Taiwan's Biggest Company - Foxconn

Summary

Foxconn, often criticized for labor practices, is Taiwan's largest company by revenue, surpassing TSMC. Founded by Terry Gou, it started as a TV knob manufacturer and evolved into a global electronics manufacturing giant, producing for brands like Apple and Nintendo. With aggressive pricing and a 'land-and-expand' strategy, Foxconn has vertically integrated its services, moving up the value chain. Despite controversies, it offers jobs to millions in low-cost regions, reflecting a tough yet necessary reality in the manufacturing industry.

Takeaways

• 🏭 Foxconn is a major electronics manufacturer with a controversial reputation, primarily due to its labor practices.
• 🍎 While often associated with Apple, Foxconn's business extends beyond Apple, producing a wide range of electronics including computers, TVs, and gaming consoles.
• 💰 Foxconn is the largest company in Taiwan by revenue, surpassing even TSMC, and is the third-largest tech company globally.
• 🔄 The company's official name is Hon Hai, with Foxconn being the trade name, symbolizing their quick production capabilities.
• 🌐 Foxconn has a complex structure with over 200 known affiliates and subsidiaries, including well-known brands like Belkin and Sharp.
• 📈 Founded by Terry Gou, Foxconn started as a manufacturer of plastic components and evolved into a global electronics manufacturing giant.
• 📈 Foxconn's revenue has seen significant growth, reaching $178 billion in a year, and it became Taiwan's largest private manufacturing company in 2001.
• 📈 China is Foxconn's key production base, with numerous factories employing hundreds of thousands of workers, taking advantage of local economic incentives.
• 📱 Foxconn's association with Apple began in 2006 with the assembly of iPhones, and Apple is now Foxconn's single largest client.
• 💼 Terry Gou, Foxconn's founder, has retired and had an unsuccessful attempt to run for the Taiwan Presidency.
• 🏗️ Foxconn's business strategy involves aggressive pricing and a 'land-and-expand' approach, aiming to be a one-stop shop for manufacturing needs.
• 👥 Foxconn's labor practices have been criticized for being authoritarian, with strict factory rules and conditions, but they offer employment opportunities with competitive wages in certain regions.

Q & A

What is the common controversy surrounding Foxconn?

Foxconn is often associated with labor practice controversies, with critics implying that buying Apple products supports what they perceive as 'slave labor' conditions.

Besides Apple, what other products does Foxconn manufacture?

Foxconn manufactures a wide range of products including computers, laptops, TVs, mobile phones, and even the X-box. It is a cornerstone of Taiwan’s electronic manufacturing industry.

What is the official name of Foxconn in Taiwan and what is its trade name?

The official name of Foxconn in Taiwan is Hon Hai, and its trade name is Foxconn, named so because of the company's ability to produce electronics at 'fox-like' speed.

How large is Foxconn in terms of revenue and its position in the global technology market?

Foxconn is Taiwan’s biggest company by revenue, larger than TSMC, and made $178 billion last year. It is also the third biggest technology company worldwide.

What are some of Foxconn's prominent subsidiaries?

Prominent subsidiaries of Foxconn include Belkin, an American accessories manufacturer; Sharp Corporation, a major Japanese electronics manufacturer; and FIH, a mobile phone manufacturer for Nokia listed on the Hong Kong stock exchange.

What was the initial business focus of Terry Gou when he founded Foxconn?

Terry Gou founded Foxconn as Hon Hai Plastic Material Corporation, initially focusing on making plastic turning knobs for black and white televisions and improving the plastic molding procedure.

How did Foxconn expand its business into the United States?

Terry Gou realized the potential of the US market and visited 32 states in 11 months. His persistence led to an order for PC connectors from IBM, marking a significant breakthrough for the company.

What was Foxconn's revenue in 1988 and when did it go public?

By 1988, Foxconn had NTD$1 billion in revenue and it went public on the Taiwan Stock Exchange three years later.

How did Foxconn's expansion in China contribute to its growth?

Foxconn quickly expanded in China, building factories in various cities and benefiting from preferential tax policies and infrastructure support from local governments. This expansion, along with the outsourcing trend from American and western companies, significantly contributed to its growth.

What is Foxconn's strategy for maintaining competitive pricing in the market?

Foxconn enters markets as a late-comer with aggressive pricing, leveraging its size and profits from one industry to fund extremely low prices in others. This strategy, along with its focus on manufacturing, differentiates it from tech giants focused on the Internet or computer software.

What are the labor practices at Foxconn that have attracted controversy?

Foxconn has been criticized for its labor practices, including building factories in areas with low labor costs and maintaining a strict, authoritarian work culture with high production discipline and long working hours.

How does Foxconn's work culture compare to other working environments in China?

While Foxconn's work culture is described as rigid and authoritarian, it is not necessarily worse than the white-collar working life in China, where practices like the '996' work schedule (9 am to 9 pm, six days a week) are prevalent.

What changes have been made at Foxconn in response to criticism regarding worker conditions?

In response to criticism and high-profile incidents, Foxconn has made changes such as capping overtime at 60 hours a week, improving dorm conditions, and increasing wages, with workers now earning between $400 to $700 a month depending on their level.

How has Foxconn's relationship with Apple evolved over time?

Foxconn took on the job of assembling Apple's iPhone in 2006, and as Apple's success grew, so did Foxconn's. However, due to controversies and increased costs, Apple began using Foxconn's competitor, Pegatron, to manufacture some iPhones starting in 2010.