Foxconn Technology Group (富士康科技集團) will keep on increasing worker salaries in China and cutting working hours, Foxconn chairman Terry Gou (郭台銘) said yesterday, after it came under fire over poor working conditions for employees making Apple iPhones and iPads.
As part of its efforts to relieve the pressure on its existing factories in Chinese cities such as Shenzhen and Chengdu, Gou said Foxconn would be building high-tech manufacturing facilities in Hainan, as well as expanding operations in Brazil.
“We have a saying now in the company: ‘You work fewer hours, but get more pay,’” Gou said at this year’s Boao Forum for Asia in China’s Hainan Province. “We won’t stop here and will continue to increase salaries. Salaries in Brazil are even higher, but we will continue with our investments there. We’ve just entered a deal with Hainan Airlines and they will eventually be our way of -connecting our supply chain [from China to Brazil].”
The 61-year-old Taiwanese tycoon said Foxconn would lift workers’ overall salaries, because some employees at its sprawling factories in Shenzhen had complained that they would not make enough money if hours were reduced.
Apple and Foxconn agreed last week to improve conditions among the 1.2 million workers assembling iPhones and iPads in a landmark decision that could change the way Western companies do business in China.
According to the agreement reached with Apple, Foxconn Technology Group, whose subsidiary Hon Hai Precision Industry (鴻海精密) assembles Apple devices in China, will hire tens of thousands of new workers, eliminate illegal overtime, improve safety protocols and upgrade housing and other amenities.
The move is in response to the independent Fair Labor Association’s findings of violations of labor laws by Foxconn, such as allowing long work hours and unpaid overtime.
Foxconn now supplies 50 -percent of the world’s consumer electronics, with its units assembling handsets for the industry’s best-known names, such as Nokia Oyj and Huawei Technologies Co Ltd (華為), as well as Apple.
“The result we expect is additional hiring to cover the shortfall in labor hours following the reduction of overtime, as well as increased investment in automation equipment to reduce the future impact of continued wage increases in China,” HSBC PLC analyst Jenny Lai (賴惠娟) said in a report.
Foxconn has also been diversifying into other Asian markets, such as Vietnam, partly to reduce its reliance on China, although the move has been limited so far.
“Vietnam’s development hasn’t been as fast as China,” said Gou, who is Taiwan’s third-richest man according to Forbes magazine.
He added that Foxconn saw Hainan developing as one of its manufacturing bases in the southern part of Asia, although some incentives, such as taxes and the availability of labor, still needed to be ironed out.
“We’ll be breaking ground in Hainan at the end of this year and the facilities will be making high-tech products — that I can say, but as to what kind of products and other details, I can’t divulge too much now,” Gou said.