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So What if Samsung Violates Labor Laws in China?: Opinion

Stocks in this article: AAPL HMC TM NSANY

Samsung (005930.KS) shares traded in Seoul also hit an all-time high last month and appear to be unfazed by reports about factories in China. ADR shares of the South Korean firm -- so large that it makes up more than a third of the MSCI Korea index -- also trade in the United States.

In Foxconn's case, the glare of labor issues may even put a shine on new Apple products. China Labor Watch itself says the October strike was due to "strict quality demands on workers" including some related to scratches on phone frames.

"With such demands, employees could not even turn out iPhones that met the standard," the labor group said in a statement on Oct. 5. "This led to a tremendous amount of pressure on workers."

The idea is to stir consumer anger against the firms behind these labor issues and steer them to other products, pressuring the factories under fire to make changes. Shoppers in Western countries are into fair trade. But probably more are keen on buying phones without scratches on the frames.

Share prices of Foxconn's parent company Hon Hai (2317.TW) have bounced around since the suicides at its China factories in 2010, but drops appear pegged to dips in the global economy that would affect consumer demand for electronic devices.

Bounce-backs among MNCs questioned for labor practices don't run in just the tech sector. In December 2011 China Labor Watch reported that cuts in year-end bonuses had set off a strike at the Guangzhou Alei Siti Auto Parts Corp., a factory complex with 1,500 employees who make stuff for Honda (HMC), Toyota (TM), Suzuki (7269.T, SUK.F) and Nissan (NSANY).

Incidentally, China Labor Watch is just one of three well publicized NGOs that follow workplace issues in China. They also don't target only foreign companies.

Japanese automakers took a hit during the anti-Japan demonstrations around China in September following a diplomatic row between Beijing and Tokyo over the control of several small islets.

Share prices of the companies that buy from Alei Siti did slide in December of last year, but so did those of unrelated American automakers. That means something in the world economy, maybe a knock-on from the euro zone-driven fall in financial markets earlier that year, probably affected the whole industry at once.

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