Open up your mind and say, ahh...

Last week Foxconn pushed its starting salaries up from 900 yuan ($143) to 1,800 yuan per month, the latest and biggest in wage upticks that began in 2010. Foxconn did this for one main reason: international attention focused on the firm and associated ethical questions surrounding its treatment of workers. The lens through which this attention was focused bears just one name–Apple–because the iPhone seller is one of the biggest companies in the world, and has recently made very bold steps to improve worker conditions. But Foxconn is actually a key supplier for a laundry list of international electronics firms, from Samsung to numerous household American names. Now two of those firms, tech giants HP and Dell, have warned that rising costs in their Chinese supply chain may result in increased in-store prices for their wares.

Just think about that for a minute, let it simmer in your mind. While it’s cooking, here’re a few spicy facts to add to the flavor.

1. Apple, facing enormous criticism about unfair treatment of workers in its supply chain–who technically work for a totally different company, in a different nation with a vastly different social and economic background–has tried to improve the situation, and has admitted errors publicly.

2. Foxconn faced controversy in the past over its supposed suicide problem. As a harsh statistic it’s worth pointing out its actually much lower than the Chinese average. Infer from this what you like about worker conditions. And remember that many potential employees are battling to work at Foxconn compared to its competitors.

3. In early 2011 it was noted that China already had the third highest labor costs in the emerging Asian economies.

4. China’s work ethics, worker conditions, and economic situation are radically different than those in the U.S., influenced by Chinese politics, history, local economic effects, laws, social habits, and tradition.

5. Raw global economics and relative currency values mean that the local equivalent of a dollar can go further in many nations than you may expect it to go in the U.S. Anecdotally a can of Coke costs $0.34 at equivalent rates.

Now, here’s more to chew on: Thanks to rising Chinese wages, brought on partly by economic booms caused by Western revenues at firms like Foxconn, partly thanks to recent events, Dell and HP have said they’ll have to pass on the costs to the consumers. That means many consumers in the U.S., a vocal number among which have recently taken to pressing Apple, and Apple alone, for improvements and an “ethical iPhone.”

Let’s ignore the odd idea of looking at Chinese work ethics through glasses tinted with Western experience, let’s skip merrily past complex global politics and economics, and brush over how critics ignore the fact economies in countries outside the U.S. work very differently, including with different value associated with cash.

Ignoring all this, we can say many Western consumers may be happy to pay more for a premium device if they knew it was produced under more comfortable–Western-like, natch–situations.

But Apple hasn’t said it’ll raise its prices because of all these moves. In a way it doesn’t have to, it can eat any increased costs passed onto it by Foxconn thanks to its high profit margin. Good business planning there.

Dell and HP aren’t doing so well financially, and losing increased production costs in their thinner profit margins may not be so easy. But these firms have kept their head below the parapet in the Foxconn battle thus far, and now their bold move is to say “folks must pay more.” That’s at the least incredibly uninspiring, and the opposite of innovative.

No one’s apologizing for Apple, nor saying Foxconn’s employees enjoy the very best of conditions. But maybe it’s time to suggest other computing giants like Michael Dell’s outfit, Korea’s government-intertwined big name, and Meg Whitman’s new gig start thinking differently. That means applying their innovative, creative thinkers into changing their supply chain dynamics, improving worker conditions, being open about their suppliers, actually adapting their behavior from make-it-low-cost/stack-it-high/sell-it-cheap. Think of all the lovely positive PR.

Related: Apple’s Tim Cook on Foxconn: Data Transparency, Work Hours

Related: The Foxconn Effect: Where Will Electronics Be Made If China’s Wages Rise?

Image: Flickr user ttstam

When British rapper M.I.A. flipped her middle finger to more than 110 million Super Bowl TV viewers two Sundays ago, it caused the NFL and NBC to flip out too. Rightly so. Both organizations have codes of conduct, regulations, and responsibility to audiences of all ages who were watching the half-time show, which is where this gesture occurred.

There’s been some finger pointing and talk of how angry Madonna is, but meanwhile, M.I.A. seems to be keeping her head and finger down. Her fans’ reaction to this has spanned a range of feelings from “who cares” to “cheers.” Will this scandal hurt her career? No. In fact, this scandal may enhance her aura and popularity as a badass. It’s just M.I.A. living up to her brand image, like any good brand must do.

This case in point goes to show that what’s seen as a “scandal” to some can also be seen as “good publicity” to others. The idea of success through scandal is not a new one. The French even have a term for it: succès de scandale. But of course!

Scandals in the world of brand image and communications are not uncommon. The questions that always arise are:

• Who do they help?
• Who do they hurt?
• Are setbacks recoverable?

A few years ago when Activia yogurt got overzealous in its product performance claims, consumers cried foul.  Health claims had to be restated with a bit less creative license. For Activia, this was a scandal and it cost them millions. For a competitor, category scrutiny is a boost to overall consumer knowledge and awareness. Very often in a scandal, one brand’s bad news is another brand’s sales boost.

About a year ago, when Taco Bell was called out for its meat-blend filling, the brand addressed the issue head on through public relations. What we learned from this is that a scandal can be audience relative. Perhaps in terms of FDA guidelines, regulations, and labeling there was a scandal. In terms of loyal Taco Bell consumers, they still thought it tasted good, less meat or not.

So, what’s so good about being bad?

• Scandals attract attention. If a brand can overcome the negativity and control the consumer outrage that can quickly pop up online through social networking, the brand, and even category, can benefit from increased awareness.
• A scandal can level the playing field by bringing issues to light that were not previously in the consumer consciousness. When Nike was called out for using some factories in China that did not have fair labor practices, the company reviewed its guidelines, set high standards to achieve, and caused an entire industry to follow. Corporate responsibility spilled over to category responsibility.
• Scandals can give brands an edge. If the scandal is just enough to make you seem “bad” but not enough to actually be detrimental your business or consumers, a proactive “sorry” in the right way is often enough to allow the issue to subside and the brand to move forward. The scandal will eventually become part of the brand’s mythology.
• A scandal prompts course correction and can lead to overall improvements in multiple facets of a brand experience. From tamper-proof caps on medicine to sealed packaging at retail, overall consumer safety has often been improved because of a scandal.
• Scandal can bring fame. Brands that are known and in the public consciousness are celebrities in their own right. Scandals not only have the power to break a brand, they have the power to make a brand. Just ask Paris Hilton.

A brand scandal is often a polarizing incident that has both negatives and positives associated with it. If you are caught in one, it’s always best to face it head on, then devise a strategy in order to move on. The worst thing you can do is go MIA… like M.I.A.

Image: The Superficial

For online security professionals, 2012 is turning out to be a banner year. Prominent hacks are taking place nearly every week. Credit card fraud and piracy on the Internet are booming. Hacktivist attacks against government computers and private companies are occurring almost daily. Big-name government agencies and businesses everywhere are shelling out for security assistance … but for everyday Internet users, it’s a giant headache with unclear risks.

The one thing no one is really able to explain is why cybercrime’s booming. According to a recent Norton study, cybercrime cost the global economy (in both direct damage and lost productivity time) $388 billion in 2011–significantly more than the global black market for marijuana, cocaine, and heroin combined. Officials at the Department of Homeland Security have reported exponentially increasing demand for cybercrime assistance–something confirmed by this reporter in anecdotal discussions with online security experts.

Every single expert has a different theory. Some say it’s due to a global economy that’s putting programmers out of work and turning them rogue. Others say it’s the easy availability of computers in poor regions of the world where job prosects are few. Then others say it’s simply that scripts and DDoS attacks have democratized cybercrime.

DDoS attacks–and their first cousins, botnets–are one of the biggest culprits. Most DDoS attacks are amazingly simplistic; they are denial-of-service attacks frequently made via software that requires no programming or IT knowledge. Botnets are impromptu networks of Internet-connected computers turned rogue via malware. Once a computer is compromised, they can be used for everything from financial fraud to knocking websites offline. Reached by email, Carl Herberger of security firm Radware put much of the blame on hacktivists such as Anonymous.

“The motive for attacks has changed and this new motive brought with it new tools and attack techniques,” Herberger tells Fast Company. “These new motives–frequently called ‘Hacktivism’–are in a new category which will go down in the record books as one of the most active periods of cyberattacks in the history of information security. Given the current efficacy of ideologically-based multi-vulnerability attacks such as WikiLeaks revenge attacks of 2010 and the Sony attacks of 2011, we believe this will only serve to encourage even more actors to enter the picture and spawn a vicious cycle of future malicious activity.”

While the idea that politicized groups such as Anonymous are malicious and/or criminals is controversial, many security experts agree with Herberger. At the recent Kaspersky Lab Cyber Conference in Cancun, CEO Eugene Kaspersky compared hacktivists to radicals who plant car bombs and commit arsons in the name of ideology. Similar alarms were raised in an end-of-year letter from risk management firm Stroz Friedberg, which largely conflated hacktivism with threats like state-sponsored data theft and zero-day exploits.

As for state-sponsored data theft, the New York Times just reported on the lengths to which American companies go to avoid Chinese cyberespionage. American businesspeople, consultants, and politicians working in China avoid bringing their work computers into the country and use throwaway mobile phones–to name the most common tricks–in order to avoid the loss of business secrets to state-sponsored corporate spies. While China is the most blatant nation-state to engage in spying on foreign businesses for the benefit of homegrown companies, it isn’t uncommon. Russia, France, Israel, Taiwan, and others have also been alleged to engage in the process.

The use of malware and worms is continuing unabated. While they remain common, little innovation has made it into the mass criminal market–the truly unique manifestations are only isolated creations of genius rogue programmers. But … the last major threat of 2012 is cyberwarfare. Anonymous has successfully transformed from their humble prankster beginnings at 4chan into an international movement. Other organizations such as LulzSec–and a host of others–are successfully coming up with cutting-edge prank attacks on high-profile targets. Non-state actors like Anonymous will increasingly see their methods used by nation-states and sympathetic patriots. Ongoing saber rattling between Britain and Argentina, friction between Russia and neighboring ex-Soviet states, war clouds over Israel and Iran, and the migration of foreign volunteers to Syria will all contribute to fertile grounds for cyberwarfare. The question now isn’t if us journalists are going to be writing about it–it’s when.

Image: Flickr user Scott Swigart

China continues its big push into the aviation industry, this time with its first domestically made heavy-lift civilian helicopter.

The Chinese government has approved the new AC313, which can carry as many as 27 passengers and has a maximum take-off weight of just over 30,000 pounds, for commercial use. The helicopter, built by the Aviation Industry Corporation of China, is an example of a colossal push into the aviation sector that includes everything from buying aviation firms in the United States to designing a regional airliner to compete with Boeing and Airbus.

Although the AC313 is Chinese-designed and built, it is an evolution of a French helicopter the Chinese first copied in the 1970s. The Chinese bought several SA 321 Super Frelons from France and in subsequent years produced helicopters of similar size and capability. The AC313 is a larger version of those same helicopters, with a range of more than 550 miles and the ability to fly at almost 28,000 feet.

AVIC is at the front of China’s aviation push. The company makes everything from fighter jets to small turbine-powered propeller airliners. Over the past year the Chinese company has showed interest in finding Western partners to build business jets.

Three different aircraft manufacturers — Bombardier, Cessna and Hawker Beechcraft — have responded to a request for partnership from AVIC, according to Aviation Week. Last year AVIC purchased the Minnesota-based Cirrus aircraft. Cirrus makes small, single engine general aviation aircraft and is developing a small business jet.

The Chinese aircraft maker is part of a large government-owned aerospace consortium and is nearing delivery of its own 80-100 seat commercial jet. The Comac ARJ21 bears a strong resemblance to the McDonnell Douglas MD-90, partly because the airplane was built using tools from MD-90s assembled under a license. The wing is one of the only major differences in the airframe.

The AC313 helicopter made its first flight in 2010 and is designed for a wide range of uses, according to AVIC. The first customer plans to lease the first five choppers off of the assembly line and will use them for flying cargo and passengers, as well as firefighting. The heavy-lift helicopter is powered by a pair of Pratt & Whitney PT6 engines made in Canada.

The size and capabilities of the helicopter would also make it an attractive for use in search and rescue as well as the oil industry.

AVIC says it plans to pursue certification of the AC313 in the United States and Europe.

Photo: The AC313 helicopter during a test flight in Jingdezhen city, in east China’s Jiangxi province. Associated Press.

The giant consumer technology firm revealed in its “Apple Supplier Responsibility Report” for 2012, available for perusal here, that it had carried out 229 individual audits among its diverse and largely secrecy-shrouded supplier chain. Looking for responsibke behavior across all aspects of their business, Apple paid attention to labor and human rights, health and safety, environmental impact and more ephemeral aspects like ethics and business practices. The targeted firms covered the full range from individual component suppliers to assembly firms like Foxconn.

According to Apple itself, the report represents “a level of transparency and independent oversight that is unmatched in our industry,” with the independent aspect coming from plans to let the Fair Labor Association carry out its own similar audits. Summarizing its audit, and actually admitting to slight errors and inadequacies in earlier audits, the company notes “We continue to expand our program to reach deeper into our supply base, and this year we also added more detailed and specialized audits to address safety and environmental concerns.
We know that finding and correcting problems is not enough. Apple-designed training programs educate workers about local laws, their fundamental rights as workers, occupational health and safety, and Apple’s Supplier Code of Conduct. Today there are more than one million people who know their rights because they went to work for an Apple supplier.”

This position is interesting, given the recent eye-grabbing headlines coming from Foxconn–which is one of its biggest suppliers. Over a hundred workers in a Foxconn plant in Wuhan, China had threatened mass suicide because their company had moved them ad-hoc to a different production line, with a potentially dangerous lack of training and imbalanced pay conditions. Though the situation has now been resolved, reportedly with the resignation of many of the workers involved in the scandal, it’s a black PR mark for Foxconn and thus its prestigious overseas clients of which Apple is the best known. Foxconn had previously been embroiled in a different suicide scandal, which though potentially overblown by a sensation-seeking press, did speak to non-ideal working conditions in Foxconn factories–with stress to deliver to Apple as the cause.

A small number of explosions in Foxconn facilities is another bad episode in its recent history, with the blame laid on inadequate dust extraction in machining facilities causing dust explosions, fatalities and injuries, and terrible headlines. Apple has also faced criticism from global groups like Greenpeace about its allegedly poor environmental footprint, largely stemming from dangerous practices among its supply chain companies.

Among these issues, Apple also disclosed that some suppliers, mainly at indiivdual component level (a lower margin business than product assembly) were operating with child laborers–an amazingly frank admission. Following Apple’s own strict policies, the firm will push for radical changes in infringing firms. Apple notes it requires “suppliers to return underage workers to school and finance their education through our Child Labor Remediation program” with free education and continued payments.

As part of its audit trail Apple has also revealed in full its extensive list of suppliers for the year 2011. Though there will be modifications to this list for 2012, it’s also an unusually open move by Apple. Speculation on these moves would naturally lead to the fact that with the death of Steve Jobs, Tim Cook is now CEO and his expertise over the years has actually been in perfecting Apple’s supply chain so it can command in the markets it now leads in.

Image: Flickr user mwiththeat

Chat about this news with Kit Eaton on Twitter and Fast Company too.