Disrupted Production at Foxconn’s iPhone Plant in China to Have Heavy Impact

Pictures and videos have recently spread widely across Chinese social media showing crowds of Foxconn employees walking along the highway to their hometowns due to an outbreak of COVID-19 cases at the world’s largest iPhone manufacturing facility in Zhengzhou. This factory is currently the leading source of employment in the central Chinese city of over 10 million people.

Some web users claimed to have walked for 40 km, while others said that after walking for 14 hours, they were picked up by a car sent by their hometown authorities to take them into isolation. Official responses from both Foxconn and local government bodies were reported one after another on the afternoon of October 30.

Under the guidance of local authorities, Foxconn’s Zhengzhou factory has now implemented closed-loop management measures, and has guaranteed arrangements for employees to voluntarily stay in the factory and for those who wish to return home. Up to now, the statements claim that there has been no severe infection in the factory itself, and that the viral outbreak situation is generally controllable.

Foxconn previously denied a rumor that about 20,000 people were diagnosed with COVID-19 in Zhengzhou on October 26, while the factory announced that it was raising the attendance subsidy standard from 50 yuan ($6.88) per day to 100 yuan ($13.77) per day.

SEE ALSO: Foxconn Refutes Rumors of 20K COVID Cases at Zhengzhou Plant

As the incident unravels, some have raised the question of why the Zhengzhou factory didn’t stop production, while others point out that it bears huge employment pressure and foreign trade for the city.

Su Dongxia, the Party Secretary for Zhengzhou Foxconn, posted a screenshot on October 29 to express her concern for Foxconn employees. “There are estimated to be more than 200,000 people in the Zhengzhou factory, so it is destined to be not only a company, but also a complex society with great difficulty in management. Our employees become volunteers and serve the lives of hundreds of thousands of people, which requires a lot of effort. Shutdown is the simplest measure, but the trauma after shutdown is also difficult to repair,” the screenshot showed.

“Foxconn can leave Zhengzhou, but Zhengzhou really cannot live without Foxconn because no company in the city can support the work of millions of people,” said Gao Guangyin, a Chinese history commentator. “Although Henan is a populous province, it is an educational desert. The ultra-low admission rate leads to low-end talent. Without Foxconn, it really cannot solve the huge employment problem.”

Because of Foxconn’s factory in Zhengzhou, local engineers no longer need to move to China’s coastal cities to find well-paid jobs. If they have three years of working experience, their starting salary is generally 9,000 yuan ($1,239). A salary of 20,000 yuan to 30,000 yuan will be provided for team leaders. Housing prices in the district where the factory is located also increased sharply from 2,000 yuan per square meter in 2009 to 10,000 yuan in 2019.

According to a report released by the China Foreign Economic and Trade Association in 2020, Zhengzhou Foxconn ranked first in the country with a total export volume of $31.6 billion in 2019, and it was the largest export enterprise in China. Its import value was $16.4 billion, second only to China National Petroleum Corporation and China National Offshore Oil Corporation. In 2019, the total import and export volume of Zhengzhou was 413 billion yuan, of which Foxconn accounted for nearly 82%.

Apple’s revenue rose 8% to $90.1 billion and its net profit was $1.29 per share, according to Apple’s third-quarter financial report for the end of September. Zhengzhou serves as an important site for Apple’s iPhone production, with more than 90 production lines and about 300,000 workers. According to IDC data, in 2019, China’s smartphone exports accounted for 27% of global smartphone sales, of which one quarter came from Henan Province, and Foxconn’s Zhengzhou factory accounted for more than 60% of Henan’s trade volume.

In order to ensure production, this year, Foxconn’s Apple-related production line wages have also been adjusted. Workers at the Zhengzhou plant were offered bonuses of up to 10,000 yuan each in July, while 500 yuan was offered to those who could introduce additional employees.

Ming-Chi Kuo, an analyst at TF International Securities, said on October 30 that because the Zhengzhou iPhone factory suddenly entered closed-loop production without warning, more than 10% of global iPhone production capacity will be affected. Apple has already shifted some of its next-generation iPhone production to India.

In addition to producing parts for Apple, Foxconn aims to manufacture items for other global industry leaders. The firm chairman once said, “I hope that one day we can produce electric cars for Tesla.” On the company’s Technology Day earlier this year, Foxconn released two new cars, including a hatchback Model B and an electric pickup truck Model V, as well as a production version of the Model C.