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Chinese Government Steps In to Help an Apple iPhone Factory

Apple’s largest iPhone factory, in the city of Zhengzhou, has been beset with production problems caused first by a Covid lockdown and then a shortage of workers. Now, that plant is getting help from an unlikely source: the Chinese government.

Officials in central China have tapped the government’s vast network of party members, civil servants and military veterans to help Foxconn, the Taiwan-based assembler of Apple’s iPhones, with its recruitment drive. They called on them to “respond to the government’s call” and “aid in the resumption of production” at the factory, according to county notices and state media reports.

The mobilization campaign highlights the Communist Party’s concerns over its reeling economy in a time of severe business disruptions, low demand and record-high debt. As businesses falter under the tough pandemic prevention measures of the nation’s top leader, Xi Jinping, authorities are turning to party-led mechanisms to keep them humming.

“It’s a great irony,” said Adam Segal, an expert on the Chinese military and technology at the Council on Foreign Relations, referring to the party’s efforts to recruit cadres to work at Foxconn. “It’s clearly reflective of the sorry state of the economy and the worry that Apple and others may relocate.”

Businesses, both foreign and domestic, have struggled in China as the government has continued to pursue a stringent zero Covid policy that relies on mass lockdowns, quarantines and near-daily testing to try to quash infections. Those measures have prompted some longstanding foreign manufacturers, including Apple, to look to countries like Vietnam and India to reduce its reliance on China.

The risk of Apple’s dependence on China became clear when an outbreak of coronavirus battered Zhengzhou in mid-October. The Foxconn plant, which makes more than half of the world’s iPhones, went into a lockdown: holding roughly 200,000 workers inside its compound and setting off widespread panic.

Workers who spoke to The New York Times on the condition of anonymity described food shortages and the fear of being at the mercy of the company for basic necessities. On the last weekend of October, hundreds of workers fled, some with no plans to return.

The worker exodus hit Apple’s supply chains, with a possible delay in iPhone shipments for the holiday season, the company announced. A report by UBS, a global investment bank, estimated that wait times for the iPhone 14 Pro and iPhone Max were approaching “the highest levels in history.”

A week after the mass departure of workers, the Chinese government sprang into action.

In Zhoukou, a city in eastern Henan, a township government met to discuss Foxconn’s recruitment challenges, and officials gave out quotas for workers to be recruited, according to Shanghai Securities Journal, a state newspaper. Reached by phone by The Times, a Zhoukou official acknowledged the city had been helping Foxconn with recruitment but declined to elaborate.

Military veterans have also been brought in.

“It’s been difficult for companies to resume work and production,” Zhang Yongchao, the office manager of the veteran affairs bureau of Changge, a city an hour from the Foxconn plant, told The Times. As the pandemic, along with China’s harsh measures to contain it, have led to labor shortfalls at Foxconn and other businesses, it has created opportunity for veterans, who have long had difficulty finding work, he said.

“Plus, Foxconn’s pay is relatively good,” he added.

Notices for recruitment were posted across official county social media pages. Foxconn would pay 30 yuan ($4) a day, roughly 5 yuan, or around 70 cents, more than earlier in the year. Workers who had previously fled because of the outbreak and were willing to return would get a one-time bonus of 500 yuan ($70). The notices made clear the urgency of the company’s recruitment drive: Those who showed up for work by mid-November were promised an additional 3,000 yuan after 30 days of work.

“It is quite rare to see a mass recruiting with such a large-scale use of the government’s power,” said Li Qiang, founder and executive director of China Labor Watch, a New York-based Chinese labor rights group.

What we consider before using anonymous sources. Do the sources know the information? What’s their motivation for telling us? Have they proved reliable in the past? Can we corroborate the information? Even with these questions satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.

The government has an interest in supporting companies like Foxconn, a major taxpayer and employer in Henan.

As the pandemic has rattled businesses and caused labor shortages, the government must take up the “baton” to help enterprises and “promote the stability of the global supply chain,” Global Times, a Communist Party newspaper, said in a commentary justifying the government’s aid to Foxconn.

China often deploys its military and party members in moments of crisis, reflecting the party’s deep-seated faith in the power of ideology and loyalty over material interests. During the Shanghai lockdowns this spring, China called on thousands of medics in the People’s Liberation Army and party cadres as part of its full-throated pandemic response.

Mr. Li, the activist, who has spent decades observing labor trends in China, said he had never seen a government campaign for private businesses hiring retired soldiers. He also expressed doubt about older veterans’ fitness for factory work, as most employees at Foxconn are under 35.

Foxconn said it did not comment on “individual employee matters” but said the manufacturer was working with “relevant local government agencies” to recruit and return production to normal as soon as possible.

Apple declined a request for comment.

The country’s push to mobilize workers also shows that there is a deep mutual dependence between one of the world’s most valuable companies and the world’s most populous country. It has long been assumed that Apple needs China more than China needs Apple, as throngs of smartphone buyers generate a fifth of the company’s sales.

But now, as the country faces mounting economic challenges, Apple may have the upper hand. If production fails to meet expectations, Mr. Li said, “Foxconn may transfer to other countries, and it could also drive the entire electronic industries to speed up their transfer to foreign countries.”

The bellicose rhetoric used in the recruitment drive suggests that the government is keen to avoid losing a major economic partnership. One notice urged veterans to “Keep duty in mind: If there is a war, respond to the call.”

Tripp Mickle contributed reporting.

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