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Foxconn: The Fire That Wasn't

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Over the past month, media reports have made Foxconn (FXCNY.PK:OTC) the icon of Chinese labor suffering. Headlines from The Telegraph (March 7) read " iPhone Workers Beg Apple for Better Working Conditions." Daily Tech wrote, " Employees at Apple's Hellish Foxconn Factory Feel Life is 'Meaningless'." Sounds like a scary place.

My office building shares a property line with Foxconn's largest plant in Shenzhen. Every night I see Foxconn employees at restaurants. They seem happy, but after reading many articles, I've come to view them with pity. Yet, friends who work as consultants to Foxconn tell me that working conditions are quite good.

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There are thousands of factories in the Pearl River Valley and a there is free flow of employees between the factories. I wondered how could a company be so abusive and yet so successful? It seemed to defy logic.

I began to wonder, "What does Foxconn look like through the eyes of its employees?"

Foxconn is a Taiwanese-owned company that produces about 40% of the world's consumer electronic products and is Apple's (AAPL - Get Report) largest supplier. Its largest factory in Shenzhen employs approximately 300,000 young adults. It's beyond huge. As a personal disclosure, I am neither related to, nor friends with any FoxConn employee and I do not own Foxconn stock. I do own AAPL.

Most FoxConn employees come from the countryside where their hardworking families have farmed the same land for many generations. They dutifully send home part of their paycheck each month.

From 1988 until 2009, four Foxconn employees attempted suicide on-site (0.18 per year). In 2010, that number increased almost one hundred times to eighteen. In 2011, it fell again to four. What happened in 2010?

In 2010, embarrassed by bad publicity, the company offered condolence pay packages equivalent to 10 years' salary to families of the deceased. This was widely reported in China and company officials say the incentive served as a call for depressed individuals to join Foxconn and leave life with honor. Foxconn CEO, Terry Gou read this letter to shareholders: "...now I'm going to jump off Foxconn, really leaving now, but you don't have to be sad, because Foxconn will pay a bit of money, this is all your son can repay you now."

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