Foxconn's recent shift in factory construction strategy is a wake-up call. In the past year, Foxconn has accelerated the pace of building factories in India, Vietnam and other places, and plans to relocate most of its production lines from the mainland. This move has led us to think deeply about our own development. This article will analyze the possible impact of Foxconn's strategy change and summarize the implications for us.
In the past year, Foxconn has accelerated the pace of building factories in India, Vietnam and other places, intending to relocate most of its production lines from the mainland. The decision dates back to December last year, when Foxconn announced that it would invest more than 10 billion yuan to build a brand new factory in India. Prior to this, in March, they had already taken the lead in investing $700 million in India for the layout of new production lines, tilting more business focus and orders towards India.
However, Foxconn also encountered a series of difficulties in the process of building a factory in India. Employee strikes, factory fires, and complex tax issues have cost Foxconn huge amounts. Despite this, Gou did not give up on the layout of the Indian market, but continued to invest heavily in the construction of new factories. What is the reason behind this?
Foxconn has experienced a ** period in Chinese mainland in the past decade. The production cost in Chinese mainland is relatively low, and local ** has also given strong support in terms of taxation. However, as China's economy grew, labor costs gradually rose, leading Foxconn to look elsewhere for opportunities.
India, as a country with extremely low labor costs, became a target for Foxconn. In addition, India has a potential of nearly 1 billion mobile subscribers, so it is also an important market for Apple. It can be speculated that Foxconn's behavior of building a factory in India is a consensus reached after communication with Apple.
However, OEM for Apple is only one part of Foxconn's business map. They are not satisfied with just a foundry, and Foxconn's ambitions can be seen in their move into the automotive field. Terry Gou once pointed out that the future of Hon Hai Group will fall in the field of semiconductors.
Faced with the gradual decline of the foundry business, especially Apple's transfer of a large amount of production capacity to India, which led to many orders being taken away by local companies, Foxconn realized that it must seize emerging industries, such as new energy vehicles and semiconductor chips. Recently, Foxconn announced that it would spend $37.2 million and plan to join forces with Indian companies to build a chip packaging and testing company. Leading companies in the semiconductor field such as TSMC, Intel, and Samsung are often prone to ignore the Indian market when choosing a global layout, and are unwilling to invest resources and time to support the development of India's semiconductor industry. Therefore, Foxconn's move has brought hope to India and boosted the competitiveness of the Indian semiconductor industry.
As a manufacturing giant, Foxconn plays an important role in the job market. The withdrawal from China will trigger a certain period of pain. Take Foxconn's factory in Zhengzhou, for example, which contributed a whopping 1,172 to the local area in 2022With a GDP of 800 million, this figure accounts for 10% of Zhengzhou's GDP. It can be said that Foxconn's deep cultivation is closely related to the prosperity of Zhengzhou.
Foxconn's role in the job market cannot be ignored, and once they leave, it will undoubtedly bring great uncertainty to the current stable economic environment. India** also pointed out that labour costs and market outlook are fundamental drivers for companies to move across borders. Some believe that Foxconn's departure was simply an attempt to find areas with lower wages and lower human rights protections. But in any case, the departure of a giant like Foxconn will undoubtedly have a significant impact on China's manufacturing industry.
First of all, the competitive environment of the global manufacturing industry has changed, and Foxconn's strategic change should cause our attention and reflection. We need to pay attention to our own competitiveness, actively adjust our development strategies, and improve our core competitiveness.
Second, Foxconn's change in strategy reflects the rise and future development trends of emerging industries. We should actively seize the opportunities of emerging industries, increase investment, and carry out technological innovation, transformation and upgrading.
Finally, Foxconn's evacuation is also a wake-up call. We cannot rely on the dividend of low labor costs, we should strengthen scientific and technological innovation and talent training, and improve the added value of products and core competitiveness.
In the future development, we should continue to learn from the successful experience of Foxconn and other enterprises, learn from their strategies and practices, constantly adapt to market changes, improve our competitiveness, and achieve sustainable development.