Foxconn emerged as the leader supplier of electronics for world leading companies that included not only Apple but also other household names such as Sony, Dell and Nintendo

Chinese integration with the world economy resulted in a rapid increase of wages and the wealth of the Chinese people. Not only were Chinese wages low, but also so was its unit labor cost, that is, wage as a percentage of labor productivity

Foreign investors in these zones received special advantages, ranging from concessionary tax policies to exemptions from export and import duties for equipment and instruments. Chinese state owned enterprises (SOEs) who received subsidies in the form of grants and tax breaks but were running at a loss were under particular scrutiny and were expected to phase out within five years as stipulated by the Agreement on Subsidies and Countervailing Measures

China’s economic development had been and continued to be driven by industrialization an increase in the share of manufacturing and a decline in the share of agriculture as a fraction of GDP

The Chinese labor force was on of the indispensable factors in achieving economic advancement

The workers spent their wages they increase the demand for consumer products contributing to further industrialization. In China the surplus of workers was so great and its industrialization as a catch up economy so rapid that the necessary demand came not only domestically but also crucially from abroad

China’s rise as a manufacturing center was due to a number of low cost advantages

High domestic rate of investment; the opening up if the economy to foreign direct investment; a surplus of labor from dismantled SOEs; continuous economic reform policies; and the emergence of new types of ownerships; such as joint stock companies; villages and town enterprises and foreign owned enterprises

Foxonn’s management expanded into greater regions of China and took advantage of an inexpensive supply of internal migrant labor to rev up the company’s new mode of production based on specialization of labor and diversification of production lines. By increasing employment among low- to mid level management staff and workers, Foxconn not only expanded its corporate organizational structure and size, but also won the group a reputation as China’s number one factory

Foxconn operated in a low-profile fashion, even though its workforce grew to over one million by 2011 and it was the backbone manufacturer that supplied cheap hardware products for premium brands, such as Apple, Dell, Nintendo, Sony and Hewlett-Packard, and many other worldwide brands

Foxconn was able to deliver on cost, quality control, and turnaround through vertical integration and through its deep involvement in the supply chain process in China, the world’s factory. Vertical integration referred to a mode of production chain extending from extraction of raw materials to final assembly

Foxconn utilized mergers and acquisitions and strategic partnerships to shorten its downstream supply chain by manufacturing some parts in house. According to company spokesman Arthur Huang, Foxconn focused on cost savings operational methods by either outsourcing the components manufacturing in other suppliers or performing in house research and manufacturing

Foxconn addressed customer demands for just in tine delivery and geopolitical diversification by establishing plans in the world’s major electronics markets

Foxconn had significant operations in such middle and high-income countries as the Czech Republic and Japan, and the company continued to explore opportunities to operate in the United States as well

Foxconn first became a household name in the West due to negative publicity associated with a spate of suicides in its factories in mainland China in 2010

Reports of child labor and underpayment emerged, some Western media critics used the company to critize the broader issues of the US trade deficit with China and the policies of the Chinese government

The company responded with a number of compensatory and relieving measures, including a substantial increase in wages for its Shenzhen-based workforce, suicide-prevention nettin, and mandatory no-suicide pledges to be signed by employees

Foxconn’s fundamental business model might have been under threat had to do with Apple seeking to diversify its supplier base. However, Apple made up for only approximately 5% of Foxconn’s turnover. Moreover as the Wall Street Journal pointed out, Apple’s turn away from Foxconn had to do with Fegatron’s willingness to accept thinner margins, and a more general frustration with an inability to control Foxconn

It became less dependent on any single customer and as it developed its own lines of products it might have gradually even become a director competitor to its clients

Advantages in technology might also have allowed customers and competitors to leapfrog Foxconn. Of particular concern to Foxconn was the emergence of 3D printing and the possibility of small scale manufacturing on demand, as well as the rise of protectionist sentiment in the United States and Europe, the main markets of its customers. Together, advantages in technology, cheaper shale gas energy in the United States and protectionist sentiment could come together, energizing a nascent reshoring movement to reduce the US reliance on Chinese electronics exports, with significant negative implications for Foxconn.

With its dependence on a pool of cheap labor, Foxconn was vulnerable to China’s demographic transition. In the decade between 2010 and 2020, the number of people in the 20-24 age bracket in China was projected to decline by 20%, while the pool of actual available workers will shrink even more due to rising participation in higher education

Foxconn seemed to brave the common market tide by foraying into one of the most important developing economies in the world

The biggest benefits for Foxconn would be the huge tariff savings and closer access to the US and Latin American markets thanks to a free trade deal between Brazil and US. This implied that the move was more than shifting the entire supply chain from China to Brazil, but rather an attempt to get closer to the downstream consumer bases in the Americas. To serve Brazilian consumers who desired high-end electronics and were willing to pay the priced-out value for a premium device, Foxconn could anticipate a large cost reduction gap for devices that were of its own brand

Desire to move workers from more routine tasks to more value added positions in manufacturing such as research and developments, innovation and other areas that are equally important to the success of our operations”. Industry observers and manufacturing experts saw a trend towards using more capital-intensive equipment to replace increasingly costly labor, improve efficiency and optimize resources

In particular, the partnership with Sony raised Foxconn’s component purchase for ODM projects from 20% to 50%. Furthermore, Foxconn’s increasing partnership with Chinese telecommunication conglomerate giants, such as Xiaomin and Huawei, to helped turn its annual loss into gains

Foxconn invested considerable resources in industrial research and development. This leveraged on Hon Hai’s research and design capabilities as Hon Hai held over 25,000 patents granted worldwide. Foxconn’s recent investment in a 10% share of the Japanese electronic company Sharp and a deep involvement in Sharp’s domestic LCD manufacturing operation gave Foxconn access to Japan’s world leading manufacturing culture