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Does Explosive Growth Lead to Compliance Problems?

Does Explosive Growth Lead to Compliance Problems?

  • By Maxwell Gove
  • · March 17, 2015

Although most recent press has focused on Apple’s new Watch and Macbook lineup, the company has also been receiving negative attention surrounding the labor practices of companies involved in its supply chain. Specifically, Pegatron–which was recently tapped to help produce the iPhone 6–has been accused of paying workers wages below the local cost of living. Chinese Trade Data reveals that the company has clearly experienced a recent surge in demand for certain electronic goods, particularly since October of last year.

Pegatron Exports of HTS Code 8517.62

Pegatron Shipments of HTS 8517.62

Large tech companies like Samsung and Apple have enormous sway in the region. Manufacturing firms are under immense pressure to produce large numbers of products in a short timeframe and at minimal cost. Intense ramp-up of production like we’re currently seeing at Pegatron puts strain on an organization and particularly its workforce, and it’s been a problem in the past for Apple. It’s situations like these that demand vigilance on the part of firms who hire overseas manufacturers.

Despite the reputation of some of its partners, Apple has made clear its dedication to sustainable and ethical supply chain practices. Particularly since it faced criticism surrounding conditions at iPhone producer Foxconn’s factories, the company has gone to great lengths to ensure compliance with fair standards throughout its manufacturing base.

But if a company as committed as Apple can still come under fire over labor violations, what does that say about companies that haven’t made similar pledges or who have stayed out of the spotlight? Compliance can be tricky, and it comes at a cost. Luckily, technology is increasing the ease of access to information for companies dealing with overseas manufacturers. It’s also making it easier for consumers to learn more about where the things they buy come from. When we polled a group of trade professionals on their outlook for 2015 late last year, 67% of them reported that compliance would become more important this year. Though cases like Pegatron are highlighting alarming violations, numbers like these suggest that companies are taking steps in the right direction.

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