Young Chinese shunning factory jobs, says Foxconn founder; “The young generation don’t want to work in factories, they want to work in services or the internet or another more easy and relaxed job”

Last updated: October 7, 2013 11:13 pm

Young Chinese shunning factory jobs, says Foxconn founder

By Ben Bland in Nusa Dua, Bali and Sarah Mishkin in Taipei

Young people across China are increasingly shunning monotonous, low-paid assembly line jobs, leaving Foxconn, the maker of iPhones and iPads, struggling to attract enough workers, according to the electronics manufacturer’s chairman. Terry Gou, founder of the company which is China’s largest private employer, says he is upgrading Foxconn’s training programs and automating more of its assembly lines in the face of a labour shortage. “The young generation don’t want to work in factories, they want to work in services or the internet or another more easy and relaxed job,” he said on the sidelines of a meeting of Asian business and political leaders in Bali, Indonesia.“Many workers are moving to the services sector and, in the manufacturing sector, total demand [for workers] is now more than supply.”

Foxconn, also known as Hon Hai Precision Industries, has come under fire for its treatment of workers following a string of worker suicides in 2010, but has since improved working conditions and significantly raised wages.

The latest shortages also come despite Foxconn, which employs more than 1m people in China, having spent the past three years moving its factories from coastal cities like Shenzhen to inland provinces where labour is cheaper and thought to be plentiful.

In response, Mr Gou said on Monday that Foxconn would diversify into non-manufacturing work.

About 90 per cent of the Taipei-headquartered group’s business in China comes from exports of electronic goods. Mr Gou wants to reduce that to 55-60 per cent by selling more products to the local market and creating new jobs in sales, servicing and ecommerce. It operates retail stores in China and has already sold some of its own-branded smart TVs in 7-11 convenience stores in Taiwan.

Should Foxconn be successful, it would alleviate analysts’ concerns about its reliance on low-margin manufacturing for foreign brands such as Apple, Dell and Sony.

But Foxconn’s efforts have so far fallen flat. It has shuttered its Cybermart retail stores in Taiwan. In China it has closed Media Markt, a Best Buy-like chain in which it held a minority stake alongside German retailer Metro.

Foxconn is also trying to move away from its focus on low-cost labour elsewhere in the world, such as in Indonesia, where it has been in talks with the government and possible local partners for more than a year to open a factory producing goods for the large and fast-growing consumer market in Southeast Asia’s biggest economy.

While Foxconn has been lobbying the government for tax and other incentives, as it has typically received when expanding both within China and elsewhere abroad, Indonesian officials have been pushing the company to invest in research and technology to ensure Foxconn does not just open in Indonesia to take advantage of wages that are as much as 50 per cent cheaper than in China.

“We promise not just to come to leverage cheap labour,” said Mr Gou, who expects the first factory to open next year. “We want to transplant technology to [Indonesia].”