Apple and China: It's Complicated

The following video is part of our nationally syndicated Motley Fool Money radio show, with host Chris Hill talking with advisors Tim Hanson, Ron Gross, and James Early. In this segment the guys analyze Apple's relationship with manufacturers in China. In the wake of recent news reports about the dangerous working conditions at some of the factories in China, the guys discuss how much leverage Apple has, the upcoming audit results, and what investors should be watching for next. As one who has toured factories in China, Tim reminds investors that the relationship between American companies and Chinese manufacturers is not as black and white as some may believe.

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Chris Hill owns no shares of any of the companies mentioned. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On February 20, 2012, at 1:13 PM, boogie162 wrote:

    "Tim reminds investors that the relationship between American companies and Chinese manufacturers is not as black and white as some may believe."

    That rich!!! Apple is there because its cheap and the Chinese react instantly to every Apple whim. Its like that BECAUSE the health & safety of the workers is not important in China.

    If Apple is really concerned it can get its stuff made in the US or Europe or anywhere the workers are looked after.

    The fact is that is no longer a priority for Apple!

  • Report this Comment On February 20, 2012, at 1:39 PM, JBangin wrote:

    These are the kinds of ignorant comments I read about this situation. You probably aren't aware that all global companies out-source.

    You probably don't know, Foxconn, is the biggest electrical producer in the world.

    You probably don't know that Foxconn labor standard are far superior than most alternatives.

    If Apple were to do as you suggested, they would sell far less product, because they would all cost near double, and they'd put themselves at a competitive disadvantage. It will never happen. Find a new "solution"...

  • Report this Comment On February 20, 2012, at 2:51 PM, 1984macman wrote:

    Thank you to the panelist who pointed out that the suicide rate at Foxconn is less than the national average. It made the morbid jokes of the other panelists ring hollow.

    JBangin is right. There's a lot of ignorance floating about on this issue. For example, nobody asks what the RELATIVE conditions for China's migrant workers are at Foxconn and throughout the rest of China. From what I've read, Foxconn is relative heaven to work at.

    Another issue: The workers at Foxconn WANT massive overtime. Apple had to put the screws to Foxconn to cut the overtime down in spite of those demands.

    Also, Apple is playing by the rules that we as a country set up. We ignore the rights of workers and the environmental standards of manufacture and allow companies to sell into this country on a strictly cost competitive basis. If we as a country don't want these practices, then all we have to do is stop permitting those products to enter the country.

    But you can bet your bottom dollar we'll never go for that, since it would drive up the cost of those products beyond what we want to pay. In fact, if we care so deeply about the conditions in Foxconn, then why do we care so little about the conditions migrant workers in this country have to put up with? The hypocrisy is astounding.

    Finally, a huge proportion of those posting their rants against Apple are Apple haters who would post their venom, period, no matter whether it was fact based or not.

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