Quote:
Originally Posted by Maggie Leung
Yes, the story touched on that. Of course, the coastal areas were chosen because of transportation efficiencies and such.
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Contract manufacturers like Foxconn are being squeezed to the max already. They do make their money (and their profit margins are extremely low) off the assembly only. I have read that only 6.94 USD for every IPad is assembly cost paid to Foxconn. Foxconn are being told by their customers (Apple, Dell, etc.) where to buy what components at what price and just pass these costs on. The ones who place the orders know Foxconn's cost and dictates a price. Wages have increased 50% since 2005 (even before the recent publicity), workers can pick and choose between factories according to wages, working conditions, and hours. That alone keeps wages rising. So the only one who could afford to pay for raises, etc. are the Apples, Dells, and HP's. And all of us, in the end.
But you will be surprised how quickly factories move, in spite of all the obvious problems involved. In 2-3 years 50-80% of the electronics may be gone from Shenzhen. Transportation inefficiencies pale compared to labor costs and local authorities usually work very quickly to remove those inefficiencies when they want to attract new factories to their areas. I have seen it happen before. And that is not a bad thing. Other areas in China and other countries are in desperate need of such jobs which will help to pull these areas out of poverty. Just as they have helped develop the coastal areas in Southern China.