Foxconn to build up to 12 factories, employ 1M in India

GOU HONHAI DEATHS
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Taiwanese manufacturing group Foxconn is planning an aggressive expansion in India, building up to 12 new factories and employing as many as 1 million workers by 2020 as it battles rising wage costs and labor disputes in China.

The move signals a shift in strategy for the technology company, which is mainland China's biggest private-sector employer and is best known as the largest global contract manufacturer of Apple's iPhone and iPad devices.

India has long hoped that its vast pool of cheap workers would see it become the world's next manufacturing powerhouse after China, only to find its ambitions thwarted by poor infrastructure and complex labor regulations.

China markets remain in infancy: Andy Xie
China markets remain in infancy: Andy Xie   

But Foxconn said it sees "huge potential" to set up Chinese-style facilities in the country, providing a boost to Prime Minister Narendra Modi's "Make in India" manufacturing drive.

The Taiwanese group is the most significant global manufacturer to announce plans to establish new facilities in the country since Mr Modi took power in May last year, following an election campaign in which he pledged to provide jobs for the 10-12 million Indians who enter the labor market each year.

Foxconn's move is also likely to make India its largest production base after China, where it operates more than a dozen large facilities, employing the vast majority of its more than 1 million global workforce.

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"We have significant plans for India and we see huge potential in the country," Foxconn Technology said. "This includes plans to establish 10 to 12 manufacturing facilities in the country by 2020, which would generate around 1 million job opportunities."

The news follows a trip to India by Foxconn founder Terry Gou last weekend. Mr Gou visited the southern IT hub of Bangalore on Saturday, announcing plans to establish a fund to invest in Indian technology start-up companies.

Facing rising wage bills in China, Foxconn, which is also known as Hon Hai Precision Industries, has tried to leave behind its low-cost image by investing in robotics and other advanced technologies.

But analysts said the group's Indian expansion signalled a broader shift in which Foxconn would look to move low-end manufacturing from China to India, while seeking to supply companies targeting India's domestic market, such as Chinese smartphone maker Xiaomi.

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"This affirms what people have been saying, namely that manufacturing companies that are big in China are seeking other places to produce, and in particular India," says Arun Maira, the former chairman of Boston Consulting Group, the professional services firm, in India.

"So this is a very significant move for Foxconn, but also for India itself, because Foxconn is an exemplar of the type of large-scale manufacturing facilities, which are well entrenched into global supply chains, that India needs to attract."

Foxconn's plans come despite a recent torrid period in India, where it has operated since 2007. This year it was forced to shut a factory in the southern city of Chennai, following regulatory difficulties faced by Nokia, the facility's main client.

However it also follows the announcement last month of a new investment partnership between Foxconn, Japan's SoftBank and India's Bharti Enterprises, to invest as much as $20 billion into Indian solar energy over the next decade.