It may be time to wave farewell to cheap Chinese consumer goods, people, as it looks like Foxconn intends raising contract manufacturing prices as it attempts to stop workers in those Chinese factories churning out cheap consumer goods for the rest of the world from, you know, killing themselves in protest at the poor wages and working conditions they’re enduring.
Reuters reports that price hikes are on the way, citing Citibank analyst, Chang Kaiwei. “Hon Hai, the world’s largest electronic parts maker, will raise prices from October for some clients, including Apple, according to a Citibank analyst, a Taiwan newspaper reported on Wednesday,” the report tells us.
This won’t just affect Apple. Nokia, Microsoft, and Sony Ericsson will also be impacted. The move comes following several months in which Hon Hai/Foxconn management have struggled to improve worker morale following a wave of tragic suicides among employees in Shenzen, China.
Speaking to The Register, Foxconn this week stressed it takes the welfare of its employees “very seriously”, saying it is, “committed to giving each and every one of our more than 937,000 employees in China a safe and positive working environment and compensation and benefits that are competitive with all of our industry peers.”
The company also dismissed some recent claims that it has failed to fully implement all its promised worker improvements.
“In the case of Shenzhen, where more than 500,000 of our employees work,” the email states, “the minimum wage has been significantly increased to RMB 2,000 per month [$300, £190] and this is in addition to benefits including free or subsidized housing and meals, medical coverage, and other government required insurance and trust funds.”
That these improvements in living conditions for its Chinese workers would eventually translate into raised prices for the products made isn’t rocket science. It only remains to be seen just how much of the company’s c.30 percent profit margins Apple will sacrifice to carry the burden of any manufacturing price rises.
Though these aren’t likely to be seen immediately, as Foxconn will be under a specified contract for those Apple orders it currently occupies.