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

US Gives Malaysia Questionable Upgrade in Human Trafficking Ranks

Malaysia’s upgrade seen as removing barrier to country’s participation in the US-led 12-nation Trans-Pacific Partnership More

Turkey, US Try to Establish Buffer Despite Differences

Coalition airstrikes in proposed zone would aim to drive out Islamic extremists, allowing targeted area to come under sway of anti-Assad rebels More

Video US: Millions Exploited by Vast Fortunes of Human Trafficking

State Department's annual report calls exploitation 'modern slavery,' brutalizing girls, women into prostitution and forcing men, women and children into low-wage jobs across the globe More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Calls Fight Against Human Trafficking a Must Wini
X
July 28, 2015 12:21 AM
The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Iran Nuclear Pact Wins Few New US Congressional Backers

Later this week, President Barack Obama returns from a trip to Africa to confront a U.S. Congress roiled by the nuclear accord with Iran, an agreement that has received the blessing of the U.N. Security Council. Days of intensive lobbying and testimony by top administration officials have won few new congressional supporters of the pact. VOA’s Michael Bowman reports.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Obama Encourages Kenya to Fix Cultures of Corruption, Discrimination

President Barack Obama bid farewell to Kenya Sunday with a major speech at as stadium outside the capital Nairobi where he called on Kenyans to change the cultures of corruption and discrimination that can hold society back. VOA East Africa Correspondent Gabe Joselow has the story.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.
Video

Video Racially Diverse Spider-Man Takes Center Stage

Whether it’s in a comic book or on the big screen, fans have always known the man behind the Spider-Man mask as Peter Parker. But that is changing, at least in the comic book world. Marvel Comics announced that a character called Miles Morales will replace Peter Parker as Spider-Man in a new comic book series. He is half Latino, half African American, and he is quite popular among comic book fans. Correspondent Elizabeth Lee reports from Los Angeles.
Video

Video California Towns Welcome Special Olympics Athletes

Cities and towns in Southern California are greeting thousands of athletes who are arriving for Special Olympics, a competition for people with intellectual disabilities. The games will run from July 25th through August 2nd. VOA's Mike O'Sullivan reports from Pasadena, California, where athletes from Namibia, Singapore and Tanzania got a rousing welcome from local residents.
Video

Video Critics of Japan Defense Policy Focus on Okinawa

In Okinawa, many locals have long complained that Tokyo places an unfair burden on the tiny island by locating most of Japan's U.S. military bases there. As Japan's government moves toward strengthening and expanding the country's defense policies, opponents of those plans are joining local protesters in Okinawa, voicing concern about where the country is headed. VOA’s Brian Padden reports from Okinawa.
Video

Video IS Uses Chemical Weapons in Syrian Attack

Islamic State militants have added a new weapon in their arsenal of fear: chemical weapons. VOA Kurdish service reporter Zana Omer was on the scene within hours of a recent attack in Hasakah, Syria, and has details of the subsequent investigation, in this report narrated by Miguel Amaya.
Video

Video Historic Symbol Is Theme of Vibrant New Show

A new exhibit in Washington is paying tribute to the American flag with a wide and eclectic selection of artwork that uses the historic symbol as its central theme. VOA’s Julie Taboh was at the DC Chamber of Commerce for the show’s opening.
Video

Video Hoverbike Flying Toward Reality

Another long-standing dream of many technological inventors is quickly approaching reality: U.S.- and British-based firms are cooperating in the development of an individual flying platform they call a hoverbike. They say it may revolutionize the concept of flying, including in the U.S. military. VOA’s George Putic reports.
Video

Video As Japan Expands Defense Role, Protests Follow

The Japanese government is moving forward with a controversial security bill that would authorize the military to fight abroad for the first time since World War II. Leaders say it is critical to defend against rising threats from China and North Korea. VOA’s Brian Padden reports from Japan on the big changes ahead, and the opposition they are drawing.
Video

Video Replacing Poppies with Coffee in Myanmar

The remote mountains of Myanmar’s Shan state are home to the second-largest opium-producing region in the world. After a drop during the 2000s, production surged in the past eight years to feed an increasing demand for heroin in China. But farmers are now making less on the crop, and the U.N. is hoping many will make the switch to growing coffee. Daniel de Carteret reports for VOA from Taunggyi.

VOA Blogs

World Currencies

EUR
USD
0.9043
JPY
USD
123.19
GBP
USD
0.6445
CAD
USD
1.3030
INR
USD
64.170

Rates may not be current.