Report: Foxconn paid iPhone suicide's family $44,000

[Originally posted July 27, 2009 on Fortune.com]

Much has been written -- especially in China -- about the case of Sun Danyong, the 25-year-old Foxconn employee who jumped to his death from a 12th-story apartment in Shenzhen two weeks ago after being interrogated about a missing next-generation iPhone prototype.

The story cast a harsh light on working conditions at Foxconn -- the brand name of Taiwan-based Hon Hai, one of the world's largest manufacturers of computer components -- and the culture of secrecy that surrounds Apple (AAPL) product development. (Apple issued a statement last week that it was "saddened by the tragic loss of this young employee.")

Monday's New York Times moves the story forward in several new directions -- including Foxconn's claim that products in Sun's charge had gone missing before and a report that the company has tried to make amends by giving Sun's girlfriend an Apple laptop computer and his family 300,000 renminbi, or more than $44,000.

[UPDATE: The Associated Press, quoting an unnamed Foxconn official, reported a higher figure Tuesday: $52,600 to the parents, plus $4,385 per year as long as either of them remains alive.]

The New York Times piece, written by Shanghai-based business reporter David Barboza, summarizes the facts as we know them: that Sun was given 16 prototype iPhones in early July to deliver to R&D but only 15 were received; that he complained to friends that he was beaten and humiliated by the factory's security team (a charge the security guard vehemently denies); and that shortly before he died, on the morning of July 16, Sun sent a text message to his girlfriend that said, in part,

"Dear, I’m sorry. Go back home tomorrow. I ran into some problems. Don’t tell my family. Don’t contact me. I’m begging you for the first time. Please do it! I’m sorry.”

James Lee, general manager of China operations at Foxconn, told the Times that his company had a duty to protect the intellectual property of its clients -- not an easy thing to do in the hotbed of electronics piracy and counterfeiting that is Shenzhen.

Lee also claimed that this was not the first time the company had had problems with Sun Danyong. "Several times he had some products missing, then he got them back," Lee told the Times. "We don’t know who took the product, but it was at his stop."

Report: Foxconn building 'crippled' iPhone for Chinese market

To defend his company against charges of unfair labor practices, Lee granted the Times a rare tour inside two Foxconn campuses, including the one where Sun worked. "The campuses were so large," writes Barboza, "they contained retail stores, banks, post offices and high-rise dormitories with outdoor swimming pools."

But perhaps the most telling section of the story is the part where the Times is interviewing Sun's family, and his older brother, Sun Danxiong, tells the paper about the gift of $44,000 and the Apple laptop for Sun's girlfriend.

"On Thursday, with his son Danxiong standing nearby, holding a box with Sun Danyong’s ashes, the father, Sun Yangdong, said Foxconn had treated the family well. But he said he was still in shock that his son could leap from a building because he was so gentle and tender.

Soon after, a security guard, who was joined by two men wearing Foxconn shirts, threatened to “beat up” a journalist’s translator if she persisted in asking the family questions. Foxconn officials later said the guard was not on their staff and might have been with the police bureau." (link)

According to Evan Osnos, writing for the New Yorker, Sun was an archetypal member of the Shenzhen factory world -- a noticeably quiet young man who grew up in an isolated mountain village and moved to the city shortly after graduating from Harbin Institute of Technology, one of China’s best schools. Profiles of Sun in the Chinese language Southern Daily say his family was poor enough that Sun would erase the old pencil notes from his school notebooks so he could use them again and again.

Osnos quotes from a separate Southern Daily story about Gu Qinming, the security manager who interrogated Sun. Gu says he suspected the employee of lying, but denies having beaten or confined him. He says he merely jabbed Sun in the shoulder, asking, “Are you a man?”, after Sun allegedly blamed a female colleague for the missing phone. Gu, whose name, address and personal details were broadcast in China over the Internet, told Southern Daily that he is unable to return to his home.

[Follow Philip Elmer-DeWitt on Twitter @philiped]