Foxconn Returns to China, India Dream Shattered: Can India Outpace China?

Foxconn Returns to China, India Dream Shattered: Can India Outpace China?Recently, Foxconn announced it will invest ten billion yuan in Zhengzhou to build a new headquarters building spanning 700 acres, relaunching its Zhengzhou factory and turning it into its largest facility. The news sparked heated discussions among netizens: Is Foxconn undergoing a transformation? Why is Guo Taiming returning to mainland China?Initially, Guo Taiming expressed dissatisfaction with Foxconn's continued development in mainland China, even going so far as to say "feeding mainland people," which caused resentment among Chinese citizens

Foxconn Returns to China, India Dream Shattered: Can India Outpace China?

Recently, Foxconn announced it will invest ten billion yuan in Zhengzhou to build a new headquarters building spanning 700 acres, relaunching its Zhengzhou factory and turning it into its largest facility. The news sparked heated discussions among netizens: Is Foxconn undergoing a transformation? Why is Guo Taiming returning to mainland China?

Initially, Guo Taiming expressed dissatisfaction with Foxconn's continued development in mainland China, even going so far as to say "feeding mainland people," which caused resentment among Chinese citizens. Subsequently, he chose to withdraw from mainland China, investing 30 billion yuan in building a factory in India, even planning to relocate all mainland production capacity, intending to abandon the Chinese market and switch to overseas markets.

Now, Foxconn has signed a strategic contract with Henan, aiming to build a national high-end manufacturing industry chain, making Guo Taiming's actions difficult to comprehend. Is he orchestrating a grand scheme?

Overseas Battles, Ultimately Unsuccessful

Guo Taiming once attempted to move Foxconn to the United States, planning to invest $10 billion in building a factory and an employee campus. The US government welcomed the move, offering various incentives, and Trump also expressed support for his plan. However, after several years, Foxconn struggled to adapt to the US business environment, the factory was forced to become a "dead project," investment steadily decreased, leaving behind only a few desolate factory buildings.

After hitting a wall in the US, Guo Taiming turned his attention to Southeast Asian countries, believing they offered cheap labor, reducing production costs, facilitating exports, and minimizing trade friction. As a result, he established factories in India and Vietnam.

However, Guo Taiming overlooked the drawbacks of these countries, leading to stalled projects.

India and Vietnam: The Beginning of The Shattered Dream

Firstly, production efficiency was low. While India and Vietnam have lower labor costs, workers lack professional training and experience, resulting in low work efficiency. Coupled with poor work attitudes, overall efficiency further declined.

India, in particular, lacks skilled workers in the electronics industry chain, and many products produced there fail to meet quality standards. Foxconn attempted to shift its high-end phone assembly to Indian factories, but encountered numerous quality issues, even discovering E. coli contamination leading to widespread returns.

Secondly, employees were difficult to manage. Compared to Chinese workers, Indian and Vietnamese workers have a strong sense of self, are organized into unions, and are prone to striking at the slightest displeasure. Unjustified absenteeism, employee collective protests resulting in factory shutdowns, these are all common occurrences, causing significant losses to the company.

Thirdly, infrastructure lagged behind. To attract foreign investment, China has been heavily investing in infrastructure, with highways, railways, airports, and other infrastructure facilities being well developed. Many industrial zones are ready for immediate use. However, India and Vietnam lack these conditions, with infrastructure failing to keep up. India often experiences water and power outages, severely impacting factory operations.

Returning to Mainland China, A New Journey

After numerous setbacks, Guo Taiming finally realized that the mainland Chinese market is the best option for Foxconn.

Initially, Foxconn's rise in China was attributed to favorable policies such as cheap land and a highly skilled and inexpensive workforce. Later, as Foxconn grew, it chose to venture overseas, only to face setbacks. Now, recognizing reality, Guo Taiming has no choice but to return to mainland China.

Returning to mainland China, Guo Taiming is drawn to the vast market potential and industry advantages.

New Energy Vehicles and AI Industries Become New Growth Drivers

Foxconn's ten-billion-yuan investment in Henan is primarily focused on two areas: the new energy vehicle industry and the AI industry.

China's new energy vehicle industry is rapidly developing, with its industry chain and production capacity ranking first globally for nine consecutive years. Guo Taiming's decision to develop new energy vehicles in China is undoubtedly a wise one.

The AI industry is also an emerging sector with growing market demand, but AI chip production capacity is tight, leading to supply shortages. Foxconn not only assembles Apple products but also assembles Nvidia's AI chips, becoming its exclusive supply specialist. By 2025, AI chip business is expected to account for 27% of Hon Hai's total revenue and gross profit. In the future, the demand for AI chips will continue to increase.

Foxconn's overseas factories have insufficient production capacity to meet market demand. Guo Taiming understands that the mainland Chinese market is the most reliable choice. Although labor costs in mainland China are higher, product quality is guaranteed, and production efficiency can keep up, ultimately leading to higher profits.

Modis Retention Efforts, India's Dream Shattered

Indian Prime Minister Modi met with Foxconn Chairman Liu Yangwei to discuss Foxconn's investment plans in India, emphasizing that Foxconn's expansion of its supply chain with Apple in India would contribute to boosting India's economy. Modi even fantasized about surpassing China in supply chains.

However, reality is harsh. Previously, a shocking incident occurred at the Indian factory: married women were prohibited from working, a clear indication of gender discrimination. Modi expressed concern and requested a detailed report. But if this gender discrimination issue is not addressed, how can collaboration even be considered?

Foxconn's Future Depends on Transformation in the New Era

Foxconn's growth was primarily fueled by its assembly work for Apple. However, Apple's current difficulties have led to a continuous decline in Foxconn's performance.

To find new growth opportunities, Foxconn has proposed three areas of development: electric vehicles, digital health, and robotics, and identified three core technology areas: AI semiconductors, new-era communication, and semiconductors.

Guo Taiming's decision to bring Foxconn back to mainland China and refocus on Zhengzhou undoubtedly indicates that "home is best." While mainland China's workforce is no longer inexpensive, it offers quality assurance, diligent work attitudes, and ultimately provides value that others cannot.

Guo Taiming's decision to return to mainland China is also a testament to the continued trust between the two parties. However, India's ambition to surpass China currently seems unlikely.

Conclusion

Guo Taiming's return is a strategic decision for Foxconn itself and reflects the development trend of China's manufacturing industry. China's vast market, well-developed industry chain, and strong technical capabilities provide Foxconn with ample room for growth.

India's goal of surpassing China in supply chains currently seems like a fantasy. To achieve this goal, more effort is needed to resolve the many existing problems within the country.

In the future, China's manufacturing industry will continue to grow and attract more companies like Foxconn back. Whether India can seize opportunities and achieve leapfrog growth remains to be seen.

References:

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