Besides recently losing a substantial part of its tablet market share to rival Android and hair-raising stories of Chinese iPhone users being electrocuted while charging their smartphones, another headache is coming Apple's way from China.

Reports said said that Pegatron factory where the Cupertino-based tech giant assembles iPhones, iMacs and possibly the upcoming iPhone 5C, more known as the cheap iPhone, have sweatshop conditions.

The basis of the story is a China Labor Watch report and video of working conditions in some of Apple's Chinese factories such as tired workers sleeping on the floor

the use of buckets for washing in squalid communal showers set up in garages

Original source: Business Insider

and dirty urinals.

Apple also bans among its workers tattoos, coloured hair, short employees and certain ethnic groups.

In response to the report, Apple said it would conduct an audit on the factory's working conditions. Apple insisted it had held 15 audits in the past since 2007 at the Pegatron facilities, covering over 130,000 in a bid to ensure safe and fair working conditions are in place at its supply chain.

"If our audits find that workers have been underpaid or denied compensation for time they've worked, we will require that Pegatron reimburse them in full," Apple said.

Pegatron CEO Jason Cheng said in a statement, "We strive to make each day at Pegatron better than the last for our employees. They are the heart of our business. That's why we take these allegations very seriously."