World’s workshop heads to inland China

29 Aug

ZHENGZHOU: In a vast muddy cornfield scarred with the tracks of heavy vehicles, two young engineers pore over a construction blueprint showing a grid of 100 rectangular factory blocks.

Here on the outskirts of Zhengzhou, the provincial capital of Henan in China’s interior, Foxconn, the largest company and exporter in “the workshop of the world” has staked its future on a mammoth new industrial complex.

New powerlines are being erected and roads built to the site under the watchful eye of local farmers who daydream about the entrepreneurial opportunities that up to 200,000 new workers in the area might present.

Taiwan-based Foxconn Technology Group, which includes its flagship Hon Hai Precision Industry, makes gadgets for a constellation of global brands including Apple, Dell, Nokia and Hewlett Packard.

Most of that production comes from its plants in Shenzhen, in the Pearl River Delta area, one of the three major Chinese coastal manufacturing hubs, along with the Yangtze River area around Shanghai and Bohai Bay north of Beijing.

With this leap into Henan province, 1,600 km (1,000 miles) from Shenzhen, Foxconn is expanding aggressively inland, where wages are lower and workers more plentiful, keeping mostly higher-value, engineering, and R&D work in China’s coastal areas. It will have as many as 1.3 million workers in China by the end of 2011, up from 920,000 now, company officials say.

Foxconn is by no means alone. Intel, the world’s biggest chip maker, opened a $600 million plant this year in Chengdu and Hewlett-Packard built a laptop factory in Chongqing, both cities in the western province of Sichuan.

Cheaper labour is not the only attraction. The worker has become the consumer in China, with the government determined to raise household incomes and reduce wealth disparities. Locating factories nearer to markets makes dollars and sense.

“Most of the villagers here think it’s a good thing,” said Meng, Xiangting, 46, a farmer prying stones from a wall with a crowbar for use on his own crumbling home. “They’ve guaranteed jobs for anyone in the area between 18 to 50 years of age. I’m not interested. I’d like to open a small shop for the workers instead.”

With factories closer to home, children of farmers like Meng won’t have to make the annual trek to distant coastal regions and live desultory lives as migrant workers in factory towns.

A rash of suicides at Foxconn’s Shenzhen plant which the company said weren’t work-related but which victims’ families blamed on tough conditions, helped fuel a wave of labour unrest — and has become yet another motivation to move operations into the less volatile interior.

Foxconn’s move will touch off a mini-boom in an ancient Chinese capital perhaps best known for the 5th-century Shaolin temple that is home to its famous brand of Kung Fu.

Foxconn’s suppliers will have to relocate as well. The workers will need housing and places to shop. Some may even be able to afford cars to commute to work on the new highways being built to Foxconn’s mega-factory and its satellites.

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