Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Analysis: Here's How Apple Could Become The First Fair Trade Tech Company

Posted by Tom Foremski - June 1, 2010


(Image by Damien Van Achter)
In the wake of the Foxconn suicides I've asked Who will be the first "Fair Trade" tech company? Moving beyond "green"...

Becoming the first Fair Trade tech company would not be easy but there is one company that would find it easier than others and that's Apple.

Apple has already taken some steps towards this by topping up Foxconn worker salaries. TechEye reports:

Apple has decided to give the workers a small cut of its profit margin, which it hopes will give workers a better standard of living and slow down the number of suicides that have taken place in the factory, which makes iPads, iPods and iPhones in Taiwan's Hon Hai Precision Industry.

The rumoured 20 percent raise from Apple will raise the cost of labour for the iPad from 2.3 percent of the cost to 3.0 percent of the cost.

A 20% higher salary for its workers is excellent and it comes at a very small overall manufacturing cost increase.

That's a feather in Apple's cap and a potentially great marketing move too.

Fair Trade electronics would mean that every part of a product has been manufactured in a Fair Trade environment. The supply chain for electronics can be massive, it will probably be impossible to make a 100% Fair Trade laptop, for example, for a while yet. But smaller products would be possible, especially if a huge manufacturer such as Foxconn converts part of its factory into Fair Trade production zones.

A 100% Fair Trade electronics product might be tough but it would be possible to calculate how much of a product is "Fair Trade" and issue a percentage number. As more manufacturing facilities within a supply chain are "Fair Trade Certified" that would raise the Fair Trade total for a product, and that can be advertised on the packaging.

When I was in Japan a couple of years agoI met a startup called Rinen. It had developed OpenTrace, a way of tracking the carbon footprint of any product. That same approach could be used to track the Fair Trade content of any product.

Increased costs...

Apple has very healthy profit margins on its products, much better than say, Dell, or Hewlett-Packard. Apple's overall profitability is 21%, Dell is at 3%, HP is at 7%.

Apple's profit margins on key products such as the iPhone and iPad are even greater.

Apple can easily absorb higher manufacturing costs, Dell and HP cannot.

What Apple pays in extra manufacturing it could recoup with killer marketing to sell more products.

For example, how would a Dell laptop compete against an Apple Fair Trade laptop?

"Buy Dell! We're cheaper and less fair!"

There's profits in being fair...

The first Fair Trade tech company would reap a bonanza in terms of the marketing opportunities plus all the free publicity surrounding that announcement.

Steve Jobs has taken bold steps in removing porn from the iPad, he's clearly an ethical thinker and leader. Why wouldn't he want Apple to become a Fair Trade company? I'm certain he will. I'm certain that eventually, every company will seek to be Fair Trade.

If it is truly inevitable, why not try to be the first and reap the benefits before everyone else?

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Here is a Pearltree on Fair Trade Electronics. If you know of additional sources send me a pearl and I'll add it.


Story link | Subscribe free | Categories: A Top Story, Fair Trade Electronics




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