This will be entertaining
I foresee a very interesting class of working cultures and attitudes.
Stocking up on popcorn in advance may be a good idea.
Apple manufacturer Foxconn reckons it will create one million jobs in India by 2020 – nearly the entire number of its current Chinese workforce – according to reports. Hon Hai otherwise known in the West as Foxconn, last month revealed it was setting its sights on India due to increasing wage costs in China. The firm has not …
And yes, I'm looking forward to the shock lesson that Indians can and do go out on strike. And sometimes for political reasons. Strikes? Non-Party parties? Government interference in investments? (no on that last one, cuz 'China' is next door)
Hey, we need a popped popcorn kernel icon. Could also serve as the Stay Puft marshmallow man!
Back in the 1970s a team of engineers and software support staff were sent to install a new computer in India. It was a gift from the UK government - and the team were on a 12 month tour to install it - then support and train the local staff.
The first problem was trying to get it out of Indian Customs - who wanted their high import duty.
Eventually it arrived in the new computer building. Unfortunately it couldn't be installed until the air conditioning was fitted. When asked when that would be ready the answer was "3 weeks".
The team went back to the UK after their 12 month tour was finished. The air conditioning estimate was still "3 weeks" - and the computer was still in its crate. They said they had decided that their achievable task was not to make the local work force efficient - but possibly to get them to understand what the word meant.
Still - that was nearly 40 years ago - and things might have changed?
Back in the 1970s a team of engineers...
Based on my observations from working with that region in several companies, there are several major failures in this urban folklore tale
1. They did not pre-agree the aircon to be installed by the father in law of the chief local programmer. As they did not, the actual aircon install date was a firm "never".
2. They did not get in touch with the local accounts payable manager in advance to ensure that his uncle is the customs inspector in charge. So the delay in customs is not surprising.
3. They did not limit the first round of training to the nephews of the chief local programmer. Actually they did not sort out the aircon, electrical, building inspection and other nephews, uncles, brothers in law and (in those days) occasional mother/sister in law first. So any ideas that they would have trained anyone were a bit delusional.
4. They ...
Feel some sympathy for the Chinese workers that may lose their job but they had to assume this day would come at some point. Similar to someone who got with their current partner while they were still seeing someone else then complains later when they cheat on them. A leopard doesn't change it's spots and an outsourcing company will always move where they can pay the least.
Would imagine relocating like this would have the added benefit of allowing Foxconn's HQ to thumb their nose at Beijing safely from Taiwan.
Wonder what this will do to the Chinese economy overall since I suspect Foxconn are a little like the canary in the coal mine and I suspect this is just the first of many similar moves. That made in China sticker may become a little rarer than we are used to seeing over the next 5-10 years.
"They are already moving up the value chain."
This was entirely predictable. It happened to Japan in the 1960s. It happened to Korea. And now to the Chinese.
People with enough grey hair will remember getting Japanese toys. That was the crap that broke the day after Christmas. A decade later they were associated with premium brands (Toyota, Sony,...).
In the 1980s the same happened in Korea. They started with low-end manufacturing and now have well respected brands such as Samsung and Hyundai.
Now China's showing signs of getting to the top of the pile. Huawei is doing damn well.
Each time this happens, the lower value manufacturing then gets displaced. Perhaps it is no surprise that China has been building cozy relationships in Africa. Perhaps they'll start off-shoring some manufacturing to Africa some time soon.
The question though is whether this can happen in India/Africa. Is there the entrepreneurial culture to repeat this all over again in India and Africa? Perhaps.
Future History That Writes Itself:
Eventually, the Chinese will open call centers to provide product support to the newly affluent Indians. Some guy in Shenzhen named Wo Fat will swear to Vishnu that his name is Sanjay, and he lives in Mumbai. It will become fashionable in India to bemoan Chinese call centers and their "goddamned thick accents."
The *really* amusing thing is that the campaigns for Foxconn to raise the wages of its Chinese workers may actually have had an effect. But not the one the rich westerners pushing for those pay rises might have had in mind.
What's incredible is that it's so easy to set up the fab plant, get the raw materials shipped, do the recruitment and training and everything else required to set up manufacturing on this scale. If it can be done so swiftly, imagine just how quickly the city of London could disappear if someone presented the global firms there with a better environment. Ouch.
"The *really* amusing thing is that the campaigns for Foxconn to raise the wages of its Chinese workers may actually have had an effect. But not the one the rich westerners pushing for those pay rises might have had in mind."
You do realise that one of the reasons why the wages have gone up is that China is running out of people from farming/poor regions to do the work, so the Chinese aren't losing jobs it's just that there aren't enough people who can or want to do jobs like this any more.
Africa is still a mess from a stability standpoint, there are far less "skilled enough" workers, and probably even more people to bribe to open and keep running a facility. You may not want to find your plants in the middle of a revolt, racial/tribal conflicts or raided by some kind of terrorists.
Moreover a plant needs infrastructures to bring raw materials and components in, and finished products out. Roads, railroads and harbours and things like that...
India, with all its issues, is still far above most African countries in this regard. And Africa is even getting worse.
I would welcome more jobs in Africa, less people trying to cross the Mediterranean Sea to reach Europe, but until the mess Africa is is sorted out, no hope.
Here we go again, employers leave developed country for third world one, then bails out (after sucking the very life out of it's Chinese employees) the very second that it appears the Chinese will finally make a living wage, Foxconn leave for India to steal even more employees wages. Leaving in their wake all the chemical and solid waste pollution they created in the first place.
Now they start the whole process over again and Apple will still have the audacity to claim they are a "green" manufacturer.
FoxConn wouldn't be doing this if its major client didn't think it was a good idea.
I also believe that the Indians (and many other countries) would be able to do the work well, given the direction and control. Of course, not many other countries have control like the People's Republic.
If the republicans of the US continue to run us down the sluice there should be plenty of low-wage americans that would work for the assembly-line pittance. However, controlling those critters is notoriously hard.
USA manufacturing has never been stronger actually. Indians may be cheap but a factory full of robots in the US doesn't draw near as much bad press from the hippies as installing suicide nets. This leaves Americans workers free to produce more valuable things like esoteric opaque financial products disguised to hide losses from the shareholders, government, etc.
Yes of course which is why even though my industry is huge in China I explicitly have refused to ever go over there for any reason (have worked in like 5 or 6 other countries including Japan). Actually turned down a pretty lucrative job offer due to possible required travel to there.
"OTOH, if installing suicide nets is part of normal company protocol, you gotta admit there's a rather huge problem, no ?"
I only have to acknowledge that a huge employer has to deal with this problem somehow. And while not a great PR move, it is effective. Because coming across what is left of cousin Wa between building 37, and 38, and 42 is not the greatest way to start the day. Death by suddenly stopping is not a pretty way to go.
You OTOH, have to explain why exactly you believe having a lower than national average suicide rate, and wishing to further reduce it, is a bad thing.
Why do you want Chinese people to die?
Do tell Pascall.
Let me explain clearly :
If a company has to install suicide nets to keep its employees from offing themselves, then there is a problem THAT NEEDS SOLVING.
I do not consider suicide nets to be the solution. They are a band-aid to hide the problem.
In other words : I DON'T WANT ANYONE TO DIE FOR MONEY. CHINESE OR OTHERWISE.
That clear enough ?
Your turn : why do you think that suicide nets are a solution ? Keeping people from killing themselves in despair by removing their ability to do so but not removing the cause of their despair is normal for you ?
"Keeping people from killing themselves in despair by removing their ability to do so but not removing the cause of their despair is normal for you ?"
You're missing the point. Take any group of 1.5 million people and the odds are at least some of them will be suicidal at some point in their lives, for all sorts of reasons not, necessarily anything to do with work or working conditions. The number of Foxcon employee suicides is lower than the national average and part of the solution is to make it harder for a "jumper" to kill themselves. The press have not reported if Foxcon have taken other measures because that would not be "news"
Am I ?
How many industries have suicide nets ?
Go on, if it's so common, give the figures.
I don't care about the national average. Yes there are suicidal people everywhere. They typicall do not congregate in enough numbers in the same company to make nets a requirement.
Exactly how out-of-touch with life are you ?
"How many industries have suicide nets ?
Go on, if it's so common, give the figures."
They weren't unknown in Victorian textile mills, and the windows were sometimes barred for the same reason. I can't give you numbers though.
What I CAN say for sure is that British prisons still have them. Of course new-build prisons are all single storey, to avoid the temptation
They'll soon run out of countries...
No they won't. There's Laos, Cambodia, Myanmar, Nepal.... when they're exhausted the southern parts of Africa might be open for business, followed by the (currently) more shambolic parts of South America. When they are done, there's possibly Pakistan and Bangladesh. Moving on through central Africa (possibly via Central Asia)....loads of places willing to offer cheap labour. Iran could be ex-sanctions by then.
And eventually maybe even Syrians might starts wanting proper paid employment rather than blowing each other up.
However, what made China the ultimate manufacturing destination was a government committed to building whatever infrastructure was needed to support export manufacturing, and repressing any form of dissent to pollution, disposession, corruption and forcible relocation. India will struggle to follow that, because for all its failings, it is fairly democratic and has a freeish press.
No, what made China the ultimate manufacturer was that Chinese culture - right or wrong - makes it a good place to make things. Places like South America and Africa lack the right culture to be efficient manufacturers with good enough quality.
The drawback is Chineses also learn, and then setup their own companies, like Huawei (like Japaneses did before them). Do it in countries like India, and they'll wait for you to bring them some work forever.
You can move facilities, but you have to cope with local workers (and politicians) culture, and you can't change it easily. Even in EU, just look at Greece, and some parts of Italy or Spain...
this doesn't mean that Chinese production will be abandoned. It simply means that Foxconn are gearing up to satisfy Indian demand from local production. Cheaper to build/assemble in India than import completed items from China. What this move represents is a recognition that Indian demand is potentially as big as China's domestic demand.
I wonder how the legal requirement to use less than 256 bit encryption in India will impact trade secret protection.Move to India and suffer a massive hemorrhage of trade secrets. They may end up having to keep them on paper, stored in actual physical safes.
That and the mandatory key disclosure law, anyone in the government asks and you must hand over your keys or go to jail and/or pay a fine. https://en.wikipedia.org/wiki/Key_disclosure_law#India
"How long will it be before the jobs come back to western countries?"
You're jumping the gun aren't you?
First you need to spend three decades selling ethnic (ie. Western) street food in Delhi, then work up to a small restaurant that sells pub nosh.... then maybe we'll talk.
Two thoughts on this:
a) Wonder if this is public announcement is mostly part of the negotiation strategy with Chinese and Indian gov's to secure better tax/conditions/something? eg lower tax in order to keep in China, or better terms for actually doing the move to India
b) Also wondering if this move may be due to large customers (eg Apple) no longer trusting Chinese manufacturing to not insert Chinese state sponsored badware? eg if not actual physical hw, then maybe something like a predictable RNG known only to Chinese mil
I notice no one has picked up on the part of the statement about building fabs in five different states with more to follow. This of course gives Foxconn the chance to play the states off against each other in order to get ultra-favourable tax and employment conditions. That's what happens in Australia and I would imagine that is what will happen in India.
>This of course gives Foxconn the chance to play the states off against each other in order to get ultra-favourable tax and employment conditions.
Its even worse than that in the states. They actually get away with playing the city/states off each other to see who will use the most tax payer money to build billionaires football stadiums instead of public schools.
Of course they have no "plans". That doesn't mean they are not going to downsize. It just means they've not written anything formal down yet.
I'm wondering if this might be the beginning of an exodus from China for the bosses and their money. New factories in India, new equipment, the newest products. Meanwhile, the factories in China are producing the "old" products on "old" equipment and eventually it's "not economic" to upgrade that plant back in China. Meanwhile, the bosses have homes and bank accounts outside of China so they can maintain their "foreign" factories.
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