Foxconn, the company that produces the Apple iPhone and iPad, as well as other electronic products, could be moving its plants out of China. In what appears to be a twofold problem, higher wages for Chinese workers and suicides at its plant in Shenzhen, the company may idle some 800,000 workers if it closes the plant. In addition, the company indicates that the price difference of producing electronics in China vs. Taiwan shrank when the company offered wage increases of 30% or more to the Chinese plant workers.
A recent article also states:
Foxconn’s facilities in Taiwan tend to be highly automated, whereas on the mainland they are much more labour intensive.
This intensive labour model, with long working hours and rigid systems, is one of the reasons given for worker unhappiness in southern China.
Taiwan is also trying to woo companies back. Last month it cut business income tax from 25 per cent to 17 per cent, and it is planning to set up several free trade zones for tariff-free imports.
The fallout from the Foxconn crisis continues to mount. There are fears of a domino effect causing serious production disruption in Shenzhen, one of the most heavily industrialised cities in China.
If Foxconn does move its operations back to Taiwan and closes its plant in China, this could cause a disruption in the supply chain. Apple could be facing a short supply of its popular iPhones and iPads down the road. Exactly when this could happen is unknown.