Foxconn's parent firm to build 2 plants in central China
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Taiwanese IT giant Hon Hai Precision Industry Co. has registered to build two factories in Henan Province on the Chinese mainland to produce cell phones and related devices, Henan commercial authorities said Monday.
"Registration of Futaihua Precision Electronics (Zhengzhou) Co. Ltd. and Hongfujin Precision Electronics (Zhengzhou) Co. Ltd. was completed early this month," an official with the Henan Provincial Commercial Administration told Xinhua.
Contractual investment in the two projects was 740 million U.S. dollars, according to the registration documents.
Futaihua involves a total investment of 100 million U.S. dollars while Hongfujin involves 120 million U.S. dollars, but the official did not say whether the amount included capital from the local government.
The factories, funded by Hon Hai, the parent company of Foxconn, will produce 3G and new generation cell phones, base station systems, core network equipment and metal and non-metal moulds, the documents showed.
Foxconn is the world's biggest electronics contractor. It makes high-tech products like Apple's iPhone.
About 20,000 workers are expected to arrive in a village in Zhengzhou New District, on the eastern suburbs of Zhengzhou, in August and local authorities are renovating houses rented from farmers for them.
The Henan official made the remarks after Hon Hai's board on Saturday signed off 64 million U.S. dollars for four factories in the Chinese mainland. Altogether the board approved five investment projects.
The two plants in Zhengzhou, capital of Henan Province, will get 32 million U.S. dollars in investment and two other factories in Chengdu, capital of southwest China's Sichuan Province, will receive the same amount.
Henan factories will mainly produce handsets while the Chengdu plants will focus on production of tablet PCs and digital set-top boxes.
The projects, Hon Hai's first in the country's inland regions, would not dwarf its Shenzhen production base in the coastal province of Guangdong, said Chen Hongfang, an official with Foxconn Technology Group in Shenzhen.
"Foxconn has been doing well in Shenzhen and will never move out," Chen stressed.
There have been rumors that scandal-hit Foxconn must move part of its business from Shenzhen to inland areas to maintain growth.
"We will win employee support if they want to go back to their hometowns to work, but we don't encourage large scale relocation of workers," he said.
"The earlier Foxconn expands to inland regions, the more it will benefit. The move is natural as the company seeks lower production costs," said Guo Shiping, a professor of economics at Shenzhen University.
Foxconn after coming under fire after a series of suicides, raised wages for workers in its coastal Shenzhen plant in Guangdong Province. Half of its 800,000 Chinese mainland employees are located in Shenzhen.
It announced last month it would hike monthly salaries for assembly line workers in Shenzhen by nearly 70 percent to 2,000 yuan (295 dollars) from October 1.
Foxconn is expected to secure higher profits because of comparatively cheaper labor, land use and factory management costs in China's inland regions, according to Guo.
The new factories will help Henan, China's most populous province, to ease unemployment problems as the two plants are expected to employ up to 100,000 workers in total.
