Why did Mr. Sun commit suicide? Was Mr. Sun's reaction to the accusation of theft something that only might be expected in China? On July 16, 2009, a 25-year-old Foxconn employee named Sun Danyong committed suicide by jumping from the twelfth floor of his apartment building. Mr. Sun, who worked at an electronics factory in Shenzen, had been put in charge of a prototype of a new Apple iPhone that went missing. Mr. Sun's death has sparked outrage about labor conditions at China's factories and at the Western companies that source from them.

Foxconn manufactures electronics for some of the world's largest companies, including Sony, Hewlett-Packard, and Apple. When the prototype iPhone went missing, Foxconn allegedly accused Mr. Sun of theft and initiated an investigation. On the day before his death, Mr. Sun told friends he had been beaten and humiliated by factory security guards. Mr. Sun's suicide has brought about an outpouring of further complaints against Foxconn, including unpaid overtime and a militant management regime.

However, it is not only Foxconn that has taken the blame for the suicide and the conditions that led to it. The Western giants that source from Foxconn—Apple, in partic¬ ular-have received criticism for their "cultures of secrecy," which many believe encourage militant management at their factories. These companies' intense efforts to protect their trade secrets at sourcing factories in China point to another difficulty with sourcing from China: intellectual property rights violations. Popular brands like Apple are counterfeited heavily in China, and prototype theft is a real and widespread problem.

Foreign companies that source from China must therefore walk a very fine line between protecting their intellectual property and ensuring reasonable working condi¬ tions that comply with international and local standards. Management that is too lenient subjects a company to theft and counterfeit, but an overly militant managerial regime may lead to inhumane working conditions and potentially even to tragedies like the suicide of Mr. Sun.