Tech behemoth Foxconn: The new victim of China’s zero-COVID strategy

Taipei: China has imposed a strict lockdown on an area of central China housing a vast iPhone factory operated by Taiwanese tech giant Foxconn.

The company, also known as Hon Hai Technology Group, is the world’s largest contract manufacturer of electronics, including producing 70 per cent of all iPhone shipments globally.

The firm is also one of the world’s biggest employers, with nearly 1.3 million working in factories mostly in China but also across Asia, Eastern Europe, Latin America and the United States.

Here are five things to know about the tech behemoth, the latest victim of China’s no-compromise zero-COVID strategy:

Maverick founder

Terry Gou, once Taiwan’s richest man (he ranked sixth this year), started his business in 1974 making television parts.

And the rise of the self-made billionaire — born to parents who had fled the Communist victory in China’s civil war — mimics the island’s phenomenal economic success.

Experts say his aggressive dealmaking style has helped him secure billions of dollars in state funding and support from mainland China to expand his business empire.

Gou ceded control of Foxconn in 2019 to a committee as he pursued an ultimately failed attempt to run for Taiwan’s presidency.

Labour violations

Foxconn has been embroiled in a series of labour scandals in the past, including a string of suicides at its China plants in 2010 that forced its founder to reassess his harsh management style.

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The so-called “suicide nets” introduced to catch Foxconn employees attempting to take their own lives at the time became emblematic of the harsh price many blue collar workers paid for China’s rapid economic rise.

The company has also during recent COVID outbreaks been accused of forcing employees who are unwell to work and not providing medical treatment or timely meals.

And China Labor Watch, a New York-based NGO, has also accused the firm of hiding the number of COVID-19 infections among its employees.

Foxconn on Sunday insisted that it “is making every effort” to ensure its employees are being looked after.

COVID-battered China factories

The Foxconn factory in central China’s Zhengzhou is the world’s biggest iPhone manufacturer, with tens of thousands of employees living in the sprawling campus year-round. Most only leave to visit their extended families during major holidays.

Since the first iPhone was rolled out in 2007, the company has expanded to six other Chinese cities, with factories manufacturing Amazon’s Kindle ebook, Nintendo gaming systems, Sony’s PlayStation, Google’s Pixel devices, and others.

On Wednesday Chinese authorities imposed lockdowns on 6,00,000 people in the area surrounding the Zhengzhou plant, after weeks of alleged company mismanagement of an outbreak at the facility.

It is far from the first time Foxconn’s supply chains in China have been disrupted in the past two years due to the state's strict zero-COVID policy, with the firm also forced to quarantine hundreds of workers in the early days of the pandemic.

US-China tech war

Foxconn has also been affected by rising US-China tensions over technology that have rattled global electronics supply chains.

When Gou and former US President Donald Trump grabbed ceremonial shovels at the 2018 groundbreaking of a $10 billion electronics factory in Wisconsin, Beijing saw it as an olive branch extended by the Taiwanese billionaire to avoid the fallout from the tech war.

But the project has fallen short of expectations, with a smaller plant and fewer jobs than initially announced. A political row also broke out over significant tax breaks the company received from the United States government to set up shop.

Global footprint

Foxconn has invested everywhere from Japan to India in a bid to diversify its business and wean itself off its dependence on China.

It acquired Japan’s ailing Sharp in 2016, marking the first foreign takeover of a major Japanese electronics company.

Today it operates in 10 countries including Vietnam, Slovakia, Hungry, Czech Republic, Brazil, Mexico and the United States.

The company has also branched out into semiconductor, robots and healthcare sectors and embraced the rapidly expanding EV business with an aim to own five per cent global market share in 2025.

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