Foxconn's establishment of a new subsidiary in Vietnam is a strategic response to changes in the global economic situation, supply chain adjustments, and changes in market demand. This action not only reflects Foxconn's keen insight and flexibility as an industry giant, but also reflects the company's continuous exploration and deepening in its global layout.
From the perspective of economic globalization, Foxconn chose to set up a new factory in Vietnam due to cost considerations and the need to diversify its supply chain
As an emerging economy in Southeast Asia, Vietnam has relatively low labor costs and a relatively stable political environment, which provides favorable conditions for enterprises to invest and build factories in the region. In addition, as the global trade landscape changes, companies are increasingly focusing on the resilience and flexibility of their supply chains, and by establishing production bases in multiple regions, they can effectively reduce the impact of risks in a single market or region on their overall operations.
For a manufacturing giant like Foxconn, printed circuit board manufacturing is one of its core businesses. The establishment of a new factory in Vietnam will help further consolidate and expand its share of the global circuit board market, improve production efficiency and product quality, and meet the needs of global customers for high-quality circuit boards.
From a social perspective, Foxconn's investment in Vietnam will also create a large number of local employment opportunities and promote local economic development and social stability. At the same time, it will also create more value for Foxconn's employees and shareholders, and help the company achieve sustainable development.
Foxconn's investment in Vietnam is indeed quite substantial
Since its first entry into Vietnam in 2000, it has invested more than US$3.2 billion, demonstrating the company's long-term commitment and confidence in the Vietnamese market. Foxconn's investment in Vietnam continues to grow, with a land investment of about RMB 428 million announced by Hon Hai's subsidiary in February 2023, further demonstrating its determination to expand its production scale in Vietnam.
Foxconn's investment in Vietnam is not only to take advantage of the low labor costs and stable political environment in Vietnam, but also to achieve a diversified and global supply chain strategy. By establishing production bases in multiple regions around the world, Foxconn can reduce its dependence on a single market and improve the resilience and flexibility of its supply chain to respond to changes in the global economic situation and market demand.
Looking at Foxconn's global factory distribution, Vietnam occupies an important position in its Southeast Asia strategy. Although Chinese mainland and Taiwan remain Foxconn's main production bases, Vietnam has the largest number of factories among Southeast Asian countries, which further proves that Foxconn attaches great importance to the Vietnamese market.
Foxconn's rapid development in Vietnam, especially the significant increase in the number of employees, and its chairman Liu Yangwei's commitment to further expansion in the future, all demonstrate the importance and long-term commitment of Foxconn to the Vietnamese market. This trend not only reflects Foxconn's strategic adjustment in the global supply chain layout, but also reflects the growing attractiveness of Vietnam as a manufacturing hub.
Vietnam became Apple's second-largest manufacturing base outside of Chinese mainland
This change in status is indeed forcing more Apple supply chain manufacturers to make the choice of moving their foundries to Vietnam. This is mainly due to Vietnam's advantages in terms of labor costs, political stability, and tax incentives, which can attract foreign companies to invest and build factories. At the same time, with the changes in the global trade pattern and the increasing demand for supply chain diversification, Vietnam's status as an important manufacturing base is also gradually improving.
It is worth noting that not only Foxconn and other Taiwan-funded companies are investing heavily in Vietnam, but many foreign-funded enterprises are also betting frantically on Vietnam, including Chinese companies. According to the Ministry of Planning and Investment (MPI), foreign investment attracted by Vietnam reached US$11.07 billion in the first five months of 2024, a year-on-year increase of 2%, showing Vietnam's strong momentum in attracting foreign investment. Among them, the actual funds in place for foreign direct investment (FDI) projects are estimated to be about US$8.25 billion, a year-on-year increase of 7.8%, which is a testament to the confidence and enthusiasm of foreign investors in the Vietnamese market.
Foxconn's strategic adjustment
Foxconn's increased investment in Vietnam, India, Mexico and other places is part of its global supply chain layout. These regions have advantages such as lower labor costs and tax incentives, helping to reduce production costs and diversify supply chain risks.
Although Foxconn has adjusted its layout globally, Chinese mainland is still one of its important production bases. Foxconn has a long history of investment in Chinese mainland and has formed a close cooperative relationship with the local government and industrial chain. Therefore, simply interpreting some of Foxconn's actions as "evacuating" or "running away" may be too one-sided.
Regarding the report on tax inspection and land survey, Foxconn has stated that it will actively cooperate with relevant units to handle it. This shows the company's attitude and determination in terms of compliance management. As for the rumors on the Internet about the tax and the land being repossessed, Foxconn has also refuted the rumors in time.
As a world-renowned electronic manufacturing service provider, Foxconn's business scale and influence in Chinese mainland cannot be ignored
From many aspects, the possibility of Foxconn completely running away or transferring production lines and equipment on a large scale is indeed very low. Foxconn has a large workforce, advanced production equipment and a complete supply chain system in Chinese mainland, which are the result of its long-term investment accumulation. These resources and channels not only provide Foxconn with stable production capacity and market competitiveness, but also lay a solid foundation for its long-term development in the Chinese market.
Foxconn's business in Chinese mainland is not only related to its own economic interests, but also closely linked to China's social and economic stability and development. As a large-scale Taiwan-funded enterprise, Foxconn has played an active role in creating jobs, promoting industrial upgrading, and driving local economic development. Therefore, whether from the perspective of corporate self-interest or social responsibility, Foxconn is unlikely to easily abandon its business in Chinese mainland.
Foxconn is indeed strengthening the construction and investment of overseas factories in India, Vietnam, Mexico and other countries in its global layout, which is a strategic adjustment made according to global market demand and supply chain conditions. But this adjustment does not mean that Foxconn will abandon the Chinese mainland market, but to better optimize resource allocation and diversify risks.
Stabilizing the economy and employment is the top priority for China's social development. In a complex and volatile international situation, maintaining stable economic growth and a stable job market is crucial to maintaining social harmony and prosperity. We hope that all legally operated enterprises, including Foxconn, can stand up and stabilize and contribute to China's economic and social development.