Li Wenqiang was planning to spend his National Day holiday (which starts today) catching up on schoolwork. But in early September, the 17 year-old and thousands of other Henan-based vocational students were told that after the week-long holiday, they’d have to spend four to six months ‘interning’ at Foxconn factories.
The internship, however, is not exactly optional, Li tells the Economic Observer. The school has threatened that students who turn down their Foxconn posting won’t be allowed to graduate. Not wanting to risk his studies, Li said he has no choice but to work at Foxconn, the world’s largest contract manufacturer, which makes gadgets for a constellation of global brands including Apple, Dell, Nokia and Hewlett Packard.
But why force students to work in factories? As it turns out, Henan has a bit of a labour problem. According to the Economic Observer, Foxconn chairman Terry Gou only committed to building a mega-plant in Zhengzhou, Henan’s capital city, after local officials promised that they could deliver 300,000 workers in the next few years (and that’s on top of the land, export rebates and subsidies the Henan government had already pledged).
But after years of exporting labour to coastal manufacturing hubs, Henan – China’s most populous province with close to 100 million people – now realises that a supply of labour once thought to be inexhaustible may be drying up.
The newspaper says the province has only recruited 60,000 workers for Foxconn, well short of the 100,000 the Taiwanese firm wanted by the end of this year. To tackle the shortage, the local government is tapping vocational school students like Li to bridge the gap.
Labour shortages are likely to become more of a problem as the growth of the working-age population slows. Experts now say that the number of Chinese aged 15 to 29 will fall sharply after 2011. Worse, the younger generation – students like Li – are better educated, more tech-savvy, and less inclined to spend their lives in the factories (see WiC70, Diary of Factory Girl).
Though forcing students to pitch in at Foxconn factories is hardly a long-term solution, it seems that in Henan, whatever Foxconn wants, Foxconn is likely to get.
Unlike some of the other inland provinces, Henan does not have any meaningful electronics manufacturing presence. To lure large manufacturers, the province has invested in new infrastructure, including highways, railways and business districts. It hopes that this will then lead to more foreign investment as well, helping it move its economy from an agricultural base towards more capital-intensive industries.
“Exports have always been weak because we lacked export-oriented manufacturers,” Henan Party secretary Lu Zhangong told the South China Morning Post. “Now Foxconn alone will double Henan’s export value next year.”
That puts Foxconn into a position not dissimilar to the high-profile anchor tenant of a new office block. The spate of suicides at the company’s Shenzhen production base in the first five months of this year haven’t dissuaded Henan officials from courting the Taiwan-based company. Where it leads, others are expected to follow.
Analysts agree that Foxconn is attractive because it brings much more than the thousands of new jobs on its own payroll. It also brings an entire industrial chain. For a start, Foxconn’s many suppliers will have to relocate as well. Earlier this year, when the company moved some manufacturing to Chongqing, more than 50 company suppliers followed in its wake, says Caixin.
The workers will need housing and places to shop. Some may even be able to afford cars to commute to work on the new highways being built to Foxconn’s mega-factory, as well as its satellite locations.
In villages surrounding Foxconn’s Zhengzhou sites, the welcome is already in place. Red banners are hung above roads and painted onto walls by the local authorities.
The message? “Welcome Foxconn. Swiftly move towards a well-off society”.
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