Japan Press Weekly

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2017 February 22 - 28 [ECONOMY]

Japanese SME rises up against arrogant Apple

A medium-sized subcontractor in Tokyo has stood up against the cold-blooded conduct of the global tech giant, Apple, Inc.

Apple, Inc., since its business crisis in 1996 and 1997, has outsourced all manufacturing processes outside its home country, the United States. The gigantic computer company has its overseas subcontractors compete against each other to produce lower-cost components and have these parts assembled into a final product in its assembly plants in China. Searching for more cost-effective “candidate contractors”, Apple frequently changes outsourcing sites. The American multinational tech giant now has more than 1.6 million staff working in its subcontractors in 20 countries.

Several Japanese companies, incorporated under this structure, also supply components to Apple. Tokyo-based Shimano Co., Ltd. is one such company. With its staff of around 350, the Japanese maker has been fighting in court against Apple, seeking compensation for damages.

Shimano, since 2006, delivered precision parts for Apple laptops. In 2012, the Japanese maker established a ramp-up production system in order to meet Apple’s repeated request. Shortly after, however, Apple shifted orders to another maker. As a matter of fact, Apple, behind the scenes, placed orders with other companies making similar products without Shimano knowing it.

However, as Shimano already purchased 80 new machines necessary for the planned production increase, it suffered a huge financial loss of about 500 million yen. To make it worse, the midsized maker came to have “no choice but to dismiss” workers it newly hired in preparation for the extra production. The company, as a result, had to pay them a total of more than 40 million yen in the settlement for their loss of employment. Accordingly, Shimano came to face serious difficulties continuing its operations.

In August 2014, the maker filed a lawsuit for damages inflicted by Apple, Inc., claiming that the price Apple pressed on Shimano to accept “was already below the production cost”. The defendant, however, says, “Shimano had been making large profits from Apple by setting an unfairly high price for its work.”

A plaintiff lawyer told Akahata that the “reasonable price” as the defendant calls it is reasonable only for the defendant and is extremely “unreasonable” for the plaintiff.

Apple always takes advantage of its dominant bargaining position and pursues only its profits, no matter whether its conduct is causing a huge loss to subcontractors around the world. Apple’s way of making deals with subcontractors is highly improper.

Past related article:
> Apple evaded 200 billion yen in taxes in Japan [February 11, 2017]