Tech Market WatchBy Perry Wu
If Foxconn were Jackie Chan, the Apple iPod OEM company would silently march the streets of Guangzhou looking for redemption. This week the action hero took to the streets of Hong Kong to protest the sexy paparazzi photo of a pop singer changing backstage. At the same time, Foxconn petitioned a Guangdong court to seize the personal assets of two journalists and fine them CNY30 million for printing a newspaper article that hurt Foxconn's image.

Though these incidents are both born of muckraking journalists, they unveil two ways of handling bad press.

Recap: Hongfujin Precision Industry Shenzhen Company, a wholly-owned subsidiary of Foxconn, makes iPods for Apple. Last month a British newspaper called "Mail on Sunday" printed an article saying that Foxconn's factory did not treat its workers well. Then China Business Net reporter Wang You and editor Weng Bao printed a story saying much the same thing. Next, Apple conducted an investigation and found some problems, but not many, at Foxconn's facilities. Penultimately, Foxconn sued the two reporters for CNY30 million and asked the court to freeze their personal assets. Finally, Foxconn now says it only wants to sue the journalists for one yuan.

I have always been suspect of the original Mail on Sunday article. It seemed that the foreign reporter did not make great strides to truly discover the situation at the Chinese factory. As I wrote six weeks ago in my article "Hyperbolic Apple iPod Factory Woes":

Workers live in dormitories? Good for them. I've worked in the offices of Chinese companies that also give white-collar workers dormitories-and they provide showers. Visitors are not permitted into the factory? Since when were you able to tiptoe around the vats of beer at Anheuser-Busch's brewery in Williamsburg, Virginia? Or when was the last time you showed up at Microsoft's compound unannounced in Redmond and expected the royal treatment?

I was originally on Foxconn's side, but with this stunt they have gone over the edge.

Foxconn's reaction to the journalists is both non-professional and should strike fear in the hearts of Apple and any other foreign (or domestic) company that wishes to work with it. Yes, it is fair for a company to sue a newspaper for libel. But does Foxconn have to seize the personal assets of the reporter and editor? Is this how Foxconn's management responds to these types of flash-in-the-pan allegations? Does Foxconn hope to silence all future condemnation of its products and processes with these antics? I think Foxconn just dug its own grave by getting "personal".

Meanwhile, in Hong Kong, Kung Fu action movie hero Jackie Chan took to the streets. Hong Kong pop singer Gillian Chung was recently photographed while she was changing backstage after a concert in Malaysia and then the photos were on the cover of "Easy Finder". Chan was marching and protesting against the magazine that published the photos, and he delivered a petition to Hong Kong's government headquarters.

Jackie Chan has finesse. Like the roundhouse kicks he delivered in his 1978 flick "Drunken Fist", Chan knows how to place pressure on the right points to make his voice heard. His silent walk through the humid streets of Hong Kong makes a noble statement, while Foxconn's seizure of personal assets is stuff of playground lore.

Local and foreign businesses operating in China will always come under fire from special interests around the world who either hate globalization, fear for workers' rights, or do not like China's current political climate. All companies should constantly prepare themselves for flak that arises from operating in the Middle Kingdom, and Foxconn could have dealt with this better.

Foxconn should fire their current public relations advisors, fire their lawyers, and then hope companies around the world forget about this incident, as it does nothing to engender trust that Foxconn will behave rationally in future business dealings.

About the author:
Perry Wu is a writer and correspondent for and can be reached here at the site. Perry Wu does not hold any positions, long or short, on any of the Chinese or American company securities mentioned in this article.


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