Foxconn International Removed From Hang Seng Index

Tasha26 writes "After the suicides and fatal explosion, the Taiwanese company Foxconn now faces losing its blue-chip status. Falling prices for smartphones, laptops, tablets and other gadgets and rising wages in China have undermined Foxconn's financial performance. The company lost $220m (£135m) in 2010. Foxconn International will be removed from Hong Kong's benchmark Hang Seng index and be replaced by insurer AIA and nappy maker Hengan. The two new entrants use China both as a source of cheap labour and as a market for their product, a switch which Foxconn is now considering."

Comments

Great...?

[Lunix Nutcase]

The two new entrants use China both as a source of cheap labour and as a market for their product

They sound like fine, upstanding companies! Oh wait... So basically they just replaced one exploitative company with two more!

Re:Great...?

[TheRaven64]

The second is the more important part. Foxconn uses China as a source for cheap labour, but focusses on exporting their products. The fact that this is a failing business model is interesting, since it shows that China needs the west a lot less than you might have thought - companies that make things in China and sell in the USA are failing relative to companies that make things in China and sell them in China.

Re:Great...?

[M. Baranczak]

I'd rather pull long hours at a Foxconn plant than go to an early grave working in a US textile plant or coal mine decades ago.

http://c2.com/cgi/wiki?FalseDichotomy

Re:Great...?

[eepok]

Oddly enough, this is historically correct. I'd mod you up if I had points.

It doesn't make it right or good, but regions (not nations) have been shown to go through industrial and economic changes in roughly the same pattern:

1) Dominance/Slavery/Colonialism
2) Once dominance becomes too unsavory or colonialism becomes too dangerous, enter "Exploitative Industrialism" (China is here.)
3) Once wealth has been spread sufficiently to empower the majority, reliable Workers' Rights comes in.
4) After Workers' Rights prevents the exploitation of local labor, companies find international sources of labor to exploit. (The "1st World" is here.)
5) ??? We're all hoping this will be "Automation becomes main labor source and the profits are shared with those that would otherwise be working in the form of social welfare and education..." but it will likely be "Automation makes things ever more profitable, people laid off, economy slides because no one has income, company fails."

Re:Great...?

[eln]

China's middle class is exploding, so there are markets there that didn't exist only a few years ago. Ironically, one of the hurdles for Chinese companies to overcome is that many middle class Chinese seek out American (or otherwise foreign) products because they believe Chinese products are largely shoddy knockoffs. This means that, at least for now, most Chinese manufacturers are only able to successfully sell to the wealthier parts of the Chinese market by doing outsourced manufacturing work for an American brand.

Of course, as Chinese companies absorb more knowledge of how to market their own brands (they're already learning about quality control from the demands of the American brands outsourcing manufacturing to them), those brands will gain strength. At that point, they won't need American brands to sell to their own country, and can cut out the middleman. Eventually, those strong Chinese brands will make their way here and compete directly with American brands on our own shores. This is a matter of when, not if.

This has always been a major problem with outsourcing. It's basically impossible to outsource any significant work without at the same time training your outsourcing partner in the skills they would need to directly compete with you if they so desired. With the Chinese domestic market exploding, there are huge opportunities for Chinese companies who are willing and able to step out from the shadow of their American outsourcing partners.

Re:Great...?

[Moridineas]

This has been true for a long time.

I once met someone who had been a manager at Bell Labs back in halcyon days. He had spent a good bit of his career in China, Japan, and Korea.

He said that when working in China, the Chinese made no bones about copying what Ma Bell was doing. He said at one point the Chinese govt (or some corporate proxy) had rented a floor in the building where AT&T had offices, and were completely conspicuous about breaking in, stealing data, planting moles. He was baffled as to why AT&T continued to do business there...

It baffles me to too... why so many American and European companies are so willing to quicken their demise for a few bucks today. On the other hand--and this is already happening--China is getting more expensive, labor codes are finally being updated, and the environment is no longer being quite so blatantly shat upon. Maybe we'll see some offshoring back to the US with shipping costs being what they are.

Re:Great...?

[scamper_22]

I work with computers all day.
I often wonder what people think computers are all about.

They're all about replacing human labor. I find it odd working in this field and talking to people outside it.

People outside the field seem to think that every age has a 'new economy' but everything else stays the same... as if nothing has changed in history. So they talk as if the 'green' economy will provide everyone with jobs... just 'green' jobs. Or they think we'll all be doing analytical work.

The problem is typically these people lack an understanding of scale. It's odd how so many academics lack an understanding of scale as well. All the 'good' jobs of the future are jobs that do not scale with the population. They are for small groups of highly skilled people.

So Google can do all it does with a mere 30K people or so. That is enough to serve the whole world. Just to put it in context. BlockBuster employed 60K people and it represents just a sliver of what Google can do (content delivery).

The single biggest problem is that the private sector is increasingly not scaling with population. Small highly efficient operations are there.

The public sector typically does scale with population. More nurses, doctors, police officers, teachers... are needed as the population grows. Now we can certainly try and automate parts of these jobs (online class delivery...), but in general we're not there technologically or the unions won't allow it.

So we have a structural imbalance. The only way out of it... is to go to the start... computers are doing what they were meant to do... kill human labor. We should all be working less... job sharing. the result is a much more egalitarian society... with potentially a very rich upper class at the top of some of the automation companies.

However that would kill people's position of privilege in society. Public sector workers expect a premium over the average person. Ditto for bankers...

IMHO, we need to embrace deflation and the lack of work and redirect people to the jobs that still need doing. Maybe we need vast numbers of people to work on the farms 2 weeks a year. Other need to go mine for rechargeable batteries.

One of the biggest problem we still face is the emphasis on 'educated' labor. Just as the industrial revolution automated manufacturing jobs. The information revolution automates so much educated labor. We need a few experts, but computing can do the rest.

So we need to get rid of the idea that just because you're educated, you should be paid more. Most of the legal and financial jobs are unproductive today. Just there to keep educated people in a premium position over society. We could for example automate and simplify the entire tax field and get rid of most accountants.

But as I said, people are used to their position of privilege. Egalitarianism is a hard concept... even though people talk about it. When people talk about good jobs, they mean jobs better than someone else.

It's definitely going to be a rough time... especially since technology is deflationary... but governments and banks are inflationary. We certainly can't embrace deflation as governments have so much debt and banks are dependent on people taking loans... and guess who is in charge of most countries (bankers and governments...)

Expect a rough time.

Re:Great...?

[M. Baranczak]

Yes, it is. When you express a preference for one of two states, and completely fail to acknowledge that there are other possible states, you are implicitly presenting a dichotomy.

In this case, the state that's being ignored is one in which companies are able to make products and workers are treated like human beings. You can argue why it can't happen, or why workers don't deserve to be treated like human beings, but ignoring it is a dishonest tactic.

Re:Great...?

[Thud457]

in China, where everything is much, much cheaper.

But the lead is adulterated with melamine and the melamine is contaminated with lead.

Doesn't change anything.

[Zoson]

Foxconn will still make money, they'll still treat their workers poorly, and we'll still keep buying their products.

Foxconn has their hands in EVERYTHING. From sockets to full products under contract with other companies. They do it all when it comes to semiconductors.