News / Economy

Apple Contractor Foxconn Seeks Wider Reach after China Flaps

FILE - Employees work at a Foxconn factory in Wuhan, Hubei province, China.
FILE - Employees work at a Foxconn factory in Wuhan, Hubei province, China.
Ralph Jennings
Foxconn is known as the company that assembles iPads and iPhones for the world with inexpensive labor in China. Now, the giant contractor is trying to diversify clientele, geography and means of production to grow its business as workplace issues haunt it in China. Foxconn’s latest ambition calls for investing $1 billion in the capital of smartphone-savvy Indonesia.
 
Giant Taiwanese contract electronics maker Foxconn normally uses factories in mainland China to make products for the world’s top electronics brands, such as Apple and Sony. But since 2010, the company has been stung there by worker suicides and labor protests. This month, Foxconn signed a deal to invest $1 billion in high-tech research and development in Indonesia.
 
Jamie Wang, a principal research analyst with the market research firm Gartner in Taipei, said Indonesia gives Foxconn a welcome alternative to China.
 
Wang said Foxconn needs a new production site and that Indonesia offers not only an end-market business opportunity but that, in terms of the production costs, Indonesia offers good value. Another key is whether the local government and its infrastructure give Foxconn attractive incentives or support. As she understands, Jakarta offered Foxconn a substantial support package.
 
Foxconn’s agreement with the city of Jakarta follows a deal in November to spend $40 million on robotics, a relatively new field for the company, in the U.S. state of Pennsylvania. The manufacturer, also known as Hon Hai Precision, said it was studying three other U.S. states for investment. A spokesman said U.S. investments would cast Foxconn as a global company, not a Chinese one. At its home base in Taiwan, Foxconn won a license last year to offer 4G mobile services, another departure from its normal contracting business.
 
Foxconn Chairman Terry Gou hinted at a company year-end party last month in Taiwan that Foxconn would rely less and less on worker-intensive factories in the future. Some see the comment as a sign he is turning away from Chinese workers who have protested Foxconn’s conditions.
 
Gou said manufacturing remains Foxconn’s core business, but because younger people worldwide don’t want to work in factories, manufacturing must rely more on automation.
 
Analysts said the push away from China is not just about shaking off labor problems. Some argue that the company, which earned $130 billion in revenues last year, is also reviewing its relations with Apple. Foxconn is Apple’s largest manufacturer, assembling its products at seven bases between China and Brazil. However, margins may be low as Apple takes on new suppliers. John Brebeck, a senior adviser with Taipei-based Quantum International, pointed out the limitations of working with Apple.
 
“Nobody makes that much money off Apple. You’d have to basically make that product only for them. You have to buy equipment that’s only good for them. I do know that Hon Hai, they make money on Apple but it’s not really high margin. And also every year the Apple supplier list includes more and more Chinese companies,” said Brebeck.
 
In the United States, the government is offering financial incentives to companies such as Apple that make products onshore instead of overseas, a possible threat to Foxconn’s factories outside the country.
 
In Indonesia, Foxconn calls its three- to five-year investment a chance to sell products to a young, smartphone-crazy local population. It plans to develop smartphones, panels and cloud computing tools just in Jakarta for now, but said it is looking at branching out into other parts of Indonesia and other Muslim countries later.

You May Like

Unpaid Kurdish Fighters Sign of Economic Woes

Sharp cuts in Kurdistan's budget by Baghdad, falling oil revenue, coping with refugees, inflated public sector have hit regional economy hard More

Koreas Exchange List of Envoys for Family Reunion Talks

Officials will discuss date, venue and number of participants for reunion; Seoul hopes to hold event late this month More

China Targets 197 in Online Speech Crackdown

Nearly 200 punished for 'spreading rumors' online in ongoing crackdown on free speech More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Calais School Offers Another Face of Europe’s Migrant Crisisi
X
Lisa Bryant
September 02, 2015 6:19 PM
Europe is facing mounting criticism over how it’s handling its biggest migration crisis since World War II. But not all Europeans believe building walls or passing repressive policies are the answer. A school for migrants in the French port city of Calais, is opening doors and building bonds across nationalities. VOA's Lisa Bryant reports.
Video

Video Calais School Offers Another Face of Europe’s Migrant Crisis

Europe is facing mounting criticism over how it’s handling its biggest migration crisis since World War II. But not all Europeans believe building walls or passing repressive policies are the answer. A school for migrants in the French port city of Calais, is opening doors and building bonds across nationalities. VOA's Lisa Bryant reports.
Video

Video Russia-Japan Relations Cool as Putin Visits China for WWII Anniversary

Russian President Vladimir Putin is in Beijing for commemorations of the 70th anniversary of China's WWII victory over Japan. Putin is expected to visit Japan later this year, but tensions between Tokyo and Moscow over islands disputed since the war, and sanctions over Ukraine, could pour cold water on the plan. VOA's Daniel Schearf reports.
Video

Video Kurdish Fighters on IS Frontline Ready for Offensive

Finger on the trigger, the Kurdish Peshmerga soldier stared across the dust at a village taken over by Islamic State extremists. The Kurdistan’s Khazir frontline, just 45 minutes from the Islamic State stronghold of Mosul. And at this point, the militants were less than two kilometers away. VOA's Sharon Behn reports.
Video

Video Yemen ‘on Brink of Disaster’ as Medical Shortages Soar

Aid agencies warn Yemen is on the brink of humanitarian disaster – with up to half a million children facing severe malnutrition, and hospitals running out of basic medicines. There are fears Yemen's civil war could escalate as the coalition led by Saudi Arabia tries to drive back Houthi rebels, who seized control of much of the country earlier this year. Henry Ridgwell reports.
Video

Video Apps Helping Kenyan Businesses Stay Ahead of Counterfeiters

Counterfeit goods in Kenya cost the government as much as $1 billion each year in lost tax revenues. The fake goods also hurt entrepreneurs who find it hard to carve out a niche in the market and retain customers. But as Lenny Ruvaga reports from Nairobi, information technology is being used to try to beat the problem.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.

VOA Blogs

World Currencies

EUR
USD
0.8905
JPY
USD
120.20
GBP
USD
0.6541
CAD
USD
1.3262
INR
USD
66.242

Rates may not be current.