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Foxconn plans one-stop business service to tap China market: analyst

2012/05/10 20:28:05

Taipei, May 10 (CNA) Foxconn Technology Group, the main manufacturer for Apple Inc., is determined to grasp opportunities in the China market by setting up a one-stop business service for customers, a Taipei-based analyst said Thursday.

Foxconn, also known as Hon Hai Group in Taiwan, broke ground Thursday on its China headquarters in Shanghai, as part of the group's bid to set up an operating hub and cutting-edge research and development center.

The headquarters, whose construction is scheduled to be completed in 2015, are expected to act as an e-commerce center in the Yangtze River Delta region for the group.

"With the new facilities, Foxconn is trying to integrate its services such as supply chain manufacturing, receiving and filing orders from customers and market expansion," Simon Yang, vice president of Topology Research Institute, told CNA.

"Foxconn's major manufacturing bases have relocated to central and western China, so the new headquarters in Shanghai can ensure that it is close to the resources of the international brands in the region," Yang said.

"By setting up the new operating center, Foxconn could also reverse its negative image of running' blood factories,' which has bothered the company for a long while," he said.

Meanwhile, Reuters quoted Foxconn Chairman Terry Gou as saying that the group and Apple will share the initial costs of improving labor conditions at the Chinese factories that assemble iPhones and iPads.

Gou, who made the remarks Thursday at the groundbreaking ceremony for Foxconn's China headquarters, did not mention to what degree the costs would be split, the international news agency said.

In addition, Gou said he is confident that Foxconn's revenue will increase 10 percent in 2012 from last year.

According to Yang, the output value of China's domestic consumption market totaled 18.5 trillion Chinese yuan (US$2.9 trillion) last year, up 18 percent from 15.7 trillion Chinese yuan in 2010.

The market is expected to hit an annualized growth of 15 percent this year and will reached 55 trillion Chinese yuan in 2015, Yang said.

Given the slowing demand for TVs in China, Yang forecast that 3G-enabled smartphones will become another momentum to drive the domestic market, which will benefit component suppliers as well as electronics manufacturing service providers like Foxconn.

He projected shipments of 3G smartphones to reach 128 million units in China this year, up 83 percent from the 70 million units in 2011.

(By Jeffrey Wu)