Explosion of Foxconn

Recently there was an explosion in Foxconn’s factory in China.  This happens right after the company tries to move its supply chains west inland in China to lower the labour cost.

Like I mentioned before, I do not like the company Foxconn that much and I don’t like their strategy of just keep chasing after the cheapest labour in China.  From the company point of view, I don’t think this is the right and sustainable strategy.  And looking at it from a Macro perspective, it does not add much economic benefit to Taiwan.  On the bigger scheme of things, the company and its capital basically got dragged by China’s policy further and further west (yea…the company really looks like China’s bitch) while its profit margin gets lower and lower.

I already mentioned a lot why I think these type of companies do not benefit Taiwan and can actually create problems for Taiwan…so I won’t repeat them here.  And now it seems the company’s relentless pursuit of cheap labour (instead of automation or other strategy direction) really back fires.  (6 suicide, and now explosion in its new factory…really a managerial disaster that few companies face).

Right now the company still makes money simply due to economy of scale, but I think in the long term there should be other Taiwanese companies that can substitute it.  I think we can also use Foxconn as a benchmark that Taiwan should cross over…in another word, when Taiwan has some companies that surpass companies such as Foxconn that have to rely on China, in terms of profitability and size, then you know Taiwan has successfully upgrades its economy.


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