Foxconn to give Chinese workers 30 per cent pay rise

4 June 2010

4 June 2010 | Lindsay Clark

Foxconn, the Taiwanese electronics supplier, has offered Chinese factory workers a 30 per cent pay rise during a period when the firm, which makes components for companies including Apple, HP and Dell, is under intense media scrutiny.

The company denied that the pay rise was related to a spate of suicides at a plant in Shenzhen, China, which employs more than 300,000 people. The 10 deaths have been a focus of world business news.

The pay rise, together with greater awareness of conditions among the Chinese workforce, contributed to a changing landscape in global sourcing, according to Melanie Halstead, director of consultancy Source & Effect.

“There’s still an opportunity [in China], but we have to be quite intelligent when we’re going through the issues and give the supplier the kind of support you would give a European supplier.”

She said that in the past the savings from Chinese suppliers of around 50 per cent meant it was worth dealing with other difficulties. As the relative savings have now fallen to between 10 and 20 per cent, the incentive to use Chinese suppliers has reduced.

Buyers are now considering countries including Turkey and India, Halstead said. “Buying from a supplier in China is no longer quick and dirty and saves 50 per cent; you need to be more robust in your thinking,” she said.

Last week, Apple chief executive Steve Jobs insisted that Foxconn’s Shenzhen factory was not a sweatshop. Apple had earlier said it would look into the spate of Foxconn suicides. “We are in direct contact with Foxconn senior management, and we believe they are taking this matter very seriously,” a company statement said.

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