Violent protests erupt at Apple’s main iPhone plant in China

(Bloomberg) — Hundreds of workers at Apple Inc.’s main iPhone manufacturing plant in China have clashed with security personnel as tensions flared after nearly a month of tight restrictions meant to quell a Covid outbreak.

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Workers at the Foxconn Technology Group plant stormed out of their dormitories in the early hours of Wednesday, pushing and shoving past the vastly outnumbered white-clad guards, according to video sent by a witness to parts of the protest. Several people dressed in white punched a person lying on the ground with sticks in another magazine. Spectators shouted “fight, fight!” as crowds of people made their way past the barricades. At one point, several surrounded an occupied police car and began swinging the vehicle while yelling incoherently.

The protest began overnight over unpaid wages and fears of spreading the infection, according to the witness, who asked to remain anonymous for fear of repercussions. Several workers were injured and riot police arrived on Wednesday to restore order, he added.

In one video, angry workers surrounded a silent, dejected manager in a conference room to voice grievances and question Covid test results. It is unclear when the meeting took place.

“I’m really scared for this place, now we could all be Covid positive,” said a male worker. “You are sending us to our deaths,” another person said.

The Zhengzhou campus had been operating normally since Wednesday evening, a Foxconn spokesman said. The violence erupted after a handful of recently arrived employees raised complaints about “job benefits” — bonuses or payments on top of regular wages, Foxconn said in a statement. But the company emphasized that it handles all of these settlements in strict accordance with its contractual obligations.

“Regarding the violence, we are continuing to communicate with workers and the government, to avoid a repeat,” the company said without elaborating.

Rare instances of violence at the plant in the central city of Zhengzhou reflect a build-up of tensions since the lockdown began in October. Many among the vast workforce of more than 200,000 people at “iPhone City” have been plunged into solitary confinement, forced to survive on spartan meals and scrounge up drugs.

Many eventually fled the plant on foot last month. Foxconn and the local government appeared to have kept the situation under wraps in recent weeks, promising unusually high wages to attract new staff and promising better working conditions.

Wednesday morning’s protests suggest that is no longer the case. He underlines how Xi Jinping’s Covid Zero policy, which relies on rapid lockdowns to eliminate the disease wherever it occurs, is increasingly weighing on the economy and throwing swathes of the global supply chain into turmoil. Beijing recently issued new directives ordering officials to minimize disruption and use more targeted Covid controls, but rising outbreaks in major cities have forced local authorities to again resort to strict limits.

“It’s really a disaster,” said Barry Naughton, a professor at the University of California San Diego who specializes in Chinese economics. “They have created a situation where local decision-makers are under intolerable pressure.”

The offshore yuan fell after Bloomberg’s report, extending losses and making it the worst performer in Asia on Wednesday.

The Chinese currency “is underperforming its other Asian FX counterparts on reports of protests at Foxconn’s Zhengzhou plant that supplies Apple products,” Stephen Innes, managing partner at SPI Asset Management, wrote in a statement. “However, a broader and more optimistic interpretation is that China is reaching the limits of ‘Covid zero’ and the authorities’ efforts to ease restrictions will continue.”

Violence has erupted sporadically across China due to Covid restrictions. In May, hundreds of workers clashed with security personnel at the Quanta Computer Inc. factory in Shanghai after months of being cut off from contact with the outside world, as protests erupted in closed areas of Guangdong, the southern manufacturing hub .

Read more: iPhone Pro output estimates cut by Morgan Stanley after lockdown

The Foxconn situation serves as another reminder of the dangers for Apple of relying on a vast China-centered manufacturing machine at a time of unpredictable politics and uncertain trade relations.

Zhengzhou is the site of Apple’s most critical manufacturing, churning out about four out of five of its latest-generation phones and the vast majority of the highest-end iPhone 14 Pro units. Apple warned this month that shipments of its new premium iPhones will be lower than previously expected, just before the holiday shopping peak.

The sprawling complex has been operating for weeks within a “closed loop,” or self-contained bubble that limits contact with the outside world. This is keeping some production going. Apple and Foxconn said they are working to replace staff who have left and resume full production as soon as possible.

The protests took place hours after Henan party chief Lou Yangsheng visited the area where Foxconn plants were located and held a video chat with selected employees. He asked executives to help staff and ensure a “warm, relaxed and stable” living and working environment, according to the official Henan Daily. Lou’s visit underlined the unusual amount of effort provincial officials had poured into the nation’s largest private sector employer in recent weeks, from helping with recruiting to urging retirees to work at Foxconn.

Naughton, the professor, said Beijing is putting intense pressure on local officials to implement contradictory goals.

“The tension is that Beijing wants both Covid Zero and full economic growth,” he said. “It’s almost impossible.”

–With assistance from Rachel Chang, Wenjin Lv and Jing Li.

(Updates with comments from Foxconn and official media from the sixth paragraph)

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