KAI RYSSDAL: As of right now Apple's just another high-tech company, albeit quite the successful high-tech company. There's been some interesting rumors the past couple of days, though, that it'll be put into the Dow Industrials, thus officially becoming a blue chip stock. Whether or not that eventually comes to pass, Apple's going to have to keep inventing and making and selling its gadgets to keep up.
That manufacturing process is where we turn right now. Apples plants in China are in the crosshairs of Chinese media over alleged air and water pollution problems. But if Apple were a Chinese company, it's unlikely anybody would know a thing. Our China correspondent Rob Schmitz explains.
ROB SCHMITZ: The village of Tongxin in China's Yangtze Delta was once surrounded by rice paddies. Now it's completely enclosed by enormous factories. A Chinese environmental group claims two of these factories are making iPads and the new iPhone 5 for Apple. But don't ask villager Zhu Zuping about Apple.
ZHU ZUPING: Apple? I think the company makes mens' clothing, right? I think my belt was made by Apple.
Villager Zhu may not know Apple's products, but he says he knows the company's byproducts. He blames the factories here for turning the local creek inkjet black and making the air smell like WD-40. A hundred and fifty people used to live in this neighborhood. Twenty-six live here now. Everyone who could afford to leave... left. According to the village chief, a third of those who remain have cancer.
Villger Bao Shuiling holds his 6-month-old granddaughter. He says his family's trying to save money to move away, too.
BAO SHUILING: The fumes from the factories make us dizzy, we can't sleep well because the factories are so noisy, and our water is poisoned. You can't even go near it because of the smell.
Apple hasn't confirmed or denied that its products are made at these factories. Until it does, Apple will likely continue to be attacked by the state-run media. It's following the lead of Ma Jun. He heads China's most prominent environmental group. His organization published a report that criticizes Apple for not paying closer attention to the environmental records of its suppliers in China. So if the local companies that have contracts with Apple are the problem, why not go after them?
MA JUN: These local companies, they don't have powerful brands.
And because hardly anybody knows who they are, these Chinese companies are usually content to ignore public criticism. They know the Chinese media may be under political pressure not to cover the stories. But according to Tsinghua business professor Patrick Chovanec, targeting a foreign company can sometimes impact Chinese companies. For example, last year, Chinese workers went on strike at auto plants in Southern China. Chovanec says had these been Chinese factories, you never would've heard about it. But they were Japanese auto plants. And the Chinese press devoted daily coverage to them.
PATRICK CHOVANEC: So they can cover a meaningful story, which is the labor market in China, labor conditions in China. The venue that's open to them is to be able to talk about the Japanese auto plants and what's going on there.
Chovanec says that scrutiny could change the way Chinese companies do business. That's the hope for Chinese environmentalist Ma Jun.
JUN: I hope that the foreign business, the big ones, come to China and could take the lead, carry on their good behavior in their home country and try to lead the change in China.
But in Tongxin Village, that idea seems idealistic and naive to villager Zhu Zuping, a man who may not know what Apple makes, but seems to have a command of the history of the global supply chain.
ZUPING: These global companies manufactured products in Japan until people there noticed all the pollution. So they moved the factories to Taiwan, Korea and Singapore in the 1970s. After getting kicked out of those countries, they moved the factories here, to mainland China, in the 1980s.
Zhu says he's waiting for the day when foreign companies will pick up and move away from his village. But that would still leave pollution from factories run by Chinese companies. The question is: When will China's state-run media target them?
Reporting from the Yangtze Delta, I'm Rob Schmitz for Marketplace.
Check out the first part of this series -- U.S. companies in China: Polluters or scapegoats?