Chinese premier visits Foxconn, suggests Apple assembler refocus on China rather than US

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in General Discussion
China Premier Li Keqiang visited a Foxconn production center, and reportedly told the Apple partner's CEO to set up its "whole industrial chain" in China, rather than expanding further into other countries like the U.S.




Li visited Foxconn's Zhengzhou facility on May 9, following Foxconn chairman Terry Gou's visit to the U.S. According to multiple reports out of China, Li reportedly told Gou that the Chinese government will continue its efforts to make a business-friendly environment, and that Foxconn should sustain focus on China, rather than in other countries.

"We will continue to expand our development, and optimize the business environment," Li said during the visit. "China has a huge market and lots of talent, it is the best investment place for expanding manufacturing."

Li Keqiang is the current Premier of the State Council of the People's Republic of China. He is one of the leading figures behind the country's economic policy, a reformist calling for lighter governmental involvement in Chinese business, and is the second-ranked member of the Communist Party of China.

Foxconn had no additional comment on U.S. investment following the meeting, but said in a statement to Reuters that it was committed to investing in China.

In January, Gou revealed Foxconn was considering a joint $7 billion investment with Apple that would go toward the creation of U.S. display production plant. It was later reported that Foxconn subsidiary Sharp would take a lead role in running the plant. Gou last month expressed concerns over building displays in the U.S., however, citing a lack of government incentives, supply chain hurdles and labor issues.

More recently, Gou met with President Donald Trump at the end of April. Specific details of the meeting remain unavailable, but the two-day long discussion reportedly centered on job creation, the sale of Toshiba's memory chip business, and investment in the U.S.

Following the second day of meetings at the White House, Gou said that the company was "planning a number of investments" in the U.S. While the scope of the investments aren't known, Gou also noted that they would "include both capital-intensive and skilled labor-intensive and high-tech investment."

Gou's meeting was allegedly arranged with the assistance of SoftBank chairman Masayoshi Son, who himself met Trump in 2016. At the time the President touted SoftBank's commitment of $50 billion to U.S. operations as part of the "vision fund," which could create up to 50,000 new jobs. Apple has invested $1 billion into the Softbank fund.
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Comments

  • Reply 1 of 24
    SpamSandwichSpamSandwich Posts: 33,408member
    Careful, Premier Keqiang. You want a trade war?
    jbdragonanton zuykov
  • Reply 2 of 24
    radarthekatradarthekat Posts: 3,330moderator
    You don't drill for oil in Manhattan.  Premier Keqiang has a point.    
  • Reply 3 of 24
    MacProMacPro Posts: 19,251member
    So his boss didn't enjoy the beautiful 'uge chocolate cake or the after dinner entertainment all that bigly after all!
    edited May 2017 anantksundaram
  • Reply 4 of 24
    lkrupplkrupp Posts: 8,993member
    Looks like somebody is taking Trump’s demand for U.S. manufacturing seriously. Cheap labor is the ONLY thing keeping U.S. companies in China. As the middle class rises and labor gets more expensive things could change. The next source of cheap labor is India. By the time that labor pool has been fully exploited the maunfacturing process will be completely automated, no labor needed. Just my opinion of course.
    2old4funoneof52muthuk_vanalingamanton zuykov
  • Reply 5 of 24
    maestro64maestro64 Posts: 4,908member
    Here is the issue for Foxconn, Apple pays more so they can pay Chinese workers more, worker on Apple product my understand are making a higher daily wage plush the have the option to work over time at time and half all enable by Apple. Chinese companies making product for the Chinese market pay far less to the workers. Why would Foxconn make less money to service more the China market when they can increase their revenues by doing more around the world.
    jbdragon
  • Reply 6 of 24
    macxpressmacxpress Posts: 5,138member
    lkrupp said:
    Looks like somebody is taking Trump’s demand for U.S. manufacturing seriously. Cheap labor is the ONLY thing keeping U.S. companies in China. As the middle class rises and labor gets more expensive things could change. The next source of cheap labor is India. By the time that labor pool has been fully exploited the maunfacturing process will be completely automated, no labor needed. Just my opinion of course.
    Its not JUST cheap labor...its also skill sets and the ability to gather very large amounts of workers in a short period of time. I seriously doubt Apple/Foxconn could pull together 50,000 workers in the US and train them in the same amount of time Foxconn does in China. If Apple were to ever assemble anything in the US it would more more automated than it is in China. 
    bloggerblogjony0
  • Reply 7 of 24
    flaneurflaneur Posts: 4,526member
    Careful, Premier Keqiang. You want a trade war?
    That would be Premier Li. Keqiang is the given name, Li the last name. It's time you figured that out about Chinese names.
  • Reply 8 of 24
    macxpress said:
    lkrupp said:
    Looks like somebody is taking Trump’s demand for U.S. manufacturing seriously. Cheap labor is the ONLY thing keeping U.S. companies in China. As the middle class rises and labor gets more expensive things could change. The next source of cheap labor is India. By the time that labor pool has been fully exploited the maunfacturing process will be completely automated, no labor needed. Just my opinion of course.
    Its not JUST cheap labor...its also skill sets and the ability to gather very large amounts of workers in a short period of time. I seriously doubt Apple/Foxconn could pull together 50,000 workers in the US and train them in the same amount of time Foxconn does in China. If Apple were to ever assemble anything in the US it would more more automated than it is in China. 
    Agreed, it's not just cheap labor, but to take it a step further it's not just the skilled labor force either. It's all about the larger support structure. The factories themselves are already built, the availability of raw materials, shipping infrastructure and components provided by the ecosystem, local to the point of manufacture. There are far too many reasons manufacturing won't come to the states. 

    The comment regarding india by the OP is way off. People in India already make more money than Chinese workers, not to mention India (as Apple has discovered) is very protectionist. In order to sell iPhones there, Apple has already started building assembly plants and support sites for IT etc. and even still they won't actually manufacture anything from raw materials and it's still taking years to iron out including re-writing laws. 

    Plus my takeaway from the the article is not that Trump's demand is being taken seriously, it's the exact opposite. The Chinese listened, politely smiled, turned around and then laughed at the idea. They know there are far too many road blocks. 

    The Trump supporters on this site make me laugh. They all have a total disconnect from the details of reality, just like the fleshy cheeto they worship. The US would probably suffer more as the result of a trade war with China, than China itself. The rest of the world still needs China's scale of production. It would take a decade for the US to catch up, at an enormous expense that we simply can't afford so long as we are the world police. Now, if you want to pull out of Iraq, Afghanistan, Syria and close our bases in Asia and Europe and repurpose maybe 20% of our military spending to rebuild and re-educate, perhaps we could do it, but allot of things need to change first. It's far easier to say it, than to actually do it. 
    edited May 2017 macxpressSpamSandwich
  • Reply 9 of 24
    cincyteecincytee Posts: 328member
    Looks like Mr. Gou finds himself stuck awkwardly in the middle between the desires of China's government, which understandably is interested in the prosperity of ... China and those of its biggest customer, which understandably is interested in the prosperity of ... Apple. Everyone's happy when the two align; not so much when they don't. #kobayashimaru
  • Reply 10 of 24
    anantksundaramanantksundaram Posts: 20,172member
    lkrupp said:
    Cheap labor is the ONLY thing keeping U.S. companies in China. 
    This is a mind-bogglingly nonsensical assertion.
    beowulfschmidtiqatedojony0
  • Reply 11 of 24
    You don't drill for oil in Manhattan.  Premier Keqiang has a point.    

    And you don't ONLY drill for oil in the middle east.
  • Reply 12 of 24
    gatorguygatorguy Posts: 22,826member
    China's premier didn't advise Foxconn not to build in the US specifically did he? He could well have been referring to Brazil, India and other locations outside of China where Foxconn has already expanded or has indicated they may.

    Anything built in the US would be for show and appeasement IMHO. India/Vietnam/Indonesia could be a different story, countries where the labor might be had on the cheap just as in China.
    edited May 2017
  • Reply 13 of 24
    boltsfan17boltsfan17 Posts: 2,247member
    macxpress said:
    lkrupp said:
    Looks like somebody is taking Trump’s demand for U.S. manufacturing seriously. Cheap labor is the ONLY thing keeping U.S. companies in China. As the middle class rises and labor gets more expensive things could change. The next source of cheap labor is India. By the time that labor pool has been fully exploited the maunfacturing process will be completely automated, no labor needed. Just my opinion of course.
    Its not JUST cheap labor...its also skill sets and the ability to gather very large amounts of workers in a short period of time. I seriously doubt Apple/Foxconn could pull together 50,000 workers in the US and train them in the same amount of time Foxconn does in China. If Apple were to ever assemble anything in the US it would more more automated than it is in China. 
    Agreed, it's not just cheap labor, but to take it a step further it's not just the skilled labor force either. It's all about the larger support structure. The factories themselves are already built, the availability of raw materials, shipping infrastructure and components provided by the ecosystem, local to the point of manufacture. There are far too many reasons manufacturing won't come to the states. 

    The comment regarding india by the OP is way off. People in India already make more money than Chinese workers, not to mention India (as Apple has discovered) is very protectionist. In order to sell iPhones there, Apple has already started building assembly plants and support sites for IT etc. and even still they won't actually manufacture anything from raw materials and it's still taking years to iron out including re-writing laws. 

    Plus my takeaway from the the article is not that Trump's demand is being taken seriously, it's the exact opposite. The Chinese listened, politely smiled, turned around and then laughed at the idea. They know there are far too many road blocks. 

    The Trump supporters on this site make me laugh. They all have a total disconnect from the details of reality, just like the fleshy cheeto they worship. The US would probably suffer more as the result of a trade war with China, than China itself. The rest of the world still needs China's scale of production. It would take a decade for the US to catch up, at an enormous expense that we simply can't afford so long as we are the world police. Now, if you want to pull out of Iraq, Afghanistan, Syria and close our bases in Asia and Europe and repurpose maybe 20% of our military spending to rebuild and re-educate, perhaps we could do it, but allot of things need to change first. It's far easier to say it, than to actually do it. 
    You delusional liberals make me laugh. China would suffer more than the U.S. in a trade war. Sure, companies like Apple would be affected in the short term. China is more dependent on trade with the U.S. as a percentage of their GDP. Most of China's trade surplus is with the U.S. U.S. companies in China can move their supply chain if a trade war were too happen. Its foolish to think China is laughing at Trump. I'm sure they aren't laughing at Trump when it comes to North Korea. 
  • Reply 14 of 24
    GBannisGBannis Posts: 12member
    What incentive is China offering Foxconn? Foxconn is not a Chinese company. It's Taiwanese, which makes any further investment in China even more odd.
  • Reply 15 of 24
    anton zuykovanton zuykov Posts: 1,056member
    GBannis said:
    What incentive is China offering Foxconn? Foxconn is not a Chinese company. It's Taiwanese, which makes any further investment in China even more odd.
    That is not how it works in China... You say that as if China is some western country. It is not.
  • Reply 16 of 24
    anantksundaramanantksundaram Posts: 20,172member
     I'm sure they aren't laughing at Trump when it comes to North Korea. 
    Oh, they are.

    Donald "Armada" Trump seems to have invited derision more than than anything else, at least so far. 
    edited May 2017
  • Reply 17 of 24
    China might have a couple more decades max as the world's manufacturing hub. They know it's going to end in the not too distant future, thus the pressure on slow-walking the transition as much as possible.
  • Reply 18 of 24
    SpamSandwichSpamSandwich Posts: 33,408member
    China might have a couple more decades max as the world's manufacturing hub. They know it's going to end in the not too distant future, thus the pressure on slow-walking the transition as much as possible.
    They'll eventually be replaced by India, parts of Africa, and other low-cost labor sources. China has been investing billions into Africa as a precaution for years.
  • Reply 19 of 24
    gatorguygatorguy Posts: 22,826member
     I'm sure they aren't laughing at Trump when it comes to North Korea. 
    Oh, they are.

    Donald "Armada" Trump seems to have invited derision more than than anything else, at least so far. 
    Ah, the Chinese don't take Trump seriously then. Is that why the Chinese are finally applying sanctions against North Korea, and apparently hard enough that Kim Jong Un is openly warning them too now? :/

    EDIT: I don't know how often you read international news, so a couple of links in case you missed recent developments:
    http://time.com/4757190/north-korea-gas-shortages-china/
    http://www.telegraph.co.uk/news/2017/05/04/north-korea-warns-china-grave-consequences-first-direct-rebuke/

    edited May 2017
  • Reply 20 of 24
    SpamSandwichSpamSandwich Posts: 33,408member
    gatorguy said:
     I'm sure they aren't laughing at Trump when it comes to North Korea. 
    Oh, they are.

    Donald "Armada" Trump seems to have invited derision more than than anything else, at least so far. 
    Ah, the Chinese don't take Trump seriously then. Is that why the Chinese are finally applying sanctions against North Korea, and apparently hard enough that Kim Jong Un is openly warning them too now? :/
    Would be very stupid for the little dictator to openly challenge China, but who knows what things look like to them from inside their paranoid kingdom?
    MacPro
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