Foxconn Plans to Lift Pay Sharply at Factories in China | Hacker News Reader

Foxconn Plans to Lift Pay Sharply at Factories in China

nytimes.com

30 pointsbenackles32 comments

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Foxconn have raised their wages significantly over the last decade and a half; This is hardly unexpected.

This is how Foxconn's wages have looked since 2004 --

2004: 380 RMB

2006: 400 RMB

2007: 600 RMB

2008: 700 RMB

2009-July 2010: 900 RMB

July 2010: 1200 RMB

Oct 2010: 2000 RMB after 6 month probationary period at 1200 RMB

April 2011: 2390 RMB after 6 month probation period at 1590 RMB

2012: 2590 after 6 month probation period at 2190 RMB

Wow, it looks like wages have nearly tripled in the last 3 years and looking at the numbers, inflation only accounts for a small fraction.

I've been expecting cheap manufacturing to move away from China eventually, but it seems it may happen faster than I thought.

Heh, yup. It's funny how the media neglects to mention how quickly wages have risen over the past few years WITHOUT any pressure being put on the companies by the media. These pay rises were scheduled a long time ago - they were only just put into action because of Chinese New Year a few weeks back.

It's going to be interesting to see what happens once the Chinese workers have to go back to their farms. The average Chinese farm earns about 300-500RMB per month (http://seeingredinchina.com/2011/04/27/how-poor-are-chinese-...); will the NYTimes write about that, too?

Foxconn also has plans to install millions of assembly robots in the next few years.

All of this push to raise employee pay will more than likely speed up the adoption of automation and end up drastically cutting unskilled jobs a bit faster.

Already, there are huge queues for Foxconn positions even if the work conditions are abysmal. The Chinese government won't like this as it could lead to famine issues all over again. I wonder how Foxconn is going to compensate for this, the socialist thinks more taxes, the conservative thinks more security.

I was just coming here to ask this; why do robots not do this and why, if robots can do this, is this not done in the US? Robots cost a lot of money (getting cheaper, but slowly; wait for the 3d-printable robots), but it makes more sense keeping it in the US anyway?

There's only about a million industrial robots in operation worldwide today. For Foxconn to turn around all those iPads (for example) in only a month or two requires about million people right now. The scale of what they do is just staggering, imagine how much it would cost to go to a third party like Siemens and buy a million industrial robots with the dexterity of human hands and fingers.

Well, with this new internal development project Foxconn will do it all by itself in just 2 years. This will DOUBLE the number of industrial robots in the world and make China the leading robotics country. Impressive stuff.

That is very impressive. I find it more impressive though that we are not farther along with this. Only 1 million?

(I have no idea about this, you seem to:)

Isn't it so that you don't need the human dexterity? They are making the same movements on the same iPad the entire day; would that not be a prime candidate to NOT need humans for? It's not as if they create a custom iPad per client?

Well the stuff that do not require human fingers have already been robiticized.

You need a manufacturing base. Raw materials, parts, tools, it all has to be made nearby your plant to be able to automate efficiently. The US doesn't have that anymore.

[citation needed]

I am curious where this info comes from? I heard the gov is sponsoring robot production in the USA now; what would be needed?

Great to see this happening!

Good on foxconn for responding, and hopefully they keep improving their conditions of work.

Hmmm... What an interesting paradox.

What made manufacturing jobs go to China in the first place was the extremely low wages and lack of red tape, worker benefits, safety, bureaucracy, etc...

In the past months wages in China have risen enough to make some US companies return jobs to the US because they were no longer saving money in China. This was predicted to happen at some time around 2015 but we're seeing much earlier. The better the Chinese get paid the less of a reason companies will have for outsourcing in the first place. Why? Because by insourcing manufacturing back to the US businesses have more control, don't have to worry about IP theft, and don't have to wait a month for shipments to come back from China.

Basically:

Chinese are treated like crap = backlash from consumers + bad for workers + but more jobs for the Chinese. Chinese workers treated better = more approval for consumers + better for Chinese workers + but less jobs for China.

It's not much of a paradox but something that capitalists said that globalisation allows a huge demand for workers in developing countries until the workers can demand developed world wages.

Two problems with this. First, rising wages in China isn't going to bring jobs back to the US. It'll bring jobs to India.

Second, from the perspective of as casual observer, it would seem Apple's success disproves all three of your concern..they seem to have ample control, IP theft doesn't seem to be a problem (Samsung "stealing" design elements, isn't a manufacturing issue), and their time to market is phenomenal.

>It'll bring jobs to India.

Unless automation catches up first. You're right that jobs will keep jumping from country to county as wages rise in previously developing areas.

However, that will end when automation reaches the point where it's cheaper to have robots in the US build it.

Also, one question I have is this: is the difference in wages between the U.S. and India, less than the difference in wages between the U.S. and China when these jobs started moving there?

The fact that the iPhone hasn't been cloned in China doesn't mean intellectual theft doesn't occur. Given so much lower hanging fruit to clone, why bother cloning iPhone?

And why exactly would manufacturing jobs go to India? Is there some preexisting manufacturing industry I'm not aware of?

I don't know how the economics work out at the moment, but India does have a couple benefits. A lot more people speak English well (like ten times as many), and it's culturally more accessible to the west. They were under British rule until after World War II, and have in general a long history of closer ties to the western world.

It's also less politically sensitive in the US. Americans have a knee-jerk reaction to China that goes far beyond outsourcing and call center complaints. India is seen as an ally rather than a potential military threat.

India have even more good reasons:

- India's domestic consumption accounts for 57% of the GPD.

- India's housing bubble is not even close to what has been going on in China.

- 650 million Indian's are estimated to live on $2 a day (100 millions in china).

- India's population will overtake china's during the 2020's

OTHO, India has other problems like endemic corruption, less investment in infrastructure, or terrible levels of inflation for example.

From what I've seen, I'm not sure corruption is much less of a problem in China, I think it just manifests differently. Arguably an openly-corrupt society has advantages over a quietly-corrupt one.

Nope, not pre-existing, but emerging. There are a number of reports on the topic, Wiki references one by PwC (1).

There's also the fact that China appears to be heading for a serious problem with respect to the age of its population. Conversely, India is expected to maintain population growth for at least a couple decades longer than China.

(1) http://www.pwc.com/en_GX/gx/world-2050/pdf/world-in-2050-jan...

>Chinese workers treated better = more approval for consumers + better for Chinese workers + but less jobs for China.

Bigger domestic consumer base so it's no longer export only, lower cost from IP means fewer legal risks/more competition and cheaper manufacturing capacity.

>Bigger domestic consumer base so it's no longer export only

Hopefully they have smoother transition than Japan.

There's a long way to go before there's anything approaching parity with the US.

$400/month is still less than $5000/year. Federal minimum wage in the US for 40 hours/week with no overtime comes out to just over $15,000/year, and it's unlikely most of the workers in a hypothetical US iPhone factory would be making minimum wage.

Remember, the Foxconn workers are already making a lot more than most Chinese manage. These workers are getting attention because of Apple's unusual public image and high profile. There's a lot worse to be found in China.

Doesn't quite work that way since US workers get payed in dollars and Chinese workers get paid in yuan. Once the Chinese government stops artificially keeping it's currency low, it should even out.

Once they do something they've explicitly said they have no intention of doing any time soon...

These workers are getting attention because of Apple's unusual public image and high profile and unusually high margins and profits...

Cost of living is not the same in China and the US though. In terms of purchasing power $5k/year is more like $25k/year. Not exactly posh, but not the extreme poverty a naive calculation would lead you to believe.

Oh I get that. I'm usually the guy who points that out. I'm just saying the economics don't really support moving manufacturing jobs back to the US at this point, and probably won't soon.

The gap is still big, so there is a room for improvement of Chinese workers conditions.

It's called the race to the bottom. It's happening in Taiwan now too. Everyone is moving their factories to Vietnam, some to Cambodia, some to Thailand.

I live in Vietnam (Saigon) and hang out with a lot of Taiwanese factory owners/managers/etc. More and more of them are coming here, though I can't imagine they'll be staying long.

I went to Taiwan for Chinese New Years and was amazed at the progress from when I was last there 12 years ago. Unfortunately, their economy is taking a beating as a lot of what created it in the first place is now moving to places with higher profit margins.

I can only think that Africa is next on the list.

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