Apple, supplier Foxconn to share costs on improving factories

SHANGHAI Thu May 10, 2012 1:13pm IST

The Apple logo is shown prior to the initial sales of the new iPhone 4S at Apple's flagship retail store in San Francisco, California October 14, 2011. REUTERS/Robert Galbraith

The Apple logo is shown prior to the initial sales of the new iPhone 4S at Apple's flagship retail store in San Francisco, California October 14, 2011.

Credit: Reuters/Robert Galbraith

Related Topics

Stocks

   

SHANGHAI (Reuters) - Apple Inc and its key supplier Foxconn Technology Group will share the initial costs of improving labour conditions at the Chinese factories that assemble iPhones and iPads, Foxconn's top executive said on Thursday.

Foxconn chief Terry Gou did not give a figure for the costs, but the group has been spending heavily to fight a perception its vast plants in China are sweatshops with poor conditions for its million-strong labor force. It regards the criticism as unfair.

"We've discovered that this (improving factory conditions) is not a cost. It is a competitive strength," Gou told reporters on Thursday after the ground-breaking ceremony for a new China headquarters in Shanghai.

"I believe Apple sees this as a competitive strength along with us, and so we will split the initial costs."

It was unclear if the split would be 50/50 or in some other ratio.

Foxconn announced in mid-February it had raised wages for workers by 16 to 25 percent, and in late March it reached an agreement with Apple to hire tens of thousands of new workers to reduce overtime work.

Analysts have attributed weaker-than-expected first-quarter results at Foxconn's flagship listed unit Hon Hai Precision Industry Co Ltd mainly to rising salary costs.

Hon Hai has been trying to cut rising Chinese labor costs in the past two or three years, and has been relocating plants to areas of China where wages are lower.

FOCUS ON DOMESTIC CONSUMERS

Foxconn's manufacturing in China will focus on domestic consumers in the country of 1.3 billion people, as well as research and development in technology, sales and services, Gou said.

Foxconn Technology Group's other listed units include Foxconn International Holdings (2038.HK), the world's top contract mobile phone maker, and Foxconn Technology Co which makes casings.

Over the past two years, there has been a spate of suicides at Foxconn's sprawling plants which make the Apple products as well as gadgets for the likes of Microsoft and Nintendo.

Apple and Foxconn agreed earlier this year to improve conditions for workers assembling Apple products.

Despite Hon Hai's weak first-quarter showing, Gou said he expected the group to be able to reach its revenue growth target of 10 percent this year.

(Additional reporting by David Lin; Editing by Muralikumar Anantharaman)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Tech Buzz

Reuters Showcase

Google Drones

Google Drones

Google tests drones for deliveries.  Video 

New iPhone

New iPhone

Apple working with NXP for pay-by-touch technology in new iPhone - FT.  Full Article 

Legal Case

Legal Case

Bitcoin promoter to plead guilty to unlicensed money transmission.  Full Article 

Online Crackdown

Online Crackdown

China's Tencent shuts messaging accounts after censorship rules - state media.  Full Article 

Hot Commodity

Hot Commodity

Data scientists are increasingly becoming important to the world's tech companies.  Video 

Agriculture App

Agriculture App

CME Group smartphone game lets students "beef up" on ag economics.  Full Article 

Copyright Dispute

Copyright Dispute

Oracle loses bid to restore $1.3 bln SAP verdict, could get new trial  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage