Following a rash of worker suicides, Foxconn moved into full damage-control mode and gave staff two big pay rises in one week, doubling the minimum monthly wage to 2,000 yuan (HK$2,280) from October 1. At the same time, its Shenzhen factory has stopped recruitment for certain jobs and announced a series of relocation plans, such as moving some of its production lines to Sichuan and Jiangsu .
According to mainland reports, Foxconn may relocate its 400,000-strong Shenzhen production plants inland. Among them, two of the most profitable production lines at the factory in Longhua district - which employs 300,000 workers - would be merged with another factory, while the majority would be relocated.
The availability of cheap labour has, for decades, helped the mainland prop up its manufacturing and processing industry. But the negative impact of this labour exploitation has sounded alarm bells across the nation.
Moving production inland, where wages are relatively lower, to continue business as usual may be effective in the short term. However, it will not tackle the root causes.
The central government has already ordered local authorities to raise minimum wages, in a bid to offset the US demand for yuan appreciation, bridge the wealth gap and boost working-class consumption. In Guangzhou and Shenzhen, the minimum wage has been set at 1,100 yuan, and in Beijing, it will go up to 960 yuan. Further inland, the levels will hover around 600 to 700 yuan, but this is expected to go up before too long as living standards improve.
For its long-term development, Foxconn could consider moving some of its production closer to Hong Kong instead of Taiwan. And the Lok Ma Chau Loop between Hong Kong and Shenzhen would be an ideal location.
Foxconn has raised its basic wage to 2,000 yuan. If food and accommodation allowances are included, remuneration adds up to HK$4,000 or HK$5,000 a month. If Foxconn could double that, to about HK$9,000, it would certainly attract a lot of Hong Kong workers. The wages may double but the quality and efficiency that Hong Kong workers offer will most probably be twice as much, too; there will be little difference in production costs.