its efforts with widespread testing, sudden lockdowns, and stringent quarantines.

Fear was a response to years of Chinese state propaganda that attempted to justify harsh pandemic controls by emphasising the virus's threat to human health, which caused the fleeing Foxconn workers. The official line was that Covid-19 was lethal and could permanently harm health, even after the milder Omicron variant took control.

The fear and panic eventually spread to the Foxconn compound, which was operating on a 24-hour shift to meet peak season demand after the new iPhone 14 series was unveiled in September, when Zhengzhou, a city of 10 million, started to report confirmed cases in the first week of October. 

The peak season is the best time for employees—many of whom are migrants from other towns and smaller cities in Henan—to maximise earnings by putting in extra hours.

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Several workers who spoke to the South China Morning Post claimed that after the factory mandated daily PCR testing for staff beginning on October 10, concern about the virus began to spread.

Even though the Henan Health Commission only reported six confirmed "asymptomatic" cases that day, to them, it was a sign that the pandemic situation was dangerous. The provincial and municipal health authorities did not report location-specific Covid-19 data, and Foxconn did not make any internal Covid-19 data available.

The following days saw an increase in reports of confirmed cases in the compound, and social media platforms in China posted pictures of buses transporting workers to quarantine facilities. 

The local health department in Zhengzhou reported seven confirmed cases and seven asymptomatic cases on October 19. Foxconn asked its 200,000 employees to bring "free" meal boxes into the dorms after it suspended dining services there.

The arrangement, intended to lower the risk of infection, backfired when many employees complained about the subpar meals that were already prepared and the commotion that resulted from food distribution. 

The introduction of closed-loop production by Foxconn, the same "bubble" strategy employed by Tesla and other factories in Shanghai in March during a two-month lockdown, drastically altered life at the compound. Workers at Foxconn were instructed to adhere strictly to the "traffic" lines set up between the dormitories and the assembly lines.

A Covid-19 outbreak made workers fearful of being trapped inside the "bubble," and they started making social media appeals. On October 26, Foxconn management finally announced that a "small number of employees" had been exposed to the virus.

Even though the company distributed Chinese medicine that was supposedly effective against the virus, the situation was too risky for some.

One employee, who wished to remain unnamed, told the Post that she trekked for three hours from the Zhengzhou campus to her hometown of Nanyang, which is about 300 kilometres from the factory, before getting a ride. 

She claimed that she was able to find a ride after joining several WeChat groups and requesting a ride to Nanyang. "I was fortunate to eventually find a ride in a carpool. Many people were forced to walk alongside the road.

Production was immediately impacted by the worker exodus. On November 6, Apple broke its silence, announcing that the Zhengzhou plant was working at "significantly reduced capacity" and that shipments of the iPhone 14 Pro and iPhone 14 Pro Max models would be delayed. 

The disruption would be significant, according to Ivan Lam, a senior analyst at Counterpoint Research, as the Zhengzhou factory was in charge of producing 80% of the standard iPhone 14 model and 85% of the iPhone 14 Pro model.

In a desperate attempt to put an end to the violent protests, Foxconn on Wednesday offered a one-time bonus of 10,000 yuan (US$1,400) to newly hired workers if they left the campus right away.

The Covid-19 controls make it nearly impossible for unbiased reporting to take place on the ground, and neither Foxconn nor the Zhengzhou authorities have disclosed how many employees have been infected or are being held under quarantine.

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In any case, the contrast between the 8,000 workers who agreed to work an additional 12-hour shift in exchange for tea and cookies and the thousands of workers who have abandoned assembly lines in spite of being offered cash bonuses could not have been more glaring. 

Three years of Covid-19 controls are quickly undoing China's manufacturing miracle, which was made possible by an abundant supply of inexpensive but skilled labour, favourable local government incentives, and foreign capital.

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