Global smartphone migration, Foxconn Xiaomihua competes in India

Recently, it was reported that Xiaomi has already realized the production and delivery of smartphones in India. It is also the factory of Foxconn, located in Andhra Pradesh. More than Xiaomi, "Xiaohualian" (referring to Xiaomi, Huawei, Lenovo) will produce their own mobile phones in India, or in other parts of the world.

“The company recently opened a mobilization meeting to mobilize everyone to go to India. The treatment of Chinese employees will not be Indianized, even higher than China. Of course, there will be good people. Even with such favorable conditions, everyone still does not want to. Going to India not only has less living conditions than China, but more importantly, it is a strange place."

On July 22nd, an Foxconn executive who asked not to be named, in an interview with a 21st Century Business Herald reporter, described the big move being carried out by Foxconn. He said: Although few employees go to India, the company still tried its best to persuade Chinese employees to work in India. The goal is to train local Indian workers and support Indian factories.

In the past three decades, Foxconn is the world's largest foundry, the biggest beneficiary of “Made in China”: so far, it has built factories in Shenzhen, China, Langfang, Hebei, Zhengzhou, Henan, Chengdu, Sichuan, and Taiyuan, Shanxi, except Langfang. The above-mentioned factories have more than 100,000 employees and more than 1.2 million employees in China.

Wei Lai, vice president of Xiaomi Technology, said in an interview with the 21st Century Business Herald: With the globalization of the company's product sales, Xiaomi's other resources will also be allocated global resources. As for the distribution of manufacturing resources, the nearest market is the most important principle. Only in this way can the transportation cost be greatly reduced, and the import tariffs on spare parts are much lower than the whole machine.

Competing in India

Recently, Huawei received the approval from the Indian government to approve the approval of the handheld device manufacturing business in India.

Foxconn released the news on July 15th: Foxconn, the world's largest manufacturer of electronic products, said it will expand its development in India on a large scale. The company plans to build 12 new plants in India by 2020 and employ up to 1 million locals. Workers, rumors that their investment will reach 20 billion US dollars.

The above-mentioned Foxconn executives confirmed the news that Foxconn will set up a production line in India.

Foxconn is the largest private employer in mainland China. It is also the largest OEM in the world for Apple's iPhone and iPad devices. It operates more than 10 large factories in mainland China, with 1.2 million employees in China, accounting for its global employees. Most of them contribute a lot to China's becoming a "world factory."

In addition to OEM for Apple, Foxconn also OEM for Xiaomi. In the global smartphone shipments ranking in 2014, Apple ranked second and Xiaomi ranked fifth. In addition, Foxconn also OEM for Lenovo, Dell, Hewlett-Packard and other PC manufacturers. Foxconn set up India, which has been interpreted as two layers. One is Foxconn's global distribution resources, and it is going to be Chinese. Second, the globalization of IT manufacturing resources, including smartphones and PCs, will become increasingly blurred.

In addition to Foxconn, Huawei, the fourth-largest smartphone maker in the world, will also build a factory in India.

Going to China, IT manufacturing global layout topic, 21st Century Economic Reporter interviewed other foundries, including Inventec, Asus, Wistron and other related leaders. On the one hand, they emphasize China's dominant position in global manufacturing, such as the maturity of industrial workers and the geographical distribution of the supply chain. It also indicates that the company has no plans in this regard.

The globalization of manufacturing resources, why is the first stop in India? The above-mentioned Foxconn personnel said: The most important reason is the huge imagination of the Indian market. India is a populous country with a population of 1.2 billion. According to the population growth rate, the future may exceed China. . According to the data, in 2014, India’s mobile handset shipments reached 275 million, accounting for 14% of the global market, making it the second largest mobile handset market in the world. However, the shipment of smartphones is only 81 million, and the penetration rate of smartphones is only 30%. Compared to the growing saturation of the domestic smartphone market, India has a huge imagination. According to the principle of the nearest market, brand manufacturers are also willing to put the factory in India.

In China, on the contrary, the penetration rate of smartphones in the Chinese market has exceeded 90%. The Chinese mobile phone market first shrank in the first quarter of 2015 in the first quarter of 2015.

At present, mobile phones such as Huawei, Xiaomi, Lenovo, ZTE, vivo, OPPO, Jinli, and Jiajia have begun to be sold in India. Millet, Huawei, Lenovo Motorola, Asus and other companies have already launched a large number of Android phones priced at $150 in India, ranking top in e-commerce website sales.

In the global competition for IT resources, this is the second "Dragon Elephant Battle": the first time after 2000, the global software industry has emerged, and India has become the world's largest software industry externally due to language advantages. China has tried to cut into this field, focusing on the development of software outsourcing industry, and even established various software parks throughout the country, such as Beijing, Dalian, Xi'an, Chengdu, etc., including Neusoft, Huaxin, Haihui, etc., which have become the national key support. Objects, giving software outsourcing a variety of very favorable industrial policies. The end result is that India has become a winner and China has not been able to steal the position of the "World Office" from India.

This time it is different. It is India’s attack on leading Chinese manufacturing. Another difference is that China is in the midst of industrial transformation, its attitude towards manufacturing has changed, and India is actively fighting for it. . What will happen? The above-mentioned Foxconn executives believe that it is still difficult to draw conclusions.

Global layout

The above-mentioned Foxconn executives revealed that in addition to India, Foxconn has built two factories in two provinces in Vietnam. At the same time, it has decided to build a plant in Brazil. It initially decided to invest 2 billion US dollars and expects to employ more than 100,000 people. The Brazilian President personally met with Guo Taiming and invited Foxconn to go to Brazil to set up a factory and give various preferential policies.

The executive said: The cost of transporting mobile phones from China to Brazil is at least 10 yuan. When the cost is high, the cost is 30 yuan. In Brazil, the price of mobile phones is generally around 500 yuan. This high transportation cost is in the whole cost. It accounts for a considerable proportion and greatly reduces the profit margin. Building a plant in Brazil will solve this problem.

In addition, exporting brand mobile phones to Brazil for tax protection, while building factories in India, can reduce the cost of tariffs, because the government will also issue various policy subsidies.

Samsung is the world's largest smartphone manufacturer with the largest smartphone shipments, and is also deploying its own manufacturing resources globally. At the end of last year, the Vietnamese government said that Samsung’s plan to build a $3 billion investment in the country has been officially approved, and Samsung’s total investment in Vietnam will increase to $11 billion in the future.

The local media estimate in Vietnam is: As of 2015, Vietnam will be responsible for producing more than 40% of Samsung mobile phones.

In addition to Samsung, in the past few years, the mobile phone manufacturing departments of Intel, Microsoft, South Korea LG and Japan's Matsushita have also extended to Vietnam. According to official Vietnamese data, Vietnam exported $19.2 billion worth of mobile phones and accessories in the first ten months of last year, an increase of 8% compared with the same period last year. Vietnam’s exports of mobile phones and accessories have exceeded their exports of clothing and textiles, which accounted for 16% of Vietnam’s total exports.

The above-mentioned Foxconn executives believe that Foxconn's establishment of factories outside China is the result of several major forces. First, there are two major trends. First, the transformation and upgrading of China's economic structure, the status of traditional manufacturing is being used by modern service industries. The second is the disappearance of China's demographic dividend. China was originally the country with the lowest labor cost and the largest number of labor. The labor cost is now much higher than other countries, such as India, Vietnam, and Indonesia.

In terms of labor cost theory, the cost of India and Vietnam is only a quarter of that of China, and the monthly salary of Brazilian workers is only about 800 yuan. In China, the factory's salary is at least 3,000 yuan. What is even more troublesome is that with the rise of other industries such as service industry, it is difficult for manufacturing factories to recruit workers; other industries have higher incomes, such as express delivery, income of 8,000 yuan, or even over 10,000 yuan, and construction workers' income is even higher. Since 2008, the labor shortage has been plaguing Foxconn and other giant manufacturers.

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