Foxconn says China can no longer be "the world's factory"

[nanoguy]

Bottom line: With the US-China trade war raging on with no end in sight, manufacturers like Foxconn are desperate to escape the immense pressure by shifting production capacity elsewhere. But while Trump administration's goal has been to encourage this capacity to go back to the United States, it looks like both China and the United States stand to lose as manufacturers look to other regions with more interest.

Foxconn's latest earnings report is out, and it looks like Apple's biggest supplier rose above analyst expectations at a time when many other companies have seen their business dwindle because of the pandemic.

After a particularly hard first quarter this year, Foxconn posted a net profit of $778.55 million for the three months ending in June, which is a 34 percent year-over-year increase and more than $170 million above expectations. The Taiwanese manufacturer believes the results are most likely caused by the upswing of people who work from home, which has greatly increased demand for both consumer and enterprise equipment when compared to the period before the pandemic.

It wasn't all rosy for Foxconn, however, as smartphone revenue still dropped around 15 percent during the second quarter. The company did anticipate this decline, as it saw a downward trend in the number of orders that persisted through June. Projections for the third quarter show a 10 percent year-over-year drop in Q3, which is why Foxconn is on a hiring spree to ensure a successful launch for Apple's iPhone 12 lineup.

Hon Hai Precision Industry (Foxconn's parent company) chairman Young Liu told Bloomberg that the manufacturing giant will slowly build out more capacity outside of China as a result of continued pressure from the US-China trade war.

Liu says that while China will remain an important region for manufacturing, the country's "days as the world's factory are done."

Foxconn currently has 30 percent of production outside of China, up from 25 percent one year ago. The company is eyeing several new locations, including India, Vietnam, Mexico, Brazil, and the United States.

Foxconn's clients have been looking to diversify their supply chain, which is why India is pushing ahead with a $6.6 billion investment to lure Big Tech into setting up a local production ecosystem. The plan seems to be working so far, with Wistron now making iPhone 11 units and Pegatron scrambling to open a new manufacturing arm in Chennai.

The tariffs imposed by the Trump administration on consumer goods have given countries like Vietnam -- which still lacks the necessary infrastructure -- a foot in the door to win some manufacturing contracts for electronic accessories.

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https://www.techspot.com/news/86350-foxconn-china-can-no-longer-world-factory.html

 

[Uncle Al]

I would have to agree with their analysis, not only for the reasons mentioned but because China has such an abysmal record of theft of designs and other similar closely held information that they simply cannot be trusted. In my work I am entrusted with many "trade secrets" which I must find trustworthy fabricators, manufacturers, and software designers that will do the work and not expose the information. That is a very special relationship and China was once in a position to fulfill such requirements; but they threw that all away and as such, are no longer trustworthy by any company, nation, etc.

 

[QuantumPhysics]

China has more teenagers than America has people.

The attempts to divest from China will inevitably lead investors and manufacturers to the only other place with the cheap labor and government stability necessary: INDIA.

You can't "divest" China no matter how hard you try because even if you switch over to India, you still end up having the exact same problems you had before - only now China continues to grow stronger across Southeast Asia and Africa as well as South America. China and India are strategic rivals. China and America are economic rivals.

Their game plan is 6000 years in the making and yours is what? 244?

Huawei is gonna make a fortune while you're busy retooling.

And then you run the risk of being cut out of China's market.

You'd have to be a FOOL to start a trade war with a country manufacturing so much of your products and holding so much of your debt.

 

[fps4ever]

Hey Foxconn where is that 4 billion dollar tech plant you were going to build in Wisconsin? Going to bring in a big boost to the regional economy and lots of jobs. Signed on the dotted line with incentives and huge tax cuts. Oh, that's right you backed out like you did with several other projects in other states/countries...

 

[Lew Zealand]

They'll just set up shop where the anti-suicide nets are cheapest.

 

[Featherawr]

China has more teenagers than America has people.

The attempts to divest from China will inevitably lead investors and manufacturers to the only other place with the cheap labor and government stability necessary: INDIA.

You can't "divest" China no matter how hard you try because even if you switch over to India, you still end up having the exact same problems you had before - only now China continues to grow stronger across Southeast Asia and Africa as well as South America. China and India are strategic rivals. China and America are economic rivals.

Their game plan is 6000 years in the making and yours is what? 244?

Huawei is gonna make a fortune while you're busy retooling.

And then you run the risk of being cut out of China's market.

You'd have to be a FOOL to start a trade war with a country manufacturing so much of your products and holding so much of your debt.

You're Chinese aren't you? LOL China is getting there, their urban areas are reaching first world level but the entire rural part of China is essentially a third world country.

 

[QuantumPhysics]

You're Chinese aren't you? LOL China is getting there, their urban areas are reaching first world level but the entire rural part of China is essentially a third world country.

And where in China have you lived for any length of time?

 

[Evernessince]

You're Chinese aren't you? LOL China is getting there, their urban areas are reaching first world level but the entire rural part of China is essentially a third world country.

Nope, he's just an investor that puts money above all else. One of the reasons America is in it's current mess.

 

[SRB]

China has more teenagers than America has people.

The attempts to divest from China will inevitably lead investors and manufacturers to the only other place with the cheap labor and government stability necessary: INDIA.

You can't "divest" China no matter how hard you try because even if you switch over to India, you still end up having the exact same problems you had before - only now China continues to grow stronger across Southeast Asia and Africa as well as South America. China and India are strategic rivals. China and America are economic rivals.

Their game plan is 6000 years in the making and yours is what? 244?

Huawei is gonna make a fortune while you're busy retooling.

And then you run the risk of being cut out of China's market.

You'd have to be a FOOL to start a trade war with a country manufacturing so much of your products and holding so much of your debt.

That's an amazing perspective.....think about it. What your saying is we're hooked on China's crack, and your a fool to do anything about it. Your going to have pain from withdrawal, your cutting off doing business with your dealer. Your just going to find another dealer, so you might as well just give the dealer you've got now everything they want. They've planned their drug empire for the long run, you can't last that long. Well, thank God not every addict thinks like you. Yes, it's gone too far, yes we're in deep, and yes, they've increased the price to do business with theft, expansion, and contempt because they were certain we'd all think like you. Well, some of us don't, so we'll see how it goes. BTW, using a clinic for withdrawal (India) is far, far, better than staying with the pusher (China).

 

[Gypsygib]

Maybe if the US invested as much in automation as they did in military over the past 30 years they wouldn't need products to be manufactured elsewhere, they could be made domestically with bots and only a handful of people.

 

[loki1944]

Anywhere that doesn't support communism.

 

[Ben1978]

I watched a YouTube video from Richard Wolffe, America's most famous Marxist, last night. He framed the Chinese "theft" rather differently saying that America went to China looking to capitalise on its low wage costs (and avoid pesky things like regulation). No one forced them to enter into agreements with Chinese manufacturers that resulted in technology transfer and in some cases theft. And now the 40 years of incredible profits China's cheap manufacturing provided is coming back to bite them. I found it an interesting perspective.

 

[Eldritch]

I watched a YouTube video from Richard Wolffe, America's most famous Marxist, last night. He framed the Chinese "theft" rather differently saying that America went to China looking to capitalise on its low wage costs (and avoid pesky things like regulation). No one forced them to enter into agreements with Chinese manufacturers that resulted in technology transfer and in some cases theft. And now the 40 years of incredible profits China's cheap manufacturing provided is coming back to bite them. I found it an interesting perspective.

The problem is, if it were only 'forced sharing' of certain technologies it would have been bad but not horrible.
What has changed in last decade is how China has transitioned from a growing economy to being straight up villain. From abolition of two party system in HK, imposition of its law globally, Nazi Germany style concentration camps, organ harvesting along with absolutely unparalleled surveillance, censorship and control of human beings by measures like Social score; have left no doubt as to what humanity's future will be if the China is allowed to become dominating socio-economic-cultural force instead USA or Europe.
Other nations are also with their (huge) flaws but compared to China, they are clearly the lesser of two evil by an order of magnitude.

 

[treetops]

China bad, drones bad. Anyways the daily show estimated it would cost about 33% more per smart phone if they weren't made in sweat shops. Back in like 2012? Damn you China for working 36 hours shifts! grrrrah bring those jobs back to America!? edit (sarcasm)...

 

[yRaz]

China bad, drones bad. Anyways the daily show estimated it would cost about 33% more per smart phone if they weren't made in sweat shops. Back in like 2012? Damn you China for working 36 hours shifts! grrrrah bring those jobs back to America!?

I'm okay with paying more knowing my things aren't made with what is essentially slave labor. The way I think about it, if you need slave labor in order to afford something then you couldn't really afford it in the first place

 

[Homerlovesbeer]

China has more teenagers than America has people.

The attempts to divest from China will inevitably lead investors and manufacturers to the only other place with the cheap labor and government stability necessary: INDIA.

You can't "divest" China no matter how hard you try because even if you switch over to India, you still end up having the exact same problems you had before - only now China continues to grow stronger across Southeast Asia and Africa as well as South America. China and India are strategic rivals. China and America are economic rivals.

Their game plan is 6000 years in the making and yours is what? 244?

Huawei is gonna make a fortune while you're busy retooling.

And then you run the risk of being cut out of China's market.

You'd have to be a FOOL to start a trade war with a country manufacturing so much of your products and holding so much of your debt.

Sorry but have you not heard of Vietnam?

 

[QuantumPhysics]

I watched a YouTube video from Richard Wolffe, America's most famous Marxist, last night. He framed the Chinese "theft" rather differently saying that America went to China looking to capitalise on its low wage costs (and avoid pesky things like regulation). No one forced them to enter into agreements with Chinese manufacturers that resulted in technology transfer and in some cases theft. And now the 40 years of incredible profits China's cheap manufacturing provided is coming back to bite them. I found it an interesting perspective.

So what you’re telling me is that American greed used Chinese cheap labor in order to live a quality of life that America’s own productivity did not justify and then decides to blame China when China become so powerful that there’s nothing America can do except divest from China and then attempt to find someone else to use as slave labor?

That’s almost like saying that America is guilty of enslaving people or something and that they should be blamed for something?

What about wind mitt Romney talks about American exceptionalism and entitlement????

 

[fps4ever]

So what you’re telling me is that American greed used Chinese cheap labor in order to live a quality of life that America’s own productivity did not justify and then decides to blame China when China become so powerful that there’s nothing America can do except divest from China and then attempt to find someone else to use as slave labor?

That’s almost like saying that America is guilty of enslaving people or something and that they should be blamed for something?

What about wind mitt Romney talks about American exceptionalism and entitlement????

LOL, admitting China uses cheap slave labor and then turns around and blames the US. Classic transference!

 

[Fook Seng]

I thought Foxconn should know better, having bad experience to relocate its production plants out of China, in the process losing $400 million in asset value.

 

[bexwhitt]

China has more teenagers than America has people.

The attempts to divest from China will inevitably lead investors and manufacturers to the only other place with the cheap labor and government stability necessary: INDIA.

You can't "divest" China no matter how hard you try because even if you switch over to India, you still end up having the exact same problems you had before - only now China continues to grow stronger across Southeast Asia and Africa as well as South America. China and India are strategic rivals. China and America are economic rivals.

Their game plan is 6000 years in the making and yours is what? 244?

Huawei is gonna make a fortune while you're busy retooling.

And then you run the risk of being cut out of China's market.

You'd have to be a FOOL to start a trade war with a country manufacturing so much of your products and holding so much of your debt.

something has to be done about China, just because they are a big financial player doesn't mean you should bow down to them. Never forget like Russia, China is a bad actor on the world stage.

 

[Fook Seng]

If China is using slave labour, then the slave master must the American corporates and companies in between like Foxconn are the slave drivers which means that everywhere the factories go to, India, Vietnam or Indonesia, the relationships are the same except that both the slave masters and the slave drivers will lose money if the consumers don’t get to pay more.

 

[Fook Seng]

I'm okay with paying more knowing my things aren't made with what is essentially slave labor. The way I think about it, if you need slave labor in order to afford something then you couldn't really afford it in the first place

You can do that if you can afford not to wear underwear or other garment or go about bare booted. But anyway without slave masters like American corporations, there will not be slave labour.

 

[QuantumPhysics]

If China is using slave labour, then the slave master must the American corporates and companies in between like Foxconn are the slave drivers which means that everywhere the factories go to, India, Vietnam or Indonesia, the relationships are the same except that both the slave masters and the slave drivers will lose money if the consumers don’t get to pay more.

America has always preferred slave labor. We fought a Civil War over slavery. Once it was ended, America was forced to take on desperate Europeans and Asians to be "indentured servants".

 

[Fook Seng]

Sorry but have you not heard of Vietnam?

What do you know about Vietnam? Vietnam is smaller than a province of China and China has 33 provinces.

 

[QuantumPhysics]

I don't think having more teenagers in one country than people in another country helps.If that was the case, india would have become Singapore by now. It's more about what those teenagers will turn out to be, and what process & resources in place or a country can afford to put in place. I have been watching China's education system, they have been trying to match match the level of Japanese & Korean level of education. So mathematically that would be 10 japan or 20 south korea or 17 Germany in a single country. And it took 1 otto hahn & 1 strassmann to change the course of entire WW2.

Now you can think of a country whose education system matches that of Uganda & students can't be "forced" to study because that would be gross violation of human rights.

At the end of the day , You need to blame your failure on something. So here we are.

"Live births are the health of the state"

Who do you think is buying all these video games?

Who do you think is buying all this tech?

Who do you think is powering China's work force?

It's not "old people". It's their teenagers (working for low wages) and their young adults.

Yes: a 300,000,000+ teenage-young adult population means a whole lot to the stock market's tech companies.