Foxconn faces staff pressure after big spin-off in China
Taiwan's richest man Terry Gou Tai-ming was urged by Foxconn's staff to raise their wages as housing prices soar
Foxconn Industrial Internet (FII), a smart factory and cloud computing division of Foxconn Technology Group, made a flying start after listing in Shanghai last Friday, but is facing mounting pressure because of rising housing prices in Shenzhen.
On the day its stock made its debut, an open letter from the company’s staff was circulated online and made into posters in Foxconn’s factory in Shenzhen. The letter requested the company, owned by Taiwan’s richest man Terry Gou Tai-ming, raise the staff wage.
The reason for the request was because rental prices in Shenzhen have been raising rapidly in recent years. The Longhua factory is home to most of the 270,000 Foxconn staff in Shenzhen, where home prices have surged year after year.
Rent for a studio unit close to the Foxconn Shenzhen headquarters is now close to 800 yuan (US$125) per month, and it is expected the rental prices will double if not triple once a new residential estate by the Vanke company is completed.
To look at it another way, the disposable income of Foxconn staff will decrease on an annual base of 1,000 yuan every year.
The letter from the staff asked Foxconn to link the pay scale to the Shenzhen housing index to make sure employees have affordable places to stay. The letter also suggested the company provide a dormitory for its workers.
This may prove to be a big challenge for Foxconn, which is rumored to be developing robots to replace one of the biggest workforces in China. Last year, Foxconn paid 22 billion yuan to its staff, or about 6,800 yuan per person each month. According to government data, the average monthly salary of workers in Shenzhen surged 10.1% to 5,611 yuan in 2017.
The request for a salary increase came on the 30th anniversary of Foxconn in China and a more than 40% surge in its A share listing last week. Chairman Gou said one off the main considerations for the mainland listing was to let staff in China share in the fruits of Foxconn though its staff equity program.
The question is, can the staff equity program catch up with the booming home market in Shenzhen.