Key Points
- Experts say workers in China had been protesting for greater rights before COVID-19 hit.
- Now, Apple is making moves to exit its manufacturing hub from the country.
- The process could take several years.
This story contains references to suicide.
Almost . Huge cities completely paused for months on end. Factory workers locked inside their workplaces, unable to leave.
Companies operating in China are facing internal protest, external scrutiny and growing political risk. In recent weeks, there have been reports Apple is looking to exit parts of its manufacturing operations in China, the country that helped make it the most valuable company in the world.
Jennifer Hsu from the Lowy Institute says China's zero-COVID policies are just the tipping point of historic struggles faced by workers there.
"Prior to COVID, we've seen disruption happen at Foxconn factories across China for lack of safety measures, and the long hours worked by factory workers," she said.
Foxconn is the biggest employer in mainland China and produces Apple products.
In 2010, a Guardian newspaper investigation reported 18 workers killed themselves, while another 20 were talked out of doing so.
"These protests and poor conditions have all been documented by groups like , " she said.
Ms Hsu says the trade war between China and the US is also taking an effect on multinational companies such as Apple.
"Part of the reason, is we've seen US-China strategic competition taking place since the [Donald] Trump era," she said.
"Many analysts are now saying the decoupling between China and the US in terms of technological dependence is taking place.
Security personnel in protective clothing taking away a protester at a Foxconn factory compound in Zhengzhou in central China's Henan province in November. Credit: AP
After four decades of massive growth, China's economy is slowing down. In October, the International Monetary Fund , the second lowest rate since 1977. However, it's expected to increase to 4.4 per cent in 2023 and 2024.
"Without a doubt, China's economy is slowing," Ms Hsu said. "And zero-COVID is a big part of the slowing of its economy."
"Apple is looking at the broader geopolitical landscape. Because multinationals have to take into play the political risk they will potentially face."
Added political risk has been added to companies manufacturing in China by modern slavery legislation, such as in the US where products from Xinjiang linked to modern slavery are banned from importation.
Xianjiang is home to many Uyghur people and other Turkic minority groups.
Backlash towards working conditions in China has also ramped up from the European Union, with the bloc to implement its own ban on Xinjiang products.
What's 'political risk'?
Neil Thomas, a senior China analyst with Eurasia Group, a political risk consultancy, says stability is a key factor.
"The main areas of political risk, speaking at a general level are things like the overall business environment that's created by a region's policies, regulations, and laws that are on the books and enforced in a particular country," he said.
"Creating a stable and predictable environment that encourages investment trade, and private economic expansion."
Mr Thomas says there are a multitude of risk factors causing multinational firms to "reconsider their future investments in China".
"The first is a kind of secular slowdown of the Chinese economic growth rate, which means that the pace of market expansion is going to be lower than in the past," he said.
"That decline in China's growth rate is partly structural, just as a result of moving up the value chain and having already kind of exhausted a lot of the low-hanging fruit of growing off a very small economic base.
"But it's also been exacerbated in recent years by high-level policy decisions, zero-COVID policy being the most obvious."
Now Apple is looking to shift its operations to other Asian countries such as Vietnam or India, according to a report in the Wall Street Journal earlier this month.
"Part of that decision is rising political risk," Mr Thomas said.
"Part of its also rising labour costs in China, and being able to save money by producing in less developed countries that have lower wages.
"Some of its political and some of its market-driven."
If Apple does move away from China, the process is expected to take several years.
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