Xbox makers in China in Mass Suicide Scare


Published on - Last week in the central city of Wuhan in China dozens of workers responsible for the assembly of Xbox games consoles scaled the factory...

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Xbox makers in China in Mass Suicide Scare

  1. 1. Xbox makers in China in Mass Suicide Scare finance/xbox-makers-in-china-in- mass-suicide-scare
  2. 2. Last week in the central city of Wuhan in Chinadozens of workers responsible for the assembly ofXbox games consoles scaled the factory walls andthreatened to jump from the roof. The trigger forthis extreme action was the news that FoxconnTechnology Group are to close the Microsoft Xbox360 production line. There was anger too over thealleged initial offer of severance pay beingrevoked; this has yet to be substantiated.
  3. 3. It is clear that labour relations are coming underincreasing strain in China and threats of suicide arenot uncommon as the workers feel they have noother alternative to making their point heard. Thebigger question is why labour relations are such abig problem, why now?
  4. 4. Chinas economy, much like the rest of the world isslowing down. Inflation is biting and wages are notalways keeping pace. Another cause of inflationhas been the increasing size of the loans industry
  5. 5. Loan sharks have found it easy to borrow moneyand even easier to loan out to individuals andbusinesses. The impact of this is far beyond that ofinflation. Company owners are fleeing theircompanies and in some cases, the country itselfbecause they took out loans from loan sharks thatwill never be repaid.
  6. 6. The obvious question is why don’t businesses go tobanks or other such lenders as we do in the UK?The answer is painfully simple. China’s governmentrun banks usually only lend to big state-ownedcorporations. So entrepreneurs are left with noother options if they wish to finance their projects.While times were good this underground basedfinancing system worked but as the economy hasslowed it has become harder and harder to meetthe debt repayments.
  7. 7. The total size of the illegal lending market is notknown exactly but it estimated to be around $630billion a year (source: New York Times). In just afew short months at the end of 2011 over 90business executives have gone missing from justone coastal city, purely because of their inability tomake the repayments to the loan sharks, and thisis a trend that is surely set to continue.
  8. 8. Foxconn Technology Group and who they work for.As well as the assembly of Xbox games consoles forMicrosoft FTG also have factories for othercompanies such as Apple. Indeed many of theApple consumables we all know and love like theiPhone and iPad are assembled at FTG factories. Inthose factories too there have been issues withtheir workers and suicide.