Exhaustion Has No Limit at Apple Supplier in China

Table of Contents 1 3

Preface: Apple Mania, But at What Cost?

Executive Summary: What Do Apple and Zhen Ding Technology Stand for in China?

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“It’s a Miserable Life.”

Big Brother Is Watching: The Workers’ Every Movement Is Recorded Workers Switch Shifts Every Month Working Hours at Zhen Ding The 354 Movement: The Workers Smell a Rat Wages at Zhen Ding The Cafeteria A Work and Rule-Bound Life Zhen Ding Workers Feel They Have No Future Forced to “Volunteer” Health and Safety A Phony Union and No Rights Apple and the iPhone Zhen Ding Technology: “An Aggressive Expansion Strategy”

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December 2014 Author Charles Kernaghan Research Barbara Briggs and the Institute’s team in China

Institute for Global Labour and Human Rights (Formerly National Labor Committee) 5 Gateway Center, 6th Floor, Pittsburgh, PA 15222 , U.S.A. +1-412-562-2406 | inbox@glhr.org | www.globallabourrights.org

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PREFACE

Apple Mania, But at What Cost?

By Charles Kernaghan Institute for Global Labour and Human Rights Apple is the world’s largest buyer of flexible printed circuit boards (FPCBs). Zhen Ding Technology is one of the main suppliers of flexible printed circuit boards and other components for Apple’s iPhone, iPad, Mac and iPod. Zhen Ding also produces flexible printed circuit boards for the Amazon Kindle and for Xiaomi.

Zhen Ding Tech’s profits in October 2014 were $290 million due to release of Apple’s iPhone 6. This is unprecedented in the company’s history, representing an increase of 14.96 percent for the month and 19.8 percent for the year ending October 2014. Company sales for the year will be an estimated $2.517 billion.

Taiwanese-owned Zhen Ding Technology is the second largest manufacturer of flexible printed circuit boards in

the world with four production facilities in mainland China, including their Shenzhen factory.

This is the story of Zhen Ding’s 15,000 employees, as told to us by many brave workers who have smuggled testimonies and rare undercover photos out of the factory.

The Institute for Global Labour and Human Rights has given our word that we will protect the identities and lives of these workers.

China’s lack of democracy and refusal to adhere to internationally recognized worker rights standards are denying Chinese workers justice.

Very powerful corporations, such as Apple, could have a positive role to play.

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Zhen Ding Technology’s plant in Shenzhen, China.

Dumping Toxic Waste Water into a polluted, dead river that runs next to the Zhen Ding factory.

Exhausted workers sleep through their lunch break, hunched over their work tables.

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3 EXECUTIVE SUMMARY

What Do Apple and Zhen Ding Technology Stand for in China?

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Zhen Ding Technology employs approximately 15,000 workers at its manufacturing facility in Shenzhen.

Workers produce flexible printed circuit boards among other integrated circuit products for Apple, Amazon, Xiaomi and many other consumer electronics companies.

•

No Taxes: Zhen Ding Technology, a Taiwanese-owned company, was incorporated in the Cayman Islands in 2006 where there are no: • Corporation tax, • Income tax, • Capital gains tax, • Inheritance tax, • Gift tax, • Wealth tax, or • “Any other tax applicable to a company conducting offshore business.” (Conyers Dill & Pearman.

December 2010)

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Primitive Dorms: More than 10,000 Zhen Ding workers are housed in primitive, dark and filthy dorms, sleeping on plywood, with six to ten workers in each crowded room.

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Zhen Ding dumps toxic wastewater into a polluted and dead river that runs next to the factory.

“Zhen Ding has obtained wastewater discharge permits, which is sufficient of development for the company in the next 5-7 years, and so it is a competitive advantage for future development of all factories in China.”

- Zhen Ding Technology Holding Limited December 6, 2011 •

Exhausted workers sleep through their lunch break, hunched over their work tables.

•

Security guards are everywhere at Zhen Ding, over 100 of them, who routinely harass and beat the workers.

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No free lunch: There is a massive cafeteria at the Zhen Ding factory. Thousands of workers were told their food would be free, which is a lie. However, it is true that for 16 cents, the workers can eat all the rice they want.

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Fifteen thousand Zhen Ding workers enter the factory each day, in two shifts. Rare, undercover photos of workers were smuggled out of the factory.

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The factory runs 24 hours a day with two 12-hours shifts. Workers toil 64 to 72 hours a week with just one day off. They are allowed just four to six seconds per operation. The workers are numb and exhausted.

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Security guards are everywhere at Zhen Ding, over 100 of them, who routinely harass and beat the workers.

Workers were promised upon hiring that food is complementary, and yet in reality they have to way well over two hours’ wages out of pocket for lunch and dinner every day.

More than 10,000 Zhen Ding workers are housed in primitive, dark and filthy dorms, sleeping on plywood, with six to ten workers in each crowded room.

Workers certainly cannot afford cars, but they do have bicycles.

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“It’s a Miserable Life.”

A Rare Opportunity, as Hundreds of Zhen Ding Factory Workers Speak Out For their safety, the workers must remain anonymous.

“Workers are trapped on the assembly lines along with the parts that keep coming down the line. They finish each piece in seconds! If a worker doesn’t move fast enough, products will pile up on the assembly line, and workers will have to bear the cost of the losses.”

Employees listen to the managers and they “work their asses off,” inserting parts all day or all night long. To avoid being punished, the workers push themselves beyond their limits. Everyone agrees, the work is mindnumbing.

“

than what we expected. Our team just broke the record and finished 15,000 pieces! Today the goal becomes 18,000 pieces. They are trying to kill us!”

Another worker told us: “It doesn’t take any special technique to be a worker at Zhen Ding. You only need to repeat simple steps tens of thousands of times. We are just machines. Our lives are boring. But what can we do?”

We are just machines.

Our lives are boring. But what can we do?

”

“We often joke that if you see someone with dull eyes and a filthy ─ Zhen Ding Tech worker face, that person must A production manager calbe a Zhen Ding worker. culates the time it takes to finish each step in seconds, and People space out after work. Nobody laughs. then sets the production goals accordingly.

You can only imagine how much pressure we are under.”

Despite the pressure, production goals are going up all the time.

“Workers won’t be fired for not keeping up, but they lose points in their performance grades. In this way it is a “The production goal increases every day. Today fine. Those who consistently fail to keep up will we met the production goal, and then it goes up be forced to leave!” tomorrow. It goes up until we can’t finish the job. On the bulletin board in our workshop, the “Day and night shift work is the same—no one can talk actual assigned production goal is always higher while working.”

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What Environmental Protections?

The river right next to the Zhen Ding factory is dangerously polluted, and gives off a horrible stench. Workers call it the “Heilong River,” which in Mandarin means the “Black Dragon River.” Other workers sarcastically observed that “the river water can be used as ink.”

Some of the workers actually found one of the Zhen Ding factory’s major waste outlets, where they observed the deadly waste pouring into the river.

“It is very tiring during the peak season. Many workers are so exhausted that they just don’t want to eat. They would rather sleep at their work station. Many workers try to find a corner in the plant to take a quick nap. We are exhausted.”

“The company is careful about preventing workers from leaking negative images of the company.”

“Managers Curse Those Girls All Day Long in the Workshop.”

“The supervisor sniffs around like a mean dog. Once he finds something wrong, he bites! He yells when someone makes a mistake or lets products pile up, or when a worker goes to the bathroom too often….There are no rules about production goals. The supervisor bumps it up whenever he wants to. Workers get yelled at for not being able to meet the goal. Workers might even be fired....Once the workers finish their production, he raises the production goal the following day. The company boasts about their humanitarian management

style. It’s bullshit! What humanitarian management style? The managers curse those girls all day long in the workshops. It’s bad. I am a guy and I can’t stand people cursing at me like that!”

Every week management publicizes a chart of production evaluations, encouraging those who are ahead and warning those who are falling behind.

A Hard Working Woman Explains the Injustice at Zhen Ding “I am well-behaved. The team leader often asks me to work overtime on Sundays. [Sunday is their one day off each week.] That means every time my friends from our hometown have a gathering, I can’t make it. The team leader then asks me to take Monday off. But everyone works on Monday. Who do I go out with? It’s so maddening…. Zhen Ding management takes advantage of us. It’s okay for the company to ‘owe you’ [for working on Sundays] but I can’t ‘owe the boss.’ My hard-earned money came out of my sweat and tears.”

While Americans pay a third of their income in taxes…

“Apple had negotiated a tax rate of less than one percent!”

What suckers we are! While hundreds of millions of Americans who pay their federal income taxes, to the tune of 35 percent of their wages each year, how is it that Apple can “relocate” to Ireland and negotiate a tax rate of less than two percent?

“When a Senate investigative panel looked into how American companies dodged taxes by shifting profits offshore, however, Apple’s operations in Ireland served as a case study….

“Senator Carl Levin, who was chairman of the investigating Senate subcommittee, said the commission’s report validated his panel’s finding that Apple had negotiated a tax rate of less than 1 percent. “‘Apple developed its crown jewels — lucrative intellectual property — in the United States, used a tax loophole to shift the profits generated by that valuable property offshore to avoid paying U.S. taxes, then boosted its profits through a sweetheart deal with the Irish government,’ Senator Levin said in a statement….”

- Patricia Cohen and James Kanter. “Europeans Accuse Ireland of Giving Apple Illegal Tax Break.” The New York Times.

September 30, 2014

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Big Brother Is Watching The Workers’ Every Movement Is Recorded Each employee has an ID card, which stores information regarding the worker’s activities. The workers are watched constantly, entering the workshop or dorm, clocking in and out, and working overtime. The workers have to swipe their cards to enter the plant and start working, and again to enter the cafeteria when they are allowed to eat.

The gates on each floor of the factory have electronic locks.

One worker told a researcher that he was constantly made to swipe his ID card…to the point where he “wanted to puke.”

Surveillance cameras are everywhere, and the workers are constantly monitored.

When workers leave their workshops, they are required to pass a metal detector test along with a full body scan.

In addition, security guards at the factory gate search the workers’ belongings.

The workers are furious: “We are here to work. We are not thieves. What do you think we are?”

The workers are not allowed to enter the factory carrying their cell phones, cameras or tape recorders.

Management hires well over 100 security guards to patrol the premises and watch the workers. According to researchers, “Many workers told us that they have seen security guards beat the workers… and not just one guard beating a worker, but rather a group of guards. This happens often.”

Workers Switch Shifts Every Month Day shift: 8:00 a.m. to 8:00 p.m.

Night shift: 8:00 p.m. to 8:00 a.m.

Workers receive four days off a month, but their days off do not always fall on Sunday. Supervisors arrange the workers’ days off.

Switching shifts every month harms the workers’ health Workers report that their biological clocks are off and that they are exhausted all the time. One worker in the flexible printed circuit board workshop told researchers:

“I can’t sleep during the day when I am on night shift.

Some of the workers can’t stand the hours and quit.”

Another worker called “Lee” worked in the assembly workshop. He told us: “Two shifts. The bosses’ machines can make money non-stop, 24 hours. As long as the boss makes money, our lives and deaths do not matter.”

When they are working the night shift, workers receive a stipend of 6.5 RMB ($1.06) per night. For the month, workers on the night shift can earn a stipend of $28.09.

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Working Hours at Zhen Ding • • • • • • •

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•

Working hours exceed the legal maximum.

Zhen Ding has adopted a two-shift system to ensure that workers are creating profits 24 hours a day.

It is mandatory for workers to toil on Saturdays—putting in a six-day workweek.

The peak season lasts for six months—from September through February.

Workers routinely toil 64 ½ to 67 ½ hours a week, and sometimes over 72 hours.

During peak season, workers must toil through their lunch and dinner breaks, taking just 15 minutes to eat.

During the six-month peak season, workers must toil up to 140 hours overtime per month, putting in a 72-hour workweek, including 32 hours of compulsory overtime.

In the slow season, the workers still toil 90 hours of overtime per month, and 21 hours of overtime a week, for a 60 or 61-hour workweek.

Management also “encourages” Zhen Ding workers to join special training courses to increase their production efficiency. But workers are not paid for their time.

The training is not mandatory, but supervisors call workers out publically, so they feel forced to attend due to pressure. The sessions last one or two hours.

It is impossible that the local Labour Bureau has no idea regarding the illegal and excessive overtime at Zhen Ding Technology. Zhen Ding management and the local government must be held accountable.

Production Goals Workers are under constant pressure to meet their excessive production goals. Moreover, the speed of the assembly line is always increasing.

Supervisors and managers watch everything closely. If a worker makes a mistake, she will be immediately cursed at by her supervisor.

If the workers keep up with the production goal, then the lineman increases the pace, demanding that the workers move faster.

If workers are unable to meet their production goals during regular hours, they have to finish their quota by “voluntarily” working overtime!

Also, instead of paying overtime wages, management asks workers to take “comp time” when it is convenient for management.

“

We are not allowed to stand up and walk around. We have to do our jobs as if we are machines. ─ Zhen Ding Tech worker

Mind-Numbing Work

”

A researcher observed the work and furious pace of an inspector on his assembly line. Using his left hand, the inspector picks up a partially finished PCB (printed circuit board) from the assembly line and places it in the autotesting equipment (ATE). Then he turns on the ATE with his right hand. He checks all the indicators and places the

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qualified products back on the assembly line, while flagging the disqualified products with a red sticker and placing them in a bin.

outside of legal regular hours from the start to the end of employment. This application is based on personal will.”

The whole process of completing the four operations is done in five seconds! In a single minute, he finishes 48 operations. The inspector completes almost 20,000 operations, inspecting 5,000 pieces in a single day!

More abuses

Workers pre-sign a letter “volunteering” for overtime: “Due to family difficulties, I am willing to apply for all overtime

Workers are instructed to report to work 15 minutes early and remain for another 15 minutes when their shift is over.

Management claims that the workers “volunteer” to work these 30 minutes six days a week—a total of three hours— without pay.

The 354 Movement The Workers Smell a Rat Zhen Ding management appointed Zhu-qing Hu as the new managing director who was introducing the so-called “354 Movement” to the Zhen Ding factory.

This is how it works: Three people are to produce what five people used to, and they get paid what four people would normally earn.

A mechanic told us: “The 354 movement is a big scam to increase production levels for the Chinese workers. Management provides a carrot and a stick so that every worker dedicates their health and their lives to the company.”

Another worker explained: “It all sounds nice. Three workers get paid for four people’s salary. But think about it: How do three people meet the production of what five people must do? Do we get prepared for dying a sudden death for just a third more pay? Who gets the money that was supposed to be for the fifth worker?”

Zhen Ding Technology’s recruitment station in Shenzhen, China. Article 12 of China’s Labor Law prohibits discrimination in hiring. Yet all the workers interviewed confirmed that the age range for men to be hired is from 23 to 45 years old. Management does not think younger workers will be reliable.

Also, Zhen Ding will not employ people who dye their hair, have pierced ears or are disabled.

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Wages at Zhen Ding The workers are paid on the seventh day of each month for the prior month’s work.

Overtime pay (rate for first three months): •

During the first three months of employment, the base wage is 1808 RMB ($294.56) per month, which is exactly 8 RMB ($1.30) higher than the minimum wage in Shenzhen.

Overtime from Monday to Friday is calculated on the base wage and paid at a 150 percent premium. During the first three months of employment this comes to $2.52 an hour.

•

By the fourth month of employment, the base wage is increased to 1,900 RMB ($309.55) to 2,000 RMB ($325.84).

Overtime on weekends (Saturday and Sunday) is paid at a 200 percent premium, or $3.32 an hour.

•

Overtime on holidays is paid at a 300 percent premium of $6.16 an hour.

Base Wage

Base Wage After 3 Months of Employment (1,900 to 2,000 RMB) $1.79 to $1.88 per hour $71.43 to 75.19 per week $309.55 to $325.84 per month $3,714.56 to $3,910.07 per year

Performance Bonus The goal is to have workers follow and obey their managers. For example, workers who are close to their supervisors receive more points and make more money on their performance bonuses.

Peak Season Wage

Cheated of Legal Sick Leave

During the peak season, workers can earn up to 2,900 RMB ($472.47) a month. But even these peak season wages are not a living wage due to the high cost of living in Shenzhen.

According China’s labor law, the employer must a medical stipend not less than 80 percent of the minimum wage to workers who are out on sick leave. But Zhen Ding’s management claims that sick leave is to be paid at just 60 percent of the minimum wage. Moreover, researchers at the Zhen Ding factory found that in practice, management never pays sick leave anywhere near even 60 percent of the minimum wage. This is clearly illegal and must be corrected.

Workers’ wages consist of: • • • • • •

Base wage Overtime pay Retainer reward Performance bonus Special position stipend Night shift stipend

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The Cafeteria The “dormitory form” states that both housing and dining are included free of charge. And it is true that for 16 cents workers can eat all the rice they want. But it is more complicated.

Zhen Ding management gives each worker a dining stipend worth 11 RMB ($1.79) per day, or $10.75 for the six-day workweek. Despite the small food stipend, the workers told us that they had to pay, out of pocket, approximately 400 RMB ($65.17) a month to eat in the cafeteria.

The cafeteria offers a big selection, but the food does not come cheap.

For breakfast, if a worker orders noodles, it will cost 4 RMB (65 cents). Other servings are: • • •

A meat dish—5 RMB (81.5 cents) A vegetarian dish—3 RMB (49 cents) A mixed dish—4 RMB (65 cents)

A single meal costs 13 RMB ($2.12). So, for lunch and dinner, it costs the workers 26 RMB ($4.24) each day—well over two hours’ wages!

Another worker told us: “It costs me 30 RMB [$4.89] to eat these simple meals.

The company gives us a stipend of 11 RMB [$1.79]. I have to pay 19 RMB [$3.10] out of pocket. If we have a day off or if it is a holiday, the company does not pay any food stipend. The company promised that the food would be included.

Instead, not only is the food not included, but the company wants to make money on us, selling us food. They are liars!”

In the six working days, each worker must pay $3.10 per day and $18.60 for the six-day week. So for the month, it costs each worker $80.60 to eat, and that does not count that the workers have to pay for their own food during their weekly day off.

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Security guards are everywhere in the plant.

A Work and Rule-Bound Life One company trainer tells newly hired workers: “Every morning when you wake up, you need to be thankful that you are still alive. Although the work is tiring, you need to realize that you have a job. So you need to be grateful toward Zhen Ding—our company. If you don’t work hard today, you’ll have to work hard finding a job tomorrow.”

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• •

Workers are not allowed to take cell phones inside the Zhen Ding factory.

Some workers believe that the company bans their use of cell phones to prevent workers from taking photographs of inhumane and cruel working conditions.

About 10,000 workers, roughly 70 percent of the total, live in the Zhen Ding dorms.

Male workers cannot enter women’s dorms.

Workers are not allowed to go to a different floor in the dormitory.

If a worker is late by more than 15 minutes, but finishes the remainder of the day’s work, he or she will not be paid for the day. If the worker does not work the remainder of the day, then three days’ wages will be docked!

The workers are also fined if they miss clocking in or out three times in a month.

Workers do not receive overtime pay for attending

trainings. No one likes the idea, but they are afraid, and they worry about their job performance. So they often participate in trainings without pay.

Strict Limits on Bathroom Breaks Without permission, workers cannot leave their work stations to use the toilet. Workers are only allowed to go to the bathroom during their meal breaks and their two tenminute rest breaks. The workers must “learn to hold their urine as long as they can on the assembly line.”

Mr. “A” told us: “My job is to attach stickers to printed circuit boards. I do not dare to leave my position to go to the bathroom. If I leave while there is no one to sub for me, the circuit boards will pile up as they move down the line. I could get a major demerit point for this. Then I’m screwed. Not only will my performance bonus be affected, but I might be denied overtime. Think about this.

“If I don’t get to work overtime, I have to live on 1,808 RMB [$294.56] a month. My family will starve to death! That way I will have to quit and the company will not have to pay me a dime.”

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According to Zhen Ding Management, “…We develop complete services to create a safe, comfortable and joyful living atmosphere for our employees.” “…We give out gifts to employees on major holidays and provide free laundry services.”

“We also provide our employees with a comfortable working and living environment and a variety of clubs and recreational activities to satisfy the personal needs of our employees. We intend to share the benefits of our growth with our employees.”

- “Compensation and Benefits” www.zdtco.com Unfortunately, real working conditions at Zhen Ding are so grueling that 15,000 factory workers flee every year!

Asked if workers utilized the facilities at the Zhen Ding factory — such as the library, internet or gym — the workers responded: “No! Work hours are long and hard. We don’t have time to use any of the facilities.”

“Those who make mistakes and do not come forward will have to clean the bathrooms” A department head named Chen at the flexible printed circuit board plant at Zhen Ding asks the workers every Monday morning: “Who made any mistakes last week? Come forward and you won’t be punished.”

A researcher observes, “At this point, the workers are nervous. They start wondering whether or not they made any mistakes the week before. Many workers have been scolded.

If we admit to something, it might be unnecessary. If I don’t, I might be punished in the end. Those who come forward have to describe the mistakes they made. Everything goes on the record. If I make the same mistake again, the punishment will be worse. Those who make mistakes and do not come forward will have to clean the bathrooms for a week. All the workers think this is sick and stupid.”

Another worker explains: “What mistakes are they talking about? There is no standard. If the boss says you made a mistake, you are wrong even if you were right. You get punished anyway....

Workers must also tuck in their shirts while in the plant.

Otherwise, these workers will ‘jeopardize the company’s image.’”

Zhen Ding managers preach to the workers that any internal problems must be resolved through internal channels.

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Zhen Ding Workers Feel They Have No Future Their work is fast, furious, relentless and boring—so intense that “Many workers have fainted.” And it demands constant concentration. During the 10-plus-hour shift, no one is allowed to speak.

ally, workers do not stay more than a year. Few if any workers have anything good to say about their work, wages and treatment.

Workers feel no pride in their labor, and they feel they have no future. Very few workers stay around. Most escape the factory within a year.

Cost of Living Is Extremely High in Shenzhen City for Zhen Ding’s 15,000 Workers

Workers flee from the Zhen Ding Sweatshop: The turnover rate of workers fleeing the Zhen Ding factory is very high. The workers mostly resign because of the low wages, the relentless intensity of their work, and the abuse of management. Gener-

Shenzhen is one of the most developed and expensive cities in China. The workers’ wages are only enough to meet their most basic needs. Most workers are unable to save, and have to live from hand to mouth. The typical worker earns $472.47 a month.

Workers Listed Their Typical Monthly Expenses

Item

Monthly Cost in RMB

Monthly Cost in USD

Rent and utilities

250 RMB

$40.73

Food

300 RMB

$48.88

Water

90 RMB

$14.66

Personal items (toothpaste, soap, toilet paper, shampoo, etc.)

200 RMB

$32.58

Midnight snacks

150 RMB

$24.44

Cell phone

100 RMB

$16.29

Transportation

50 RMB

$8.15

Clothing, shoes, socks, etc.

500 RMB

$81.86

Fruits and snacks

150 RMB

$24.44

Cigarettes and alcohol

500 RMB

$81.46

Internet

100 RMB

$16.29

Social gatherings

200 RMB

$32.58

20 RMB

$3.26

Haircut Books and entertainment

100 RMB

$16.29

Other

200 RMB

$32.58

Total

2,910 RMB

$474.10

The Company Deducts Money from Workers’ Pay for Safety Gear Summer outfit costs: 19.8 RMB ($3.23) Winter outfit costs: 20 RMB ($3.25) Anti-static shoes, hats and belt: 15 RMB ($2.44) Management charges the workers 60 RMB ($9.78) for health exams and 12 RMB ($1.96) for mandatory photographs.

This is a violation of China’s labor law.

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15 Zhen Ding Tech workers attending unpaid training on weekends.

Forced to “Volunteer” Zhen Ding management expects every worker to “help out” as a volunteer. Workers are exhausted after working a regular shift in addition to overtime, and yet they still must do “volunteer work.”

If a worker violates company regulations, he or she will be punished and made to do volunteer work. Typically it will entail, “…cleaning the bathrooms, which is a way to insult the workers.”

Health and Safety Workers may be handling potentially harmful chemicals at the Zhen Ding factory. Moreover, most workers are not aware of hazardous conditions at work and have no knowledge regarding how to prevent occupational disease or work injuries.

benzene, a carcinogen, and toluene, which can cause damage to the nervous system, kidneys and liver.

Recently at a printed circuit board (PCB) workshop, workers voiced their concerns that the solvents used to clean the circuit boards may be harmful.

• •

Among the cleaners that are used is trichloroethylene also know as TCE or trichlor, toxic to the kidneys and nervous system, and a carcinogen.

• •

• •

There is no protective gear for workers who spray glue.

In their workshops, there are no facilities for workers to wash even their hands and faces.

Chemicals are stacked high in the factory hallways.

Workers barely know anything about potentially hazardous conditions in their workplaces.

There is no health and safety training for newly hired workers.

Nor does Zhen Ding management pay for occupational health exams.

It appears workers also routinely use thinners that include

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A Phony Union and No Rights There is an “excellent” phony union at Zhen Ding, with so-called “union leaders,” “representatives,” and “elected officials” who have never been elected in any democratic process.

Workers told us that assembly line workers “vote” while furiously working on their lines. At other times, workers do not have to vote for themselves. Managers take the workers’ badges from them to “vote” on their behalf. Bosses can also be candidates for the role of “union staffer.” The workers are not allowed to participate in any transparent or democratic process and are prohibited from joining a real union with collective bargaining, which would improve working conditions and benefits.

Researchers found that when workers complained about their schedules, night shifts or wages, the so-called union

refused to intervene and claimed that the complaints were about “internal affairs regarding production and human resources.”

A young worker told us: “I have never seen any colleague approach [the union] for consultation. Calling them does not solve any problems.”

Printed on the workers’ ID cards are: • • •

the phone number for employee complaints; the union hotline; and the employee service center’s number.

The workers never call the “hotline,” knowing how useless this effort will be.

The workers are alone.

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Apple and the iPhone Apple is an extraordinarily profitable company with profits of $37 billion on revenues of $170.9 billion in 2013. (By comparison, Apple’s nearest competitor, Microsoft had profits of $22.8 billion on revenues of $86.7 billion. Wal-Mart had profits of $16 billion on sales of $476.5 billion).

Helped by the release of the iPhone6 in September 2014, Apple announced a 12.2 percent increase in revenues, to $42.12 billion in the third quarter.

Forbes ranks Apple as the world’s fifteenth largest public company, but fifth most profitable and number one in market value of its brand. (The value of the Apple name is estimated at $124.2 billion.)

Apple CEO Tim Cook received $74 million in salary and other compensation in 2013.

Apple’s iPhone is an extraordinarily popular device According to some estimates, even before the launch of the iPhone 6, 70 percent of the U.S. population was already using smartphones, and of those over 42 percent (more than 74 million) were Apple iPhones.* iPhone prices range from $649 for a regular iPhone 6 to $749 for the iPhone 6 Plus, to $949 or more for special models with extra memory.

From September 19 to 21, 2014, the weekend of its release, Apple sold 10 million iPhone 6s, topping all previous sales records (Market Watch).

By October 5, Forbes was reporting that the number sold had broken 20 million. * According to last Census, in 2013 there were 250.9 million people over the age of 16 in the U.S. If 70 percent (175,624,590) use smart phones and 42 percent of those were using iPhone (even before the release of iPhone 6), that would mean that over 74 million people in the U.S. are using Apple’s iPhones. (Source: U.S. Census 2013, Apple Q4 of 2013, Asymco).

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Zhen Ding Technology “An Aggressive Expansion Strategy” In June 2006, Foxconn Advance Technology Limited (FAT) was incorporated in Georgetown in the Cayman Islands, beginning with an investment of $70 million. In 2011, the company’s name was changed to Zhen Ding Technology.

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Zhen Ding “was ranked as the largest PCB [printed circuit board] vendor in China and Taiwan and in second place in the global PCB industry in 2013.” (Source: About ZDT, Zhen Ding Technology.)

Sales 2013: $2.146 billion 2014: $2.517 billion…an increase of $37.1 million.

Net Income 2013: $182 million 2014: $201.8 million…an increase of 10.88 percent.

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76.7 percent of Zhen Ding Tech production is sold to other companies in mainland China; 10.8 percent goes to Taiwan, and 12.6 percent to other countries

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Zhen Ding’s major clients include: - Apple - Motorola - Dell - Nokia - Sony

“Zhen Ding is a subsidiary of Hon Hai Precision Industry and was spun off for a separate listing on the Taiwan Stock Exchange in December 2011. It makes flexible circuits that allow consumer electronic product designers to save space — a crucial component in gadgets such as iPads and iPhones.”

“Indeed, the company is often described by investors as an Apple concept stock and its share price moves in relatively close correlation with that of its biggest customer. That relationship is set to become even closer, as Apple is expected to increase the size of its orders during the second half of the year when it launches several new products.”

- Nick Ferguson. “Apple supplier Zhen Ding taps CB maret for $300m.” Finance Asia. June 19, 2014

Institute for Global Labour and Human Rights

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What Zhen Ding Makes Zhen Ding Technologies makes flexible and rigid printed circuit boards (PCBs), high density interconnects (HDI) and integrated circuit substrate (IC substrate).

Integrated circuits (ICs) (also known as “chips” or “microchips”) are made of silicon and copper with small amounts of other metals and metal oxides. ICs are the “wiring” that controls virtually all today’s electronics--mobile phones, personal computers, cameras, radios, tablets, etc. Because ICs are printed using a photo-sensitive process (not assembled piece by piece) they can be mass produced cheaply, producing circuits that are tiny and able to pack highly complex functionality into a fraction of the space required by traditional wiring.

High density interconnect printed circuit boards, HDI PCBs reflect a further miniaturization of the printed circuit board allowing for much greater density of circuitry and function in a given amount of space. This is achieved by etching microscopically fine lines for transmission of electrical signal. Often multiple interconnected layers are stacked on top of each other to achieve even greater density.

IC Substrate (integrated circuit substrate) refers to the thin silicon-based material that holds and connects a collection of IC “chips.” Advanced IC substrates, connecting, powering and protecting the “chips” have permitted the greatest degree of miniaturization.

Zhen Ding Technology Holdings Limited Corporate Headquarters in Taiwan

No. 6, Lane 28, Sanhe Rd., Sanahi Village Dayuan, Taoyuan, Taiwan, 33754 Phone: +886-3-383-5678

USA Office (6.6 miles from Apple’s corporate headquarters)

1688 Richard Avenue Santa Clara, CA 95050-2844 Phone: +1-408-919-6100

Production facilities Shenzhen Factory Huai-‘an Factory Qinhuangdao Factory Yingkou Factory

Guangdong Province Jiangsu Province Hebei Province Liaoning Province

Zhen Ding’s Shenzhen factory (subject of this report)

Fukui Precision Component Co., Ltd. Yanluo Road Songgang Town, Bao’an District Shenzhen, Guangdong Province China 518105 Phone: +86-755-3381-0388

Chairman: Mr. Ho Shao Chun

Apple Inc.

1 Infinite Loop Cupertino, CA Phone: +-408-996-1010

Institute for Global Labour and Human Rights