Wednesday, June 30, 2010

iPhone China factory moving to cheaper location

Apple iPhone supplier Foxconn is relocating the main plant to a cheaper province in Northern China rather than trying to improve working conditions in the existing plant in Shenzen in South China.

Foxconn has been hit by a spate of suicides by workers allegedly frustrated by harsh working conditions in the factory. After 13 incidents of suicide this year, the company announced 66% raise in wages. However, reports now say that the company has told workers that only those who shift to the new plant in Tianjin will receive the raise.

Media reports today suggested Foxconn is planning to relocate the main plant from the more expensive Shenzen to Tianjin where labour cost is relatively lower.

Minimum wage in Tianjin is 920 yuan ($132) while the minimum wage in Shenzen, where Foxconn plant is currently located, is 2000 yuan ($295).

Foxconn will shift 300,000 out of the total 420,000 workers in the Shenzen plant to the Tianjin plant.

Foxconn shares are down 44% so far this year. The company has warned that its first-half losses may swell due to weaker pricing.

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