After Foxconn was exposed to tax and land use violations, Terry Gou did not seem to panic, but took the opportunity to complain that Apple was overly rewarding. However, as the recruitment problems of building factories in India and the inability of Indian factories to deliver orders on time were exposed, Foxconn's crisis gradually surfaced. Now that Apple has dispersed orders to multiple manufacturers, Foxconn's market position and interests have been seriously eroded.
However, Foxconn's crisis does not end here. Recently, Foxconn was announced by relevant departments to have fabricated false tax calculation basis, violations and other problems, and was only fined 20,000 yuan after review. On the surface, it seems that Gou has won a victory, but in reality the real crisis has not been resolved.
In response to the accusations of relevant authorities, Foxconn announced that it would enforce the mainland's labor law and implement an eight-hour two-day work week. Behind the seemingly normal schedule adjustment is the dissatisfaction of Foxconn workers and the inner pressure of Gou.
As a labor-intensive industry, Foxconn's huge profits largely depend on overtime from its employees. While long hours of overtime are not good for workers' health, they can at least be exchanged for higher incomes. Without overtime, a worker's basic salary may be less than 3,000 yuan per month, making it difficult to make ends meet. Therefore, for the workers, this adjustment amounts to a pay cut, which puts a lot of pressure on them.
Although Foxconn officially denied that it would implement this decision, such news could not have been without reason. Soon, this "counterattack" ushered in results, and the punishment of Foxconn by the relevant departments was only a fine of 20,000 yuan. However, for a giant enterprise like Foxconn, 20,000 yuan has little to lose. On the surface, Gou seems to have won, but in reality it was just a warning. If Foxconn does not correct it, the punishment will be even more severe.
According to statistics, Foxconn's total revenue in 2022 will exceed 500 billion yuan, but the actual tax payment will only be 3.3 billion yuan. Such a ratio can be said to be problematic under normal circumstances. Now, the relevant departments have given Foxconn the opportunity to reform themselves, and the key lies in how Terry Gou adjusts.
At present, Foxconn continues to transfer production capacity to the Indian market, and subsequent investments are mainly concentrated there. Coupled with Apple's insistence on transferring production capacity, the perfection of the ** chain in the Chinese market has been greatly damaged. However, abandoning the Chinese market is not a wise choice.
The Chinese mainland market has given appropriate concessions, but if Apple insists on destroying the complementary situation, then the sales of Foxconn's products in the Chinese market will definitely be greatly reduced, which can be confirmed by the dilemma of Samsung mobile phones.
To sum up, Foxconn's crisis has not really been lifted, although the fine of 20,000 yuan has almost no impact on Foxconn, but in fact it is a warning that Foxconn will face more severe punishment if it cannot change the status quo. For Foxconn, re-examining its strategy and returning to the Chinese market is the fundamental way to solve the crisis.