The Potential of the China Market to Drive Responsibility

No doubt you have all by now heard about the NY times piece that has catalyzed a (global) discussion on Apple’s sense of responsibility.

It is a discussion that has taken place in many forms, and with many angles, but in rereading the piece I found two paragraphs that were most interesting to me.

Some former Apple executives say there is an unresolved tension within the company: executives want to improve conditions within factories, but that dedication falters when it conflicts with crucial supplier relationships or the fast delivery of new products […] “We’ve known about labor abuses in some factories for four years, and they’re still going on,” said one former Apple executive who, like others, spoke on the condition of anonymity because of confidentiality agreements. “Why? Because the system works for us

This passage is interesting for three reasons.

1)It shows that there is a debate going on internally about what should be done
2) It shows that Apple actively listening to its consumers for guidance on what to do.
3) It shows that Apple understands that (on some level) their brand image could be tarnished by this issue.

But ultimately, say former Apple executives, there are few real outside pressures for change. Apple is one of the most admired brands. In a national survey conducted by The New York Times in November, 56 percent of respondents said they couldn’t think of anything negative about Apple. Fourteen percent said the worst thing about the company was that its products were too expensive. Just 2 percent mentioned overseas labor practices.

This passage is interesting for one reason.. It shows that the average American is either unaware of or does not care about these issues, and therefore the risk to Apple of brand destruction (from U.S. consumers) is a low risk item.

It seems that Apple’s approach to date has been the right one for Apple and its bottom line.

BUT, is it the American consumer who should be listened to a this point, or is it the Chinese consumer who should be driving Apple’s next move?  After all China is now their #2 market.  A market whose growth potential far outstrips any other.

THIS is the question I believe everyone, including Apple executives, should be asking.  That, while the average American does not seem to identify with, or care about, the issues of a failed supply chain in China, the average Chinese (i.e.  their future) just may.  And that while a poor standard of CSR may fly with the average American, with respect to treatment of Chinese labor and environment, it may not fly with the average Chinese consumer (or government official).

Which is an interesting dynamic that I do not think many firms operating in China have had to work with until only the last few years, and it is a dynamic that has still yet to filter back to HQ.  That, as firms are building the markets in China, their global HQ’s need to begin factoring in the expectations of consumers locally over those of their home territory.  It is not the days of old where a firm, through its export strategy, was able to blackbox its problems without risk to a domestic market.

Where firms manufacture, is where they sell, and as such, it is time to begin addressing the issues differently.

Particularly for those firms who are not using a global standard (like JCI or Intel), but are instead using the local standards as the base.

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