China raises concerns about Foxconn Group’s US expansion intentions

FILE PHOTO Logos of Foxconn and Ennoconn are seen during the annual Computex computer exhibition in Taipei, Taiwan June 1, 2016. REUTERS/Tyrone Siu/File Photo

 

Bloomberg

China’s government has conveyed its concern over Foxconn Technology Group billionaire Terry Gou’s plan
to expand the Apple Inc. assem-bler’s operations in the US after President-elect Donald Trump takes office, people familiar with the matter said.
A high-ranking Chinese official recently expressed Beijing’s concerns directly to Gou, the people said, asking not to be identified because the conversation was private. In response, the Taiwanese billionaire told the senior bureaucrat he won’t withdraw capital from China. The US investment plan hasn’t been finalized and is dependent on the policies of the incoming administration, Gou said, according to the people.
China is pivotal to Foxconn’s massive electronics assembly operation, which cranks out more iPhones and iPads than any other in the world. One of China’s largest employers, Foxconn has said it’s in preliminary discussions to broaden its investment in the U.S., without elaborating. Trump has often articulated his vision of bringing manufacturing jobs back to America from China, which became the world’s factory floor thanks to cheap labor and central policy support. And he’s singled out Apple in the past.
A potential strategic shift by Foxconn unnerves Chinese authorities because the company employs roughly a million workers across the country. Major factory job cuts
have been known to trigger protests in the past, even as maintaining
social stability remains among the top priorities of the ruling Communist Party.
“Gou wants officials to know that he still sees China as a market of greatest importance,” said James Yan, Beijing-based research director for Counterpoint. “Foxconn very much relies on China for both assembly and consumer businesses and its suppliers are also in Asian countries. That is not going to change at least in the next five years.”
Foxconn announced the potential expansion hours after a pledge from SoftBank Group Corp.’s Masayoshi Son to invest $50 billion in the U.S. and create 50,000 jobs. A document Son held up for reporters after a December meeting with the President-elect included the words “Foxconn” and “$7 billion” alongside SoftBank’s numbers. Shares of the Japanese company dropped as much as 2.5 percent in Tokyo on Tuesday. Hon Hai Precision Industry Co., Foxconn’s main listed arm, rose 0.6 percent.
It remains unclear how SoftBank and Foxconn may be working together, or what sort of promises may have been made to Trump. Gou told the Chinese official he was invited to the former reality TV star’s Jan. 20 inauguration but didn’t plan on attending, according to the people familiar with the matter.

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