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Foxconn Twelve Jump Highlights The Bottleneck Of OEM Mode

2010/6/10 15:48:00 59

Foxconn

In the five months, twelve employees jumped out of the building in Foxconn Shenzhen factory. The owner was frightened. Terry Gou, the group boss, frequently visited the factory area. In addition to offering a 22% salary increase policy, he also planted Skynet, ground net and invisible net to prevent the suicide from happening again. Terry Gou also bowed and apologized for the four degree of suicide. This is the most severe challenge facing Hon Hai Group since its construction.


Foxconn's twelve jump incident highlights the bottleneck of Terry Gou's most successful foundry model in the past twenty years. On the one hand, it also shows that Taiwan's electronics industry, which has the advantage of low labor strength in mainland China, has faced severe challenges. On the other hand, the mainland's stage mission as the world's production base seems to have reached an end.


After the outbreak of the incident, Hongkong Economic Daily published a comment on the theme of "Foxconn's Dilemma and China's development dilemma". Zhou Hangyi, a professor at Taiwan Administration University, said: "the plight of Foxconn is also the plight of Taiwan." David Pilling, a Financial Times columnist, also said: "China's bustling dream is jumping out of the dark." He Jun, a senior research fellow of the Chinese folk think tank, ampong consulting company, also published a special article, pointing out that Foxconn's "linked jump" ended the era of low wage OEM. He thinks that Foxconn problem is no longer a case of an enterprise, but a serious public event. He Jun said: "in a civilized country, any company with a strong face will be seriously warned and treated if there is a continuous occurrence of similar incidents." He believes that Foxconn incident and Shanxi coal mine safety incidents are essentially the same.


In addition to these, the western media also widely reported the incident. For example, the Wall Street journal published a commentary entitled "tragedy behind the tragedy of Foxconn", saying that it was hasty and incapable of pointing the finger at Foxconn completely. The tragedy of Foxconn is just the epitome of China's economic model, which relies on foreign capital, cheap labor and processing trade at this stage. This is the way China integrates itself through the comparative advantage of labor force, but the consequence is the disregard of labor rights and protection, the conversion of labor into machinery, and the pursuit of efficiency by enterprises. The Wall Street journal commented: "if the Chinese government can not abandon the export oriented economic mode of processing trade, if entrepreneurs do not have a certain degree of self-consciousness, the tragedy of Foxconn will not stop at Foxconn alone."


At the same time, London Financial Times also had an article titled "Foxconn tragedy", pointing out that Foxconn is not a sweatshop, but workers still have no time and energy for entertainment and relaxation. There are obvious blind imitation factors in recent events. At the same time, the product was handed over to Hon Hai and Foxconn OEM. Terry Gou's "first-class customers" also jumped out immediately.


The apple computer, which was criticized as "bloody iPhone", issued a statement by spokesperson Steve Dowling (Steve). "Apple Corp is firmly committed to ensuring the safety of the whole supply chain environment and ensuring that workers are treated with respect and dignity." Apple is in direct contact with Foxconn executives, convinced that they are seriously addressing the problem. DELL computer also echoes that they require suppliers to adopt the same high standards as their own facilities. They will also investigate the bad working environment in the supply chain and take appropriate measures if necessary. HP and NOKIA also issued similar statements later.


For Terry Gou, this is certainly a major event. No wonder he must take the most effective measures to extinguish the fire. Because if this matter is mishandled, Terry Gou's efforts in decades will be destroyed and the whole Hon Hai Group will be greatly affected. However, behind the crisis, he also received many encouragement from time to time. Wu Dunyi, the chief executive of Taiwan, and Wang Jinping, the president of the Legislative Yuan, both inflated on him. They all believed that the situation of Foxconn was also the plight of Taiwan.


Zhang Zhongben, chairman of poly Ding technology, jumped out at the first time and said, "Foxconn is not a sweatshop." Zhang Zhongben believes that the US technology is leading and mastered the core technology of IT industry. But Taiwan is good at process management, high efficiency, high quality, fast delivery and complete supply chain, so that it can become the foundry kingdom in the world. Without the advantage of Taiwan's manufacturing industry, IT products will not be so cheap and universal. And Terry Gou is the biggest promoter of this popularization. Even Li Jiacheng, the richest man in Hongkong, jumped out to show that he admired Terry Gou very much.


A continuous staff jumping incident has attracted worldwide attention. I am afraid that only Terry Gou can have such a high level. A series of staff jumping incidents will also let Terry Gou evaluate more positive and negative polarization. But no one can deny that China has made remarkable achievements in the past thirty years of reform and opening up. Terry Gou is an important opener and contributor.


In 1978, the Chinese mainland embarked on the road of reform and opening up. We must find a way out for the vast number of migrant workers. Terry Gou's model of OEM, and the most efficient way, is a model and representative work of China's rise. Because only Terry Gou can solve the employment problem in mainland China, the mainland needs Foxconn.


In the case of Foxconn Shenzhen Longhua plant, Foxconn alone employs more than four hundred and eighty thousand workers in Shenzhen. Foxconn's exports account for 22 of the total export volume of Shenzhen, creating more than ten billion yuan of tax revenue for Shenzhen every year. China has become the world's factory by the creation of vast numbers of migrant workers and enterprisers.


But the success model of the past thirty years is not a guarantee of success in the next thirty years. China's role as an excellent production base is undergoing qualitative change and quantitative change. First of all, the migrant workers in the past two or thirty years are hard-working and tolerant, and the young men and women who have only one heart to earn money and get ahead of the Cultural Revolution have a hard working environment. But now it is the peasant workers born after the only child policy of the 1980s and the 90s. They were originally the favored children or proud daughters of the family. They were born to be protected. They dreamed of going all the way to get to the top of the world.


The mainland's one-child policy has been implemented since January 1, 1980, and now the people who grow up under the one-child policy are already thirty years old. In other words, China's current industrial production army is a new generation after birth. When they were young, their lives were no longer so bitter. They had higher expectations for their work contents and incomes, and were hard to endure the dull and dull work. Therefore, in the face of indifference working environment, they were not able to adapt themselves to the end.


Taiwanese entrepreneurs need new entrepreneurial mechanisms


Zhang Cuirong, a columnist of Hongkong economic daily, said that Foxconn was everywhere in China. Looking around the provinces and cities of all parts of China, the industrial parks like Foxconn were everywhere, and a group of migrant workers who came from the countryside were wearing black bodies, puzzled eyes, lost souls and filled with construction sites.


In fact, the working environment of most factories in China is closer to sweatshops than that of Foxconn, while the average suicide rate in China is 12/100000, much higher than that in Foxconn. However, in the past 12 months, 12 incidents of jumping off buildings have finally made Foxconn the focus of the world. This is a big event in front of us, but if we look back at Foxconn's jumping tower in ten years, it will probably be a major turning point in China's economy. For example, the Taiwanese businessmen who learned to move factories to China twenty years ago and use cheap labor to rise are all winners. But in the same way, they are likely to be losers. Future Taiwanese businessmen must find new entrepreneurial mechanisms after the Foxconn incident.


The Foxconn incident represents the end of the cheap labour in the PRD, and is the end of China's role as the world's factory. In order to quell the incident of Foxconn staff jumping, Terry Gou decided to raise 22 of the total salary. At present, the average salary is about more than 900 yuan, and will be raised to RMB one thousand and one hundred yuan. This plan will increase Foxconn's annual expenditure of about $4 billion to $200 billion. If overtime is added, the estimated cost will increase by RMB eight hundred million to nine hundred million yuan, which is a signal of China's overall pay increase.


After the Foxconn incident, the Japanese Honda auto parts factory in Foshan, Guangdong, because the staff complained that the salary was too low, the wages of the Chinese workers and Japanese workers were fifty times different. The all-out strike led to the complete shutdown of Honda's four assembly plants in China, and the lowest wage requirement for employees was two thousand yuan. After this series of events, the pay rise has become a trend.


As a matter of fact, since the implementation of the labor contract law in 2008, China began to enforce the "decent work" proposed by general secretary Hu Jintao, to make the staff decent and the salary is the most basic link, and is also the first step for the central government to implement a harmonious society. In fact, since 2006, China's minimum wage has risen almost 10% annually. In May alone, eleven cities announced that they would raise the minimum wage by 10%, while some cities, such as Guangzhou, would be 20% higher. This time Foxconn's pay rise is the strongest signal in the era of cheap labor in China.


China's role in ending production bases and on the other hand transforming China's role as the world's largest market from wage rises is the first step in China's transformation. At this turning point, there will be several future directions. First, the generation of cheap labor will have to rely on water and grass, and they must find cheaper production bases. Therefore, the two processing and subcontracting industry may go to the ASEAN countries to find production bases, such as Vietnam, Burma, Indonesia, Philippines and other places, but these countries have many problems, such as the inefficiency of language and administration, and so on.


Two, the mainland's consumption power is increasing. Taiwanese businessmen must seize the new opportunity of the mainland to become a big market. In the future, such as eating related industries, mainland food hygiene is not yet on the right track, and black heart foods are frequent, it is a good time for Taiwanese businessmen to actively seize their cards. Like Kangshifu and Wangwang, they have the effect of Taiwan business promotion. In the future, such as eighty-five degrees C, cross strait coffee, Yonghe soybean milk, and even Taiwan's unique Shabu Shabu sausages and sausages, all have the opportunity to enter the mainland market. Taiwan businessmen must fight for the mainland market.


The three is that wages will rise rapidly, and the gross profit will be squeezed. This is also an opportunity to oppress industrial transformation. Microsoft and Apple computers employ tens of thousands of employees in the world's largest IT manufacturers, but Apple's first quarter net profit of 3 billion 700 million dollars, Microsoft's first quarter net profit of $four billion, Apple's annual profit this year has a challenge of $13 billion, Microsoft sees 16 billion dollars. That is to say, the two super enterprises with a market value of more than $two hundred billion earn about NT $five hundred billion a year, but Hon Hai, which employs nine hundred thousand people worldwide, earns NT $seven, eighty billion yuan and some 20 billion US dollars a year.


We must rethink the way out.


The foundry factory in Taiwan has taken all risks, but the biggest profit is the IT plant in foreign countries. Even if Samsung, with tens of thousands of employees, the net profit in the first quarter of this year has reached thirty-five. Nine hundred million dollars. This is the next step for Taiwan generation of industry to think about. In the past twenty years, Taiwan has made good use of cheap labor in mainland China and created the legend of the generation industry, but it also lost the chance of transformation because of the exertion of cheap labor to the extreme. Today, the mainland's wages continue to rise, forcing the industry to the corner, the power of elimination is also increasing, because "cost down" has reached the limit. Terry Gou and Ceng Zihao said: "cost down" is also a service strategy, but China's environment is not what it was twenty years ago. Many people are watching Terry Gou's next step.


Terry Gou himself analyzed the secret of Foxconn's rapid growth, which is "first-class customers, second rate equipment, three streams of management and four streams of talents". First class clients refer to apple, NOKIA, HP and DELL; but the mainland workers with four talents are no longer workers who can be squeezed freely. The future position must be corrected. Terry Gou must use the best talents to open up the next thirty years.


Looking at the future of Hon Hai, it is said that Hon Hai should go to the brand, but the brand and the OEM have been unable to co-exist. Moreover, Terry Gou has always had no brand thinking and is very difficult. In the future, China should become a big market. Guangyu's cyberspace has already worked with de mand, and hopes to make a big bet with 3C. And this year, Terry Gou BOT captured Taipei's Akihabara, and the parties were watching how Terry Gou built it.


Just as global consumers crazily buy iPad, Foxconn employees frequently jump buildings, which is a very strong contrast picture. It also means that Futomi Jiyasu, Taiwan and mainland have to rethink new ways.

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