Grievances
Everyone knows that Apple and Foxconn can be said to be good partners who "talk about hand-in-hand blind date". In the past, Apple designed products, Foxconn produced them, and the two companies cooperated with each other for mutual benefit and win-win results, just like a pair of beautiful people. However, there seem to be some cracks in the relationship between the "old couple" recently, and Foxconn boss Terry Gou even feels that he has been cheated by Apple. What's going on? Let's talk a little bit about it.
Why does Foxconn feel cheated?
It all started a few years ago. At that time, China's demographic dividend was still sufficient, and labor costs were low, which was the best choice for Foxconn, which relied on manpower production. So they built a lot of factories in Chinese mainland and solved a lot of jobs. In order to save costs, Apple also handed over most of the orders to Foxconn.
However, in recent years, the aging of the Chinese population has intensified, the number of working-age labor force has declined, and wages have also risen. As a result, Apple and Foxconn began to consider moving their industries to India, Southeast Asia and other places where the demographic dividend is still there. Foxconn was ambitious at the time, with plans to build 12 factories in India, and billions of Indian rupees had already been invested.
Why did Apple "go back"?
Who knew that Apple's CEO Tim Cook suddenly came to a "reversal". A while ago, he personally flew to Shanghai and publicly announced that the Chinese market is indispensable for Apple and that it will increase investment in China.
This can make Foxconn's Terry Gou miserable. Do you think that Foxconn was going to gradually withdraw from the Chinese market, but as a result, Apple is coming back, and the previous investment in India has not been wasted?
In fact, there are some reasons why Cook made this decision. In terms of production costs alone, India is indeed lower than China, but the overall quality and work efficiency of Indian workers are much lower than those of Chinese workers. Many foreign companies have built factories in India, and the product qualification rate is very poor. Indian workers can't even read a word, so how can they use advanced equipment? In addition, they often go on strike to demand paid holidays, and their production efficiency is only a fraction of that of China's, and the overall cost is even higher.
China is vigorously developing intelligent manufacturing
On the other hand, although China's labor costs are rising, it is also reducing manufacturing costs through intelligence and automation. Intelligent robots work 24 hours a day without rest, and the cost is much lower than that of manual labor. Apple's revenue is currently declining, and if it wants to remain competitive, it must partner with emerging smart manufacturers like China.
In addition, China's economy is still one of the world's major growth engines, although growth has slowed. As the income level of Chinese people continues to increase, the consumer demand for products such as Apple mobile phones will also increase. Therefore, the Chinese market is still very important and has potential for Apple.
Foxconn's difficult choice
We can understand Apple's approach, but it is a difficult choice for Foxconn. As an OEM company, its core advantage lies in low labor costs. However, China's labor costs are rising, and if they want to gain a long-term foothold, they must transform into real intelligent and information technology enterprises, rather than always working for others.
However, for a large OEM company like Foxconn, it is not easy to complete such a transformation. Take intelligence as an example, if Foxconn wants to use a large number of robots, where will their hundreds of thousands of workers go? Will it lead to a major labor conflict?
Get out of the shadow of the "factory of the world".
The cloud of the trade war between China and the United States also hangs over the heads of both companies. The U.S. government blindly suppresses Chinese companies, but Apple still chooses to take root in the Chinese market, which shows how deeply dependent American companies are on the Chinese market.
However, I personally believe that it is also the general trend for China to get rid of the shadow of the "world factory" and transform to high-quality development. In the future, China will no longer be a simple "processing and manufacturing center", but will develop in the direction of "innovation and design center", which is undoubtedly a huge challenge for foundry companies like Foxconn.
In general, there are some cracks in the relationship between Apple and Foxconn, the "old partners", and there is indeed a conflict of interest between the two sides. However, I think that any business must eventually follow the trend of the times. Whether it's Apple or Foxconn, if you want to gain a long-term foothold, you must have the courage to innovate and keep pace with the times, rather than staying in the past. For both sides, this is both a challenge and an opportunity.