Is Foxconn Fleeing China? Sure Looks Like It

http://www.forbes.com/sites/gordonchang/2013/02/24/is-foxconn-fleeing-china-sure-looks-like-it/

by nreece • 13 years ago

69 28 13 years ago

cpleppert• 13 years ago

Geopolitical concerns can't be even a small part of why Foxconn is expanding internationally. This is just sensationalism over wanting to build the supply chain to build anything in any location on the planet. They aren't just a source of cheap labour anymore. Especially Foxconn International wants to move up the chain and provide more value.

chiaro• 13 years ago

It's incredibly interesting to me that a share price in an US company can plunge just because their manufacturer in China had some surprisingly low employee churn.

kbar13• 13 years ago

it's not because of the low employee "churn", it's because Foxconn has put a freeze on hiring.

People see "hiring freeze" and instantly associate that with slowing down production or growth.

seanmcdirmid3• 13 years ago

Again CNY. Usually during CNY, a lot of your employees don't come back, so everyone expects high churn around now. Except more old FoxCon employees came back than expected, so they were probably hiring more people than they thought they needed. So full stop on hiring. Makes sense given the way the migrant worker labor market works here.

jhancock• 13 years ago

As near as I can tell, the author doesn't seem to understand the import of Chinese New Year. Happens ever year. No news here.

greenyoda• 13 years ago

"It's incredibly interesting to me that a share price in an US company can plunge just because their manufacturer in China had some surprisingly low employee churn."

Not surprising at all. Stock prices frequently rise and fall dramatically due to rumors that are completely baseless. This one, at least, has some facts behind it (which may or may not have been interpreted correctly).

rogerbinns• 13 years ago

Nothing is mentioned about robots. It certainly makes sense to use them closer to customers and where wages are higher. It is also easier to run a factory with robots 24 hours a day 7 days a week at times leading up to product launches.

http://www.tomshardware.com/news/foxcponn-apple-iphone-ipad-...

JumpCrisscross• 13 years ago

Brazil has walls of tariffs around its lucrative consumers. The U.S. has Hon Hai's largest customer's sourcing ambitions. Indonesia has cheap unskilled labour.

The author, Gordon Chang, is a political analyst. I suspect this may be colouring his perception.

bvi• 13 years ago

Out of curiosity - does Foxconn procure the parts which it uses to assemble iPhones, iPads etc, or is it Apple's responsibility/domain to procure all the parts, with Foxconn merely putting it all together?

beagle3• 13 years ago

There might be stuff like screws that Apple will let foxconn procure based on their spec, but they might not even let them do that.

Apple produces the CPU, procures the screen, the aluminum, the glass, the memory and the glue. At the scale they operate, if they didn't, they won't be able to keep the production pipeline running.

hef198982• 13 years ago

Ok, so you have a 1.5 million employee company that actually wants to expand it foot print to contries other than china. Brazil, Indonesia and the move to the US was already discussed.

Articles like that happen when political journalists write about economic things. The facts provided are mainly that Foxconn has a) a new growth strategy and... let me think... yeah, that's about it.

But yes, a 10 billion investment plan in indonesia surely is a sign that the iPhone 5 (the only electronic device Foxconn is assembling) isn't selling as good as before. Would Apple stock have risen by 2,4 percent the article would have been about greater growth in iPhone market share in Brazil and the HUGE opportunities manufacturing sites in Indonesia would offer.

Just to end up with the fact that Foxconn flees China because it's a bad place to be. Business as usual in journalism and stock exchanges. :-)

ma2rten• 13 years ago

> the iPhone 5 (the only electronic device Foxconn is assembling)

What do you mean?

"Notable products that the company manufactures include the iPad, iPhone, iPod, Kindle, PlayStation 3 and Wii U."

Source: http://en.wikipedia.org/wiki/Foxconn

hef198982• 13 years ago

Sorry, I forgot the ironic smilley! ;-)

fauigerzigerk2• 13 years ago

Moving production to Taiwan doesn't seem to be a particularaly smart move if the objective is to avoid China related political risk.

potatolicious• 13 years ago

How so?

The modern take on China-Taiwan relations is free trade and cross-strait economic cooperation. The Chinese have a not-very-hidden goal of having this lead to eventual political reunification. The Taiwanese are much more ambivalent about this concept, but are embracing whatever option leads to continued de facto independence. The Taiwanese-independence issue is no longer the hot button topic it once was.

In short, so long as Taiwan makes no overtures towards actual independence, this relationship is stable, with lifting trade interference being a publicly stated goal on both sides.

Source: I'm a Taiwanese expat.

fauigerzigerk2• 13 years ago

Taiwan making overtures towards actual independence doesn't seem like a very far fetched possibility. It has been a hot button issue on and off over the last decades. If, on the other hand, China and Taiwan actually move towards unification, Foxconn's decision seems even more pointless.

gurkendoktor• 13 years ago

This is how I've perceived the relationship until the last election.

But, just hypothetically speaking :), if the PRC was hellbent on absorbing Taiwan, they should simply let the Senkaku conflict escalate. In that case, the KMT could believably argue that they have no choice but join sides with the PRC, no matter the democratic ambivalence about it. The reason I could see this happen is because this would be the last chance for the PRC to actually achieve unification. It's certainly not going to happen democratically.

Not that this would be of much interest to Foxconn; but being in the general area would suck in the case of a conflict. If Terry Gou really moves robot production to Taiwan out of all countries, I guess he agrees with you that there's no imminent danger (which I hope).

bitcartel• 13 years ago

It appears the author has a penchant for bashing China at every opportunity. Check out this comment[1] and then browse the author's archive[2] to make up your own mind.

[1] http://www.forbes.com/sites/gordonchang/2013/02/24/is-foxcon...

[2] http://www.forbes.com/sites/gordonchang/archive/

dear• 13 years ago

This guy is desperately trying to latch on anything he can to sell his prophecy.

http://www.gordonchang.com/qanda.htm

Q: When Will China Collapse? A: Within this decade—in other words, by 2011.

seanmcdirmid3• 13 years ago

Well, we have a pretty big property bubble here ATM. Once it goes pop.....

joonix• 13 years ago

China is not a consumer driven economy.

owksley• 13 years ago

To be fair to the author, there are various issues, particularly for technologists. The uncomfortable relationship between the government and the web, censorship, piracy, and net security all contribute toward a challenging environment for global tech companies.

I think "collapse" is a strong term, but changes will undoubtedly happen in the coming years. Companies and investors are generally very keen to avoid uncertainty. FoxConn is simply doing what any sensible multinational ought to do by mitigating the risks of having all its eggs in one basket.

confluence• 13 years ago

> Foxconn Technology Group sent Apple Inc. stock reeling on Wednesday. Shares plunged 2.4% on reports that the world’s largest contract manufacturer of electronics—and Apple’s largest assembler—had imposed at its Chinese plants a hiring freeze lasting until at least the end of next month.

Sigh. Daily movements in short term market liquidity do not a causation of disparate events make. Movements happen in stock markets everyday for no apparent reason - and using these to buoy your point just shows you how you don't understand financial markets.

seanmcdirmid3• 13 years ago

I heard Foxconn was able to offer decent salaries and got all their new hires in pretty early at the start of the post-CNY hiring season. All their competitors are hurting for workers now, the workers have raised their expectations (if Foxconn can over X, why can't you?) and now there are labor shortages in the Pearl/Yantze manufacturing areas.

lifeisstillgood• 13 years ago

Foxconn is not really the story, let alone their investment plans - the story is that this will create far far fewer jobs than thought - manufacturing, even at Foxconn, is dominated by automation and I would not be surprised if Apple were looking for a gleaming, bright, lights-off factory for the iPhone - think car factory in Minority Report

Gou has also been reported saying he wants to invest in a million robots at his factories.

Humans are structurally unemployed

stravarius• 13 years ago

The idea of a company the size of Foxconn fleeing China isn't believable. Government regulations, tax structure and cost considerations determine business decision making. And, that's exactly why China's thriving right now. A decade from another low cost center will spring itself up and without doubt businesses will throng that destination.

It for sure makes a great negotiating tactic to extract maximum leniency from the Chinese Govt. Besides, Foxconn is one of the poster boys for Chinese manufacturing might and the Govt. won't let them shut shop over night. It's just bad PR!

smoyer• 13 years ago

I don't normally expect to see the words "hissy fits" in a Forbes article ... I wonder if Forbes will be blocked by the great firewall now.

In any case, I tend to agree with the sentiment that you'd better be seen as sane if you want the rest of the world to include you in the global economy.

Is Foxconn Fleeing China? Sure Looks Like It

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