Henan assures Foxconn of comprehensive ‘services’ for iPhone production

A top official in central Henan province, home to the world’s largest iPhone factory, has called on the head of Foxconn Technology Group to keep its local operations and investment amid recent initiatives by the company and other Apple suppliers to expand their manufacturing supply chain outside China.

Lou Yangsheng, the Chinese Communist Party’s Secretary in Henan, on Wednesday met Foxconn chairman and chief executive Liu Young-way, who was visiting the province, to assure the company that the government will provide comprehensive “services” to its local operations, according to a statement posted on the official WeChat account of the municipal government of Zhengzhou, the provincial capital.

Foxconn, which had been derisively described as a “sweatshop” by some non-governmental organisations many years ago, was complimented by Lou as “a world-renowned intelligent manufacturing enterprise”, adding that he hoped the Taiwan- based company will “take root in Henan and deeply cultivate in Henan”, according to the statement.

That charm offensive marks China’s latest effort to preserve its major role in Apple’s manufacturing supply chain, following the disruptions caused by rigid Covid-19 control measures and ongoing concerns about geopolitical tensions with the US.

Apple chief executive Tim Cook earlier this month said that manufacturing disruptions in November and December contributed to the firm’s first quarterly decline in revenue since early 2019, in an apparent reference to the unrest late last year at Foxconn’s iPhone production complex in Zhengzhou.

Foxconn, formally known as Hon Hai Precision Industry, is the single largest importer and exporter in Henan, according to local newspaper Henan Daily, which described the company’s operations in Zhengzhou as having a major impact on the local economy.

At the meeting on Wednesday, Foxconn’s Liu said the Taiwanese firm values its cooperation with Henan and thanked provincial authorities for helping it continue production in Zhengzhou even “under multiple waves of the pandemic”, according to the statement.

That meeting came three months after Foxconn scrambled to restore full production capacity at its manufacturing complex in Zhengzhou, following severe disruptions including worker protests that turned violent and the exodus of tens of thousands of employees amid a Covid-19 outbreak that started last October.

That unrest ignited fresh questions about China’s primary role as manufacturing hub for Apple’s products. India is already expected to assemble as much as half of the world’s iPhones by 2027, according to a forecast by Taiwan-based DigiTimes Research.

Foxconn, which is Apple’s biggest contract manufacturer, earlier this month secured a new site in Vietnam, as part of its efforts to shift more production away from mainland China.

While production in Zhengzhou has resumed to about 90 per cent of full capacity as of December 30, there are signs that Foxconn has significantly slowed recruitment as of this month – a rare case for the company, which typically ramps up recruitment after young workers return from the Lunar New Year holiday.

Foxconn’s integrated Digital Product Business Group (iDPBG), the division responsible for iPhone production, on Thursday published its first recruitment post since late December. The firm said it was looking for full-time workers, but did not specify the amount of extra bonuses like it usually provided in the past.

The slow recruitment drive is in sharp contrast to February last year, when the iDPBG sent out at least 20 WeChat posts to offer a 5,400 yuan (US$783.34) subsidy for each full-time worker and another 600 yuan for each new worker they refer.

An employee at a Henan-based third-party recruitment agency indicated that the number of workers needed at Foxconn’s Zhengzhou facility was “significantly lower” in February, compared with the same period last year. This employee, who declined to be identified because he was not authorised to speak to media, said there was no call for short-term workers at this time probably because of weak demand for consumer electronics. South China Morning Post