Aftershock of Foxconn Incident – The Mixed Bag of Taiwanese Business Returning and Industry Upgrade

The Aftershock

There are still some aftershock of the Foxconn incident, but these aftershocks troubles me a bit because it shows many people in Taiwan still have this Chinese centric thinking that largely ignore Taiwan itself.

Some students and academia has jump in the attack of Foxconn.  One professor even call it “the Shame of Taiwan.”  While I myself start disliking Foxconn, its chairman and its management team in general way before this incident, to call it a shame and smear this “shame” upon Taiwan is unbelievably STUPID.  It is Foxconn, not Taiwan, that choose to build these 800,000 workers factories in China.  It is Foxconn, not Taiwan, that choose the way they run the factories.

Many people in Taiwan, including me, dislike their strategies, not because it causes problems in China, but because it causes unemployment/lower wages in Taiwan and large outflow of capital from Taiwan in pursuit of cheap labor and low profit margin.  In fact, Foxconn has helped out a great deal in boosting Chinese economy.  

These academia seems to miss all of these points and simplify it to be a “shame” and amplify it to be a “shame” of Taiwan.  To align themselves with the CCP and bash Foxconn and Taiwan now, one then cannot help but wonder about these academia’s intention.

The Mixed Bag

Now some Taiwanese business are thinking moving some production back to Taiwan or else where, since now that they have jacked up the wage in China, and Chinese labour might not hold the same attractiveness anymore once it lost its price appeal.  However, this news, if true, is good, bad and tragic to Taiwan at the same time.

The good part is that, perhaps after some Taiwanese business people realize that chasing cheap labour is not the way to go, they will re-invested into Taiwan and re-engage the route of production automation and re-pursuit higher quality products.  This might have a rejuvinating effect in Taiwan’s economies.  Factory will provide jobs.  Production automation will require engineering services.  Higher qulity products could bring more money and brand power into Taiwan. 

The bad part is, some of these Taiwanese business people, given the past record, will not go in that direction.  Instead, they will once again engage in cheap labour route.  That, in the short term, is not a big deal and might solve the unemployment rate problems as well.  However, when China, with its larger population base, once again has much lower wages, these Taiwanese business people will again jump into China’s embrace.  Therefore, in the mid and long term, whether this is a good thing remain to be seen.

The tragic part is, Taiwan now has to welcome those that have abandon it in the first place back (maybe not all Taiwanese business abandon Taiwan as some are forced to move due to supply chain).  Wouldn’t it seem that justice has been served more correctly if these business people lost their shirts in China and return to Taiwan penny-less? (well, actually that happens a lot but not to the large enough scale to cool the Chinese fever before)  But perhaps this is the reality.  And maybe these business will have a harder time to survive, now that many industries have advanced while these people pursuit their cheap labour….who knows.

And just how many will actually return is still unknown, we will have to wait and see.

PS.  Now I think of it…from the business perspective, perhps these people (maybe even those American and Japanese firms) realize now that if they have most of their business operation in China, they will become like sheep waiting to be killed and served by the Chinese government.  In another word, the Chinese government will have absolute power over them.  However, if they diversify, in this case, moving major operation back to Taiwan, then Chinese government holds much less power over them.

Industry Upgrade

In any case, it remain to be seen what will happen next.  However, I think it’s probably worth a while for the pan green to think of a way to avoid these dangerous over reliance on outsourcing production to China in the future.  I am not totally sure how…but there are obviously other way than pursuing cheaper labour or labour intensive production.  Automation, training, R&D, value chain, customization, service, marketing, brand….etc…all these might help in diversify Taiwan’s economic structure and in its stability and growth.

Also, DPP intends to pay closer attention to unemployment rate and the widening gap between rich and poor etc.  I think that is a good thing.  However, it is not easy.  Simply redistribute wealth does not seem to work well in a lot of European countries (economic stagnation in France and Germany, collapsing in Greeks, extremely high unemployment rate in Spain).  However, Taiwan seems to have policies that give unfair advantages to the rich / powerful and  large coroporation…perhaps those policies could be examined first,…I am not sure lol.


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