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"there is a shortage of people. a large shortage of people."

on september 1, the most prominent information on zhengzhou foxconn’s recruitment official account, “zhengzhou foxconn joint recruitment”, was still the “high-priced” recruitment information that continued to be released.

recruitment prices are rising steadily. on june 27, the highest rebate was only 5,000 yuan, and it rose to 6,000 yuan on june 30. in mid-to-early july, the rebate fluctuated between 7,000 and 7,500 yuan. by the end of august, the highest rebate rose to 8,000 yuan. the so-called rebate refers to the income of the rebate workers. based on the highest wage, this year, the rebate workers in foxconn zhengzhou can get 18,500 to 22,500 yuan after working for three months, and hourly workers can get 6,000 to 7,500 yuan per month.

"it's still the peak season and prices are high." the recruitment information reveals signals of "sprint" and "rush work". the goal is clear. september 10 is the release date of apple's new mobile phone, and the iphone 16 will be released soon.

this summer, there are different opinions about foxconn, the largest apple foundry in zhengzhou. on the one hand, people regard foxconn's peak season recruitment advertisements as a signal that it cannot leave and is even "returning" to zhengzhou; on the other hand, henan's mobile phone exports plummeted in the first half of this year, and the impact of apple's industrial chain transfer cannot be avoided.

zhengzhou is the "loser" in this round of apple's capacity re-positioning, but the decline of the mobile phone industry, which was once highly anticipated, is not only due to the departure of foxconn. more importantly, at a time when global mobile phone shipments have encountered bottlenecks and brand concentration is constantly increasing, the mobile phone industry in zhengzhou and henan has already hit the "ceiling".

for zhengzhou, the most important thing may not be simply to let foxconn "come back", but how to find the "next foxconn".

on april 26, the campus recruitment booth of foxconn new business development group (foxconn technology group industrial foxconn) was held at the spring campus recruitment fair held by zhengzhou university in henan province. photo/visual china

what happened to zhengzhou’s mobile phone industry?

with the upcoming release of the new iphone, foxconn in zhengzhou will enter its peak production season in late july and mid-august, and naturally also its peak recruitment season, mainly recruiting temporary workers.

unlike regular workers who have "five insurances and one fund" and receive "n+1" compensation when they are laid off, temporary workers are usually only recruited in large numbers during the peak season. since the end of july 2024, foxconn has increased the hourly wage from 21-22 yuan to 26 yuan. compared with last year, foxconn's peak season recruitment demand has increased slightly, and the wage increase is basically the same. this year is just a normal "peak season recruitment".

in kunshan, where there are also many electronic consumer product oem companies, a local government official told china news weekly: "in comparison, the labor cost of foxconn in zhengzhou is still relatively low. the price of hourly workers in kunshan can even reach 30-35 yuan, which is higher than that of regular employees. on the one hand, it leads to competition among companies for talent, and on the other hand, it leads to the impetuousness of regular employees. however, electronic consumer product oem factories can only use workers in a tidal manner, so every september and october before the concentrated release of new apple products, this problem will become serious."

the labor force is abundant and the price is low, which is also an important reason why foxconn moved to zhengzhou. after 2010, apple ceo cook said that the factory needed to be moved closer to the workers' homes. at that time, nearly 20% of foxconn's employees were from henan.

so foxconn "moved inland". on september 16, 2010, foxconn's zhengzhou plant started construction, located in the xinzheng comprehensive bonded zone (the comprehensive bonded zone was later incorporated into the zhengzhou airport economic comprehensive experimental zone, namely zhengzhou airport economic zone, established in 2013). talking about the speed of the initial construction of more than 1.3 million square meters of factory buildings, then-hon hai group chairman terry gou said: "this is the world's fastest speed, the world's first administrative efficiency, henan people, no.1."

this factory is what people call foxconn in the hong kong area. it now covers an area of ​​nearly 5.6 million square meters. it is foxconn’s largest factory in mainland china and also apple’s largest assembly plant in the world. most of the high-end models of the iphone series are assembled and produced here.

according to a survey by chen xiaofei, an associate professor at henan university, the number of employees at foxconn zhengzhou technology park reached more than 300,000 during the peak period. foxconn zhengzhou technology park includes three factories including foxconn in the port area. today, this number has dropped to about 100,000 in the off-season and about 200,000 in the peak season.

the number of employees at foxconn in zhengzhou has been reduced, and replacing people with machines is an important reason. as early as 2021, the smart interconnected workshop of zhengzhou science and technology park was selected into the list of "lighthouse factories" of the world economic forum (wef), and its production efficiency increased by 102%.

the outside world is paying attention to the employment situation of foxconn in zhengzhou because it is largely regarded as a barometer of the production of foxconn in zhengzhou. through data comparison, it is not difficult to find that the production of mobile phones in zhengzhou has experienced two obvious declines after the peak.

after foxconn zhengzhou went into production in 2011, zhengzhou quickly became an important mobile phone production base in the world. in 2011, the zhengzhou statistics bureau disclosed the production of mobile phones separately in the annual statistical bulletin for the first time. zhengzhou produced 24.45 million mobile phones that year. this number rose rapidly in the following years, and exceeded 100 million units for the first time in 2014. the peak occurred in 2017, approaching 300 million units. however, there was a first sharp drop afterwards, with 213 million and 214 million units produced in 2018 and 2019 respectively, a drop of more than 30% compared with 2017. in 2020, it experienced a second decline, with a drop of more than 30% to 135 million units. although it has rebounded slightly since then, it has never exceeded 160 million units. last year's figure was about 143 million units.

compared to the peak, zhengzhou's mobile phone production has shrunk by nearly 50% last year. the same experience is also experienced by henan's mobile phone exports, which entered a downward channel after reaching a peak of 126 million units in 2018, and the export volume last year was only 57.61 million units.

however, has foxconn's apple mobile phone production capacity experienced a similar decline? zhengzhou foxconn has apple's largest assembly plant in the world, so people are accustomed to equating zhengzhou and even henan's mobile phone manufacturing industry with foxconn, but this is not the case.

in 2017, when zhengzhou's mobile phone production reached its peak, the "henan province electronic information industry transformation and upgrading action plan (2017-2020)" (hereinafter referred to as the "action plan") was released in november of that year, proposing production capacity targets of 160 million and 300 million units for apple and non-apple mobile phones in 2020. it also plans to introduce and cultivate 40 complete machine manufacturing companies by 2020, requiring "accelerating the acceptance of huawei's mobile phone oem production projects, planning to establish huawei's smart phones and other smart terminal product manufacturing bases; accelerating the introduction of mobile phone production projects such as oppo, vivo, and gree."

zhengzhou officials have not fully announced the production of apple and non-apple phones over the years. zhengzhou's non-apple phone production capacity mainly comes from the intelligent terminal (mobile phone) industrial park in the aviation port area. after the park opened in 2014, the first batch of companies to move in included 13 companies such as zte, tianyu, and lepai. the aviation port investment group disclosed in 2018 that from 2014 to 2017, the industrial park's non-apple phone production capacity was 24.38 million units, 63 million units, 132 million units, and 196 million units, respectively, saying that "non-apple phone production entered an 'explosive period' and exceeded apple phones in 2017."

taking the peak data in 2017 as an example, zhengzhou's mobile phone production reached 295 million units that year, of which at least 196 million were non-apple mobile phones, which means that apple's mobile phone production that year was slightly less than 100 million units. this trend continued at least until 2018. in the first half of that year, the production of apple and non-apple mobile phones was nearly 34 million and 76.598 million units respectively.

that is to say, at a time when "one in seven mobile phones in the world is produced in zhengzhou", the output of non-apple mobile phones is twice that of apple phones. in 2023, when zhengzhou's mobile phone production fell to 143 million units, zhengzhou foxconn still produced 82.87 million mobile phones. although the output was lower than that in 2017, it was not "halved".

the biggest variable is actually the production capacity of non-foxconn. a considerable number of non-apple mobile phones are aimed at overseas markets. for example, henan xintai communication technology co., ltd. produced 11.8 million and 13 million mobile phones in 2016 and 2017 respectively, and its products are mainly exported to india, russia and other countries.

therefore, rather than associating the decline in mobile phone production and export volumes in zhengzhou and henan with the capacity transfer of a single company, foxconn in zhengzhou, it is better to view it as a significant reduction in non-apple mobile phone production capacity due to the lack of support from a second company other than foxconn.

in fact, henan province and zhengzhou municipal government have always hoped to introduce a second well-known brand of mobile phones. the action plan issued in 2017 proposed to "focus on introducing well-known domestic brands of mobile phones" and believed that the electronic information industry "is too dependent on individual places and enterprises, and there are certain risks in industrial development." the "implementation opinions of the general office of the zhengzhou municipal people's government on accelerating the development of the new generation of information technology industry" issued in 2022 also proposed to "accelerate the introduction of well-known domestic and foreign brands of smartphones."

but even in the era of rapid growth of zhengzhou's mobile phone manufacturing industry, the projects it introduced are mixed. in 2016, henan jinchangwei electronics co., ltd., which claimed to produce 30 million smartphones annually, landed in zhengzhou airport economic zone and announced its start of production at the end of that year. the parent company of this company is zhengwei group, whose main business is non-ferrous metal mining, smelting, processing and trade. however, in 2022, the total production capacity of smartphones, laptops and other products of this project is less than one million units.

of course, foxconn in zhengzhou does face pressure to transfer production capacity, but it is not the "large inflow and outflow" that the outside world imagines, and the destination of the lost production capacity is not just india.

who is "stealing business"?

foxconn's production line in india is considered a direct competitor of foxconn in zhengzhou, and the two are growing and declining at the same time.

this year, some iphone 16 and iphone 16 pro models will be produced in india. this is the first time that india has undertaken the production of relatively high-end pro models. this news seems to have attracted more attention than the new iphone itself, because the pro models were previously only produced in china.

it is reported that the iphone manufacturing yield rate of foxconn's indian plant is only about 50%. however, liu yangwei, chairman of foxconn, refuted the rumor, saying that in terms of yield rate, india is "not much different" from mainland china. if the yield rate is only 50%, "we would have withdrawn long ago. if i don't withdraw, customers will ask us to withdraw, so it is not true."

foxconn has invested $10 billion in india and will increase investment next year. foxconn's trend of transferring part of iphone production capacity from china to india will not change, even if it encounters temporary setbacks.

since 2017, apple has set up a relatively low-end iphone se production line in india. however, before 2023, india will produce apple's new products later than the release time. apple will transfer production capacity from china to india, but the iphone 15 has been produced in india since its release, and the iphone 16 will continue this strategy.

it is still unknown how fast apple's mobile phone production capacity in india will grow, and it has always been difficult to get an accurate number on how many iphones are produced in india. the figure reported by the media in april this year was 14%. if we extrapolate last year's iphone production of 230 million units, the corresponding production is more than 30 million units. according to a report by counterpoint, in 2020, iphones produced in india accounted for only 1.3% of the global iphone production, and it will only rise to 4% in 2022.

mobile phone industry analyst ming-xia kuo predicted in a report released in november 2023 that india's share of iphone production capacity will increase to 20%-25% by 2024. during the same period, foxconn's production scale in zhengzhou is expected to decrease by about 35%-45%, and its production scale in taiyuan is expected to decrease by about 75%-85%.

it is still difficult for india to reach this scale of iphone production capacity. a chinese person familiar with the indian mobile phone industry told china news weekly that according to his observation, the "rear base" of the indian mobile phone industry, including parts and equipment, still comes from china. it is estimated that it will take 15 to 20 years for the indian mobile phone industry chain to reach the current maturity of the chinese mobile phone industry chain. even in the assembly link, indian local companies are still in their infancy, far behind chinese companies and chinese companies in india in terms of technology and management. "however, the efficiency of indian workers can reach 90% of that of chinese workers, but the monthly salary is only about 1,000 yuan, which is far lower than the salary level of 3,500 to 4,000 yuan for chinese workers."

according to the supply chain list for the fiscal year 2023 released by apple in april this year, there are 155 factories in mainland china, ranking first, while india has only 13. regarding apple's ultimate goal of transferring iphone production capacity from china to india, sun yanbiao, an analyst at chaodian think tank, told china news weekly that in the future, domestic apple mobile phone production capacity will mainly supply the domestic market, which may account for up to 40% of global production capacity.

however, compared with the long-term trend of transferring production capacity to india, foxconn in zhengzhou is facing competition from domestic manufacturers in the short term.

according to data compiled by trendforce cited by third-party agency visual capitalist, 70% of the iphone 15 series released in 2023 will be produced by foxconn, 25% will be manufactured by luxshare precision, and the remaining 5% will be undertaken by india's tata company. for the relatively high-end iphone 15 pro, foxconn and pegatron account for 70% and 30% of the production capacity respectively. for the top-of-the-line iphone 15 pro max, foxconn and luxshare precision account for 70% and 30% of the production capacity respectively.

it is not difficult to see from this apple's efforts to reduce the concentration of its supply chain, and this process has accelerated after 2020.

before 2020, foxconn, pegatron, and wistron were the three largest iphone assembly plants. in july 2020, luxshare precision announced that its controlling shareholder acquired wistron's two factories in kunshan, suzhou for 3.3 billion yuan, becoming an iphone foundry. in recent years, wistron has only maintained a 5%-10% iphone foundry market share and has never been able to manufacture high-end models.

at the end of 2021, luxshare precision announced the construction of a manufacturing park covering an area of ​​285,000 square meters in kunshan city, equivalent to the size of 40 football fields. luxshare precision hoped to rapidly increase iphone production capacity from 6.5 million units in 2021 to 12 million to 15 million units in 2022.

a landmark event was that in early 2023, luxshare precision produced a small number of iphone 14 pro max in kunshan to make up for foxconn's insufficient production capacity. previously, foxconn had been the exclusive oem for the latest iphone pro models. in the fourth quarter of 2022, apple was so troubled by the decline in production capacity and shortage of new products at foxconn in zhengzhou that it handed in a financial report with both revenue and net profit declining that quarter. it was also in that quarter that the local government in henan even called on civil servants to work at foxconn.

at the end of 2023, wang laichun, chairman of luxshare precision, revealed that luxshare precision produced three iphone 15 models for apple, and that this business doubled in the past year.

as luxshare precision's position in the iphone oem market continues to improve, the mobile phone production in suzhou and kunshan, where luxshare precision has a "heavy position", has rapidly increased from 33.802 million units in 2021 to 75.3618 million units in 2023. the mobile phone export value of jiangsu in the first half of this year increased by 42.7% year-on-year, in contrast to the nearly 50% decline in henan.

what should we do in zhengzhou?

in fact, the manufacturing of electronic consumer products such as mobile phones and laptops has undergone several rounds of migration in china.

"previously, chongqing made great efforts to attract laptop computer manufacturers, and some taiwanese companies moved their production capacity from kunshan to chongqing. however, kunshan's industrial supporting facilities are more complete, and assembly companies can reduce the inventory of parts and components, thereby reducing overall costs. therefore, there are also cases of companies returning after relocating. moreover, after 2020, mobile phone production has increased rapidly, changing the past pattern dominated by laptops." a person from the kunshan municipal government told china newsweek.

he said that when compiling kunshan's "14th five-year plan", he had intended to reduce the share of the electronic information industry, but it was impossible to suppress its advantages too much. "the giants that support the output value are basically oem companies, and there are many "apple-related" companies. there must be risks, because apple is a relatively strong company. once it proposes to transfer production capacity, it will take action in the short term." he called this the weakness of kunshan's electronic information industry.

as a loser in apple's capacity re-positioning, zhengzhou is facing such an embarrassment. comparing zhengzhou's "13th five-year plan" and "14th five-year plan", it can be found that zhengzhou has lowered its electronic information industry output value target from 750 billion yuan to 600 billion yuan. zhengzhou and henan have never been able to find a second fulcrum other than foxconn, and it is almost a high probability that foxconn in zhengzhou will reduce its production capacity, and there is not much room for imagination in the mobile phone industry.

in april 2023, hon hai group proposed to build a new foxconn in henan within 5-10 years, but mobile phones are no longer the key words. at that time, foxconn established its new business headquarters in zhengzhou, saying that it would deeply cultivate henan to implement the "3+3" transformation and development strategy, namely the three emerging industries of electric vehicles, digital health, and robots, and the three technical fields of artificial intelligence, semiconductors, and mobile communications.

in july this year, hon hai group announced that foxconn will invest in the construction of a new business headquarters building in zhengzhou. the first phase of the project is located in zhengdong new district, with a construction area of ​​700 acres (70,000 square meters) and a total investment of 1 billion yuan. the new energy vehicle industry is the focus of foxconn's new business projects. in january 2024, henan foxconn new energy vehicle industry development company was established with a registered capital of 500 million yuan. it will focus on the new energy vehicle industry and accelerate the project.

automobiles have been listed alongside electronic information, equipment manufacturing, modern food, and aluminum deep processing, becoming a trillion-level industrial cluster that zhengzhou hopes to build during the 14th five-year plan period.

foxconn is not the only consumer electronics oem giant to transform into the new energy vehicle industry. for example, luxshare precision has been aiming to become a tier 1 automotive parts supplier since it started making automotive connectors in 2007 and acquired fujian yuan optoelectronics in 2012 to enter the automotive electronics field. currently, the company's automotive product lines include automotive connectors, smart cockpits, etc.

however, after the new business headquarters is established, foxconn will focus on the layout of new energy vehicle trial production center and solid-state battery industry in zhengzhou port area in the near future. this obviously cannot ease the anxiety of local governments. in the first half of this year, henan was more obviously dragged down by the decline in mobile phone exports. when the mobile phone export value fell by 49.1% year-on-year, henan's export value fell by 19.1%.

looking through the volume and value table of major export commodities in henan province, it is not difficult to find that, judging from the data in the first half of this year alone, there are not many commodities that have the potential to reach the export value of mobile phones. automobiles are obviously one of them. the export value in the first half of this year exceeded 14 billion yuan. although it is still a long way from the 56.5 billion yuan of mobile phones, it has recorded an increase of nearly 20%.

in june 2022, zhengzhou proposed to strive to achieve a city-wide new energy vehicle production capacity of more than 1 million vehicles and an annual growth rate of more than 20% in the output value of the new energy vehicle industry by 2025. although the scale of zhengzhou's automobile industry was about 200 billion yuan at the time, the output of new energy vehicles that year was less than 70,000 vehicles, and byd played an important role in this goal.

a local government official who has negotiated with byd on project introductions told china newsweek that byd is probably the only domestic automaker that is not restricted in building new production capacity because its existing production capacity is fully utilized. byd has its own rhythm in laying out its production capacity. after sales exceed 3 million vehicles in 2023, the next round of site selection for new production capacity may have to wait until sales reach 4 million vehicles. byd attaches great importance to whether local governments can "give money, land, and market."

byd's sales volume in 2021 was less than one million. zhengzhou byd signed a contract with zhengzhou port in september 2021, started the project within 37 days, put it into production smoothly in 17 months, and officially started production in april 2023. in that year, it completed an output value of 33.47 billion yuan, produced more than 200,000 vehicles, and produced 7gwh of power batteries and energy storage.

in 2023, among the 316,000 new energy vehicles produced in zhengzhou, 200,000 were produced by byd. it took zhengzhou less than a year to enter the top ten cities list of new energy vehicle production.

according to official information, byd zhengzhou is known as byd's largest vehicle production base with the largest number of employees. it has three phases of projects planned, and the first phase, which has been put into production, has a planned production capacity of 400,000 vehicles. according to the employment information introduced by the head of byd's human resources department in zhengzhou to henan daily in july this year, there are currently 36,000 employees, and the total number of employees will increase to 50,000 after full production.

of course, the output value of more than 30 billion yuan and the number of employees of 36,000 are still far behind foxconn at its peak. however, zhengzhou byd is growing rapidly. according to data released by the henan automobile industry association on july 22, 2024, the production and sales volume of zhengzhou byd in the first half of this year was 10 times that of the same period last year.

from the beginning of the project construction, zhengzhou has been welcoming byd at the same speed as it welcomed foxconn that year, and expects the same return.

reporter: chen weishan