17
2019
05

Foxconn's withdrawal and Gou's ambition

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Some time ago, under a series of heavy news such as "resigning chairman" and "running for the leadership of Taiwan", Guo Taiming and Foxconn once again became the focus of public discussion. Recently, a series of comments by Guo Taiming further pushed themselves and Foxconn into the whirlpool of public opinion. Behind this, the crisis of China's manufacturing industry is also involved.


Evacuation of Foxconn


Recently, Gou Taiming said that this year Apple's main production line will be transferred to India, claiming that it was invited by the general manager of India. It is reported that Foxconn plans to invest US$5 billion to build a factory in India, and the first US$300 million has been paid. It is expected that the Indian factory will provide assembly services for new Apple products in September this year.


In fact, Gou chose India mainly because he wanted to open up the Indian market at Apple's request, and secondly because Indian workers were relatively cheap.


Previously, a high-tech robot pushed an article, "Don't let the factory run away!" 》 Foxconn's move confirms the trend that China, as a "world factory", is facing the evacuation of manufacturing enterprises to Southeast Asian countries in the current environment of the disappearance of China's demographic dividend and rising labor costs.


For a labor-intensive company like Foxconn, India's labor costs are lower, and if Apple needs a lot of labor, it can continue to help produce. In addition, as a fast-growing smartphone market, India is more attractive to Apple because it does not have to pay a 20% import tax. At present, Apple accounts for a small proportion of the Indian market, and its growth space and potential are huge.


In 2018, India's mobile phone market shipped 145 million units a year, compared with Apple's 1.7 million units, which accounted for only 1.2% of the market share. It is predicted that India's mobile phone market will deliver 302 million units a year in 2019.


Apple's recent successive failures in the Chinese market have naturally made it its choice to open up new markets, and the huge potential of the Indian market is what attracts Apple's heavy bets on India.


According to the current situation of Chinese manufacturing industry, Foxconn, a sweatshop, has already begun to withdraw from China. On February 5, 2018, Foxconn said it was considering building a factory in Vietnam to produce the iPhone.


Before the announcement of the relocation of the factory to India, there was a rumor that Hon Hai Group (Foxconn's parent company) planned to lay off 340,000 workers and cut its expenditure by 51 billion yuan in 2018. Since October 2018, Foxconn's Zhengzhou iPhone assembly plant has laid off more than 50,000 people.


If Foxconn's factories in India and Vietnam are a flow of manufacturing to low-cost countries, then it has a deeper consideration to move manufacturing back to Taiwan.


On May 8, Guo Taiming first disclosed in an interview with the media that he had said to Kaohsiung Mayor Koreayo, "Under trade friction, Hon Hai plans to move some production lines in Shenzhen and Tianjin to Kaohsiung. Taiwan is expected to become a manufacturing center outside the mainland of Hon Hai's future high-level Netcom and server equipment."


I have to say that Guo Taiming has a long way to go.


In Guo's view, Taiwan is expected to become a transitional interface for U.S. trade with China because of its geographical location. Kaohsiung is the Key Position. He also disclosed that hardware products produced in Tianjin and Shenzhen will be manufactured in Kaohsiung in the future.


He further pointed out that it was necessary to find a third party, a neutral buffer point between China and other countries (Buffer), which used to be Hong Kong, but now seems impossible for Japan, South Korea and Singapore. This possibility naturally falls to Taiwan.


Asked if he would move the hardware back to Taiwan for production in the future, Guo answered yes positively. In the future, products from Tianjin and Shenzhen will be manufactured in Kaohsiung. New factories will be built in the direction of automation, light-free and worry-free factories.


If Foxconn's relocation to Taiwan is a "long-term vision" in the face of major environmental changes, then building a factory in the United States is what Gou Taiming considers to be a "rainy day" to support the Empire for a long time.


As Guo Taiming said, the current return of Taiwanese businessmen is mediocre. Economically, it is called comparative advantage. That is, "Is it better and cheaper for me to come back today?" And he's not moving old things back. It's mediocre growth. He's moving new technologies in. The United States did not pay much attention to local labor in the past. Now president trump of the United States attaches great importance to it. So he wants all industries to move back. "What we are doing for him is the reshaping of the supply chain".


Recently, American media reported that Foxconn would soon announce more investment in Wisconsin. According to the news, Mr. Gou is likely to spend $30 billion to accelerate investment in the United States. In addition to the investment panel, Foxconn will cooperate with the state in the next generation of automotive technologies, such as car networking and driverless driving.


But this move has undoubtedly aroused some doubts. In the face of Foxconn's foreign investment in building factories, Guo Taiming said to the media, "Businessmen have no motherland, the market is my motherland".


Some people are indignant about this: "Businessmen do not know the hatred of subjugation, capitalists are profit-seeking." Others said that this statement was not a problem, but there was political incorrectness.


As a super-manufacturer, more than 90% of mobile phones and computers, more than 70% of color TV sets and most of electronic products are produced in China, and among them, the largest generation in the world.


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