Apple is a company with a huge following and massive demand. When new products are announced, millions of people around the world start planning for how many days they will need to take off work or school in order to line up at their nearest Apple store days in advance of the release. In order to keep up with this massive product demand, Apple appears to have made the calculated decision to violate Chinese Labor Laws in order to cut costs and circumvent regulation.

Based on Chinese Labor Laws, employees at Zhengzhou Foxconn Factory (the largest iPhone factory in the world) have been working more than what the current labor law allows. In China, it is against the law to hire more than 10% of your overall workforce in one factory as temporary workers. At the Zhengzhou Foxconn Factory, approximately 50% of the workers employed were temporary or “dispatch” workers. These employees were also expected to work over 100 hours of overtime per month and were reprimanded for not meeting their daily production targets.

Furthermore, this factory is known to grossly underpay their workers, to the point where the wages received are insufficient to support a family living in Zhengzhou. Apple was quick to release a statement about how they are working to correct this issue right away, ideally without affecting their current operations.

For a company the size of Apple, most fines that could be imposed on the company would be, from their perspective, inexpensive and fairly easy to deal with, or at the most, a minor setback. What would less easy to deal with for them would be a lack of ability to meet their customer needs. Therefore, Apple needs to come up with a plan can both meet prospective product demand while still being in compliance with local labor laws.

The government of the People’s Republic of China must determine what penalties will apply and will most likely fine Apple – but based on their decision to hire this many temporary workers, Apple executives may have already accounted for these fines in their budgets. Apple has also stated that their temporary employees voluntarily accepted all working hours and overtime hours and that there was no evidence of forced labor.

Where does this leave other enterprises operating in China? What kind of a precedent does this set? Is a hypothetical “slap on the wrist” enough to deter mega corporations (like Apple) from disregarding local labor regulations? Or will Chinese Labor Laws continue to be circumvented?