Foxconn has no choice but to leave India?The workers refused to work overtime and went on strike, and Gou was under pressure

2022-06-02 0 By

If, in the past decade or so, the fastest growing industry, it is undoubtedly the Internet industry, and other industries complementary to the Internet, is also growing.The express industry has developed on the basis of the Internet. Now the express industry has become the most popular industry in our daily life, and the development of the express industry is inseparable from every day.In fact, in addition to the express industry, mobile communication industry has also become a relatively rapid development of the industry, after all, mobile phone is the foundation of the Development of the Internet.So many mobile phone manufacturers, we are familiar with Apple, Huawei and so on are popular, Huawei is a domestic brand lasting several decades.Huawei’s development in the past two years has made Apple’s share of the domestic market, which originally occupied a large share, gradually disappear, and even apple’s affiliated industries have suffered a downturn.Speaking of Apple’s suppliers, we have to say foxconn. 75% of foxconn’s orders come from Apple. The decline of Apple’s business volume leads to the deterioration of Foxconn’s profitability.But now Foxconn, after all, has lost in India. Its dream of building a factory worth 5 billion yuan has been completely shattered. Workers working overtime and strikes have become a headache for Foxconn.Before the pandemic, Apple decided to move all of its domestic factories to Southeast Asia and India, where costs were relatively low.As for Apple’s approach, many people think it is very risky, including some relevant professionals in China, but Cook still made such a decision.When Apple announced it would move its factories to India, Foxconn decided to move its factories from China to India and even spent $5 billion to build a new factory.Foxconn chose to leave The Chinese market for The Indian market, the first reason is to follow Apple, the second reason is cost reduction.Apple and Foxconn had argued that a large increase in the domestic labor market was narrowing the otherwise small profit margin.Labor costs in the domestic market have indeed increased in recent years. Not only these foreign-funded enterprises, but also many domestic enterprises have said that the rising labor costs have brought continuous decline in corporate profits.After Foxconn built its factories in India, it gradually found that it thought it could fulfill its production tasks well, but it did not expect anything to backfire.Having vowed to build a 5 billion yuan factory in India, It’s fair to say That Gou has big ambitions in India.But after the success of foxconn factory, but did not achieve the expected results, there are big problems, let Terry Gou to do thoughtful.After the success of foxconn’s factory in India, the intention was to increase productivity, to exceed the task, and to fulfill orders while making more profits than at home.But what Foxconn didn’t expect was that Indian workers, unlike their domestic counterparts, don’t work endless overtime.As soon as he asked them to work overtime, there was a strike, which caused the factory to stall for a while. Gou had no choice but to continue hiring.After continuing to hire people, Foxconn’s production lines have all the workers shift, the idea of non-stop machines, so that in order to complete the task, labor costs are not reduced at all.It did not even dawn on Mr Gou that the Indian market, unlike its home market, does not like to work overtime, or even to earn overtime pay.Originally, the labor cost was higher than expected, but it was possible to complete the task, but unexpectedly, the power failure in the Indian factory.The power failure of Indian factories is closely related to the local situation. In the case of excessive power load of local circuits, there will be a large area of power failure.After all, India is not a well-developed country at present. Since the cost is low, there must be corresponding problems, and electricity is their biggest problem.After a large area of power failure, the factory cannot operate normally, and the situation is that the factory completely stops production, bringing the production task behind.If workers’ strikes can be solved through recruitment, then the problem of power outages cannot be solved in a corresponding way and can only be solved by waiting.One of the main problems is that there are not so many raw materials in the Indian market, so all the raw materials have to be shipped from the country, which increases the cost.India is a relatively backward market, the developing market is bound to be less stable than the domestic market, so the Indian market for many materials is not.For some raw materials foxconn needs, it needs to be transported from China. In the process of transportation, it needs to increase a lot of transportation costs.These transportation costs also need to be added to the cost of the final product, so the overall cost of Foxconn after entering India does not reduce much.Gou once vowed to build a 5 billion yuan factory in India to open up his profit margin, but the result was not particularly satisfactory.Faced with such a situation in India, Gou even felt that he had made a wrong decision to follow Apple to India, but he could not regret it.Foxconn was just starting to get back on track when it was hit by the pandemic, which has caused production delays in many factories around the world.Of course, India is no exception, the market was once greatly affected, for Foxconn’s existence is even worse, the already bad production has encountered problems.Amid the pandemic, factories were shut down, workers hospitalized and quarantined, leaving Foxconn, already underproducing, to retreat.Gou’s decision to retreat to India and return to the domestic market created big problems for Foxconn, which had no profits at all.Foxconn, which spent $5 billion to build a factory, wasted all its money and failed to make any significant profits in India, much to Mr Gou’s regret.When Foxconn returned to China and saw the steady development of the domestic market, it seemed that his departure was the most regrettable decision, but it could not be regretted.After Foxconn left the domestic market, BYD gradually emerged to replace all of Foxconn’s domestic production capacity and market at that time.Byd as a domestic manufacturer, in the development of the domestic better than Foxconn, and by a lot of domestic enterprises recognized, Foxconn return, it is difficult to grab back this belongs to their own market.Once Terry Gou boasted that China could not do without Apple without Foxconn, but did not expect Apple and Foxconn have left China, China’s market is still normal development.On the contrary, Apple and Foxconn lost the Chinese market, which brought great disadvantages to their own economic interests and made them unable to produce and operate.From the perspective of Apple and Foxconn’s return to domestic development, only the Chinese market can enable them to have better development and ensure normal productivity.But Gou realized this late and had to spend more money and manpower than before to restore his capacity.When Foxconn returned to the domestic market, it first opened the zhengzhou factory, which restored foxconn’s production capacity and completed the production task.But the zhengzhou factory opened, Foxconn paid more money than before in the domestic market, after all, back to domestic development, Chinese people will not be able to support at that time.Many people lost their jobs when Foxconn left, and it is impossible for them to have much affection for Foxconn after finding jobs in related industries in China.Only if Foxconn pays more wages to bring these people back to work at Foxconn, can Foxconn complete the relevant tasks.If the task is not fulfilled, the cooperation between Foxconn and Apple will be cancelled. Now Apple is looking for a qualified supplier, and Lixun Precision Has been named as the supplier to replace Foxconn.Now Foxconn is in a very difficult situation both at home and abroad. It may be that Gou made a wrong choice to directly follow Apple and put all his ability into Apple.This time back to China, Foxconn can choose to cooperate with other domestic manufacturers, so as to open a certain situation for their follow-up business.