HP, Dell warn of price hikes after Foxconn wage rise Tech giants HP and Dell have revealed that they are keeping a close eye on developments in the Chinese labour market and may even be forced to put up their prices if wages keep increasing in the region. It was reported last week that Taiwanese hardware giant Foxconn – which is the world’s largest component maker and builds …
You're being too logical. Marketing types will work with PR people, scare everyone and say they've managed to keep cost rises down to 10%. So expect your £299 product to now retail for £229.
Still, if you take that increase and divide by 3 (expect a PC to last 3 years), that £10 a year... worth the price if the workers can have a happy life.
Perhaps production (and component manufacture) will now shift to Africa ...
Wrong.
try the energy company method of marketing.
Our costs have gone up by 10% so we have to raise retail by 10%.
Random numbers:
Cost to build per unit £100 + 10% = New cost £110
Cost retail £500 + 10% = New Cost £550.
£40 extra profit, but hey it's the same % increase as we have been hit by.
I don't think that method is unique to energy companies. I think it is pretty much standard practice in all industries, for reasons I've never been able to fathom.
However, it is likely to be masked by another irrational effect -- the tendency for everything to be priced at "round" numbers. So if the unit cost rises from £100 to £103, there will be agonising meetings to decide whether to bravely absorb the cost increases to protect our valued customers (retail at £149.99) or whether to regret that these increases will have to be passed on given the pressures of the global economy (retail at £159.99).
Not unless people in Africa stop killing each other so much.
Africa by rights should be the richest place on Earth - geographically it is perfect - it has everything. But corruption is so ingrained into the various societies that it's unlikely to really ever be truly utilized. At least not in our lifetime.
" Foxconn wages barely give staff there enough to get by on once living costs at the plants dormitories are deducted"
How? Know facts (from Nightline/Fair Labor Association):
Meals cost $0.70 each = 60 meals = $42/month
Dorm rent: $17.50/month
=> Total accommodation and food costs: $59.50
Salary of 1800 yuan = $285
So that's $225 left after living expenses, or 80% of the total salary.
I'm not saying it's a good life or great salary, but it seems their living expenses get sorted with less than a week's work?
..but more importantly protect the profits!
This comes as no surprise to me. The bottom line is that tech companies have to appease shareholders and will, without batting an eyelid, pass the costs on to the consumer rather than absorb the additional costs.
Guaranteed that within ten years China will no longer be the red star state of cheap manufacturing as workers' salaries and conditions improve.
China will be become too expensive and the manufacturing companies will move their plants to another despot nation who prefer financial investment to uplifting the lives of their citizens.
Eventually China, Taiwan and other emerging nations workers salaries will eventually rise to such a point that production those nations is no longer economical. Production will then move to countries with cheaper labour. (No doubt by then UK will be classed as a third world nation with cheap labour.)
The cycle has been going on for years... have a look at Japan for example. First 'made in Japan' meant cheap crap, then it meant mass produced consumer stuff, and nowadays I at least associate it with precision, high-tech stuff. Optics, robots, machine tools and the like. Taiwan is also going the same way, a little ahead of China but not by much. India will be next no doubt. Barring any economic catastrophe, neither China nor Taiwan will stop being manufacturing powerhouses any time soon... I don't see a whole lot of companies out there to replace the Foxconns and TSMCs of this world any time soon.
This won't have escaped the notice of the Chinese, who have been massively investing in African nations, and fully intend to be making a healthy profit when cheap manufacture starts becoming impractical in their country, but they're also well aware that this isn't going to happen for years yet.
We have lived for far too long on the backs of people who work for piss poor wages and in conditions that we wouldn't keep a rabid animal in. But at the same time, technology companies like Apple, HP and the like rake in BILLIONS in PROFIT, not earnings, not turn-over, PROFIT. And then when a few people get a pittance of a pay rise they threaten to move a manufacturing site or ut up prices? Utter nonsense.
Manufacturing is not just about the bottom line. Look at Mexico; the number of companies who left Mexico to move manufacturing to India because it cost less who have subsequently gone back because the quality of work is so much better there is unbelievable. UK companies who outsourced all sorts to India at Africa then had to come back to the UK for similar reasons. Just think how rich the US could be if all the manufacturing for Apple, HP, Dell etc was done there? It's a disgrace that we all pay for the profits of rich people off the back of poor people's cheap labour.
This whole global economy breeds inequality and ruthless cost cutting at the expense of human lives. Pisses me off no end.
+10 on that.
Problem is, most corporations world wide OWN the politicians they come in contact with...so as long as that stays as it is...and there is little chance it will EVER change...NOTHING is ever going to change.
The rich will get richer...and the poor will be used as their door mats.
Just glad I don't have any children to leave this mess to.
"Then it would cost a hell of a lot more, wouldn't it?"
Think about it.
Think about it for a bit longer than the average Sun reader might.
Think about it like Henry Ford did.
If there are more employees, and those employees are better paid, there are more possible customers for your product/service (assuming your product/service is of general interest and is not e.g. luxury speedboats or nuclear weapons).
If you make your local customers collectively poorer by moving their work abroad, then your local customers will eventually stop being your customers.
But by that time, the movers and shakers at HQ will have taken their "compensation" out of the company, and moved on to wreck another economy.
"No-one would be richer."
And in the current model, only the rich ("the 1%") get richer.
That's corporatism, globalisation, whatever.
It'll end in tears.
Come back Cadbury, Rowntree, Lever Brothers, and indeed Henry Ford.
Maybe in the future the world will have a universal currency so buying something made in the UK would be the same price as buying something made in China. It might take another 100 years or so but it would seem to be a fair solution to me? Where would this leave all the currency traders though - burger van outside your work?
I guess Apple doesn't want to divulge its plans. After all, everything from Apple [in hardware] is from Foxconn. I'm sure Apple has a dilema. If they don't increase the price for their gadgets and stuff, their profits will drop. If they do, they may get one or two less fanoi or fangurl buyers around the would not buying their stuff.
Of note, a place I know bought 3 systems. Made in China - assembled in Mexico.
Unlike Apple where probably everything is made and assembled in China.
Don't buy ANYTHING from companies that Foxconn supplies including but not limited to Microsucks, HP, Dell, Acer, Apple and many more. When their sales tank, these unscrupulous companies that use Chinese sweat shops will change to "Fire Sale" pricing and it won't take long for that to happen.
>However, according to Reuters, margins are so tight at the tech titans<
HP: 9.7 Billion dollars profit for 2011 fourth quarter
http://www.engadget.com/2011/11/21/hp-releases-q4-earnings-9-7-billion-operating-profit-for-fisca/
DELL: In its Q1 fiscal 2012 year results, Dell's profits were up 177% to $945m
http://www.computerweekly.com/news/1280095905/Dell-posts-177-profit-boost-after-increasing-enterprise-sales.
That's profit people, not income! (and that includes HPs abortive tablet attempt). Cry me a fucking river. And some poor Chinese person gets another 5p an hour for working 120 hours (assumption: Citation needed), making us pay another 50 quid for their tat that dies just after the years warranty runs out - Monday morning, who needs it? EOL.
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