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Foxconn in China

Foxconn makes managerial changes and moves some operations inland after worker suicides.

Foxconn specializes in computer parts, telecom, and consumer electronics. Since it started operating in China in the late 1980s, the Taiwanese-owned company has established the world’s largest electronics factory-city in Shenzhen. Foxconn is, in the words of founder Terry Gou, the “trusted partner of choice for contract manufacturing worldwide,” producing for Apple and other global brands.

 

Motivated by cheap labor costs, Foxconn scaled up its factories but kept wages low and conditions strict. In 2010, as many as 16 workers attempted to commit suicide, with 11 dying as a result. Pushed by this tragic chain of events to make managerial changes, Foxconn raised wages, and started to move operations inland. Now Foxconn will need to figure out how best to balance rising labor costs, public demand for better working conditions, and its desire to increase the bottom line.

 

Future technology rather than cheap labor may be the answer to controlling costs. The company, which currently assembles computer servers in Houston, Texas, will probably make components and finished products at factories in the U. S. within five years.

Case advisor: 
Wang Yijiang
Case writer: 
Lin Lin, Christopher Hildner
Keywords: 
innovation, globalization, strategy