A year after Apple Inc supplier Wistron Corp faced an uprising in India, its larger rival Foxconn Technology Group, known in Taiwan as Hon Hai Precision Industry Co, is encountering a similar rebuke. This time, their key client is getting drawn into what ought to serve as a wake-up call for Taiwanese manufacturers in the South Asian nation.
Concerns about food safety and accommodation standards spurred Apple to take the unusual step of placing a factory near the southern Indian city of Chennai on probation. More than 17,000 people work at the facility, and in the middle of last month hundreds of workers contracted food poisoning. More than 150 were hospitalized.
That outbreak spurred workers to strike, once again shining a spotlight on conditions for the tens of thousands of factory staff hired across India to churn out devices that include smartphones and computers. When Apple investigated, it found that not only did food sanitation fail to meet expectations, but employee dormitories were also below par.
Illustration: Mountain People
Apple and its Taiwanese partners have been here before. A year earlier, workers at a Wistron plant near the tech hub of Bengaluru ransacked that factory after being fed up with delayed and underpaid wages. Baton-equipped police were called in to quell the protest, but not before staff destroyed equipment and torched vehicles.
Foxconn last week apologized for the recent problems and said it is restructuring the local management team, but that is not good enough. Despite Wistron’s failure a year earlier, it would seem that executives back in Taipei still do not get it.
After decades of developing their business models, Taiwanese companies, including Foxconn, Wistron, Pegatron Corp and Quanta Computer Inc, have come to dominate global electronics manufacturing from facilities dotted throughout China. They have done well in the world’s most populous nation over the past 50 years, thanks in part to a common language and successive leaders’ pro-business policies that made it easy to set up factories and hire workers from near and far.
Now, faced with labor shortages and a recognition that they are too reliant on China, Taiwanese firms are making the savvy move of shifting operations to the next-largest country.
However, they are learning that India is not as easy. Be it language barriers, cultural differences or the raucous democracy, Taiwanese executives are struggling to adapt. It is yet another sign that India is not the next China, but a nation with its own traits and nuances.
Part of the challenge is that India lacks the infrastructure Taiwanese companies are accustomed to relying upon when setting up local facilities. When Foxconn founder Terry Gou (郭台銘) went on tours of China, playing local governments off against each other in the battle to land the next iPhone factory, he was able to extract commitments to provide workers’ accommodation and the numerous other support services needed for a massive manufacturing operation.
In the Wistron case, local contractors appear at least partly to blame for the wage payment problems that escalated to the point of explosion. Yet management itself failed to adequately monitor its own suppliers to ensure compliance. Foxconn appears to be facing similar problems, exacerbated by the fact that international travel has been curtailed by the COVID-19 pandemic.
It would be incorrect to conclude that Chinese workers are simply more compliant than their Indian counterparts, as evidenced by the 2012 riots at a Foxconn plant in China.
However when push comes to shove, Taiwanese management has generally found that local governments in China would side with companies over workers. That is less likely in India, where leaders need voter support at election time.
Perhaps the biggest challenge, though, is management style. Taiwanese businesses — which generally used their own executives in China — will increasingly rely on local leaders to set up and run operations in India. That means offering adequate training and support so that they can mesh the rigid Taiwanese approach to operations with a more relaxed worker culture found on local turf.
Their experiences in China, where such a divide also existed, proves that the challenge is not insurmountable.
However, technology manufacturers had decades to adapt to the local landscape there as they slowly expanded operations in line with the growing needs of their largely Western clients.
In India, though, Taiwanese firms must acclimatize faster. Customers need these new factories to ramp up quickly to ease their reliance on China, while both New Delhi and Taipei are in a hurry to forge a strong trading relationship that can blunt Beijing’s economic power.
In the rush to reorient the global center of production, manufacturers do not have the luxury of time.
Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
As strategic tensions escalate across the vast Indo-Pacific region, Taiwan has emerged as more than a potential flashpoint. It is the fulcrum upon which the credibility of the evolving American-led strategy of integrated deterrence now rests. How the US and regional powers like Japan respond to Taiwan’s defense, and how credible the deterrent against Chinese aggression proves to be, will profoundly shape the Indo-Pacific security architecture for years to come. A successful defense of Taiwan through strengthened deterrence in the Indo-Pacific would enhance the credibility of the US-led alliance system and underpin America’s global preeminence, while a failure of integrated deterrence would
It is being said every second day: The ongoing recall campaign in Taiwan — where citizens are trying to collect enough signatures to trigger re-elections for a number of Chinese Nationalist Party (KMT) legislators — is orchestrated by the Democratic Progressive Party (DPP), or even President William Lai (賴清德) himself. The KMT makes the claim, and foreign media and analysts repeat it. However, they never show any proof — because there is not any. It is alarming how easily academics, journalists and experts toss around claims that amount to accusing a democratic government of conspiracy — without a shred of evidence. These
The Executive Yuan recently revised a page of its Web site on ethnic groups in Taiwan, replacing the term “Han” (漢族) with “the rest of the population.” The page, which was updated on March 24, describes the composition of Taiwan’s registered households as indigenous (2.5 percent), foreign origin (1.2 percent) and the rest of the population (96.2 percent). The change was picked up by a social media user and amplified by local media, sparking heated discussion over the weekend. The pan-blue and pro-China camp called it a politically motivated desinicization attempt to obscure the Han Chinese ethnicity of most Taiwanese.
On Wednesday last week, the Rossiyskaya Gazeta published an article by Chinese President Xi Jinping (習近平) asserting the People’s Republic of China’s (PRC) territorial claim over Taiwan effective 1945, predicated upon instruments such as the 1943 Cairo Declaration and the 1945 Potsdam Proclamation. The article further contended that this de jure and de facto status was subsequently reaffirmed by UN General Assembly Resolution 2758 of 1971. The Ministry of Foreign Affairs promptly issued a statement categorically repudiating these assertions. In addition to the reasons put forward by the ministry, I believe that China’s assertions are open to questions in international
RSS