What's going on in #Zhengzhou and the Foxconn factory? Is it a #Zerocovid protest or a labor dispute? Let's break it down...Full thread 🧵
Foxconn said that “some new hires” at the Zhengzhou campus had complained to the company about work allowances. It seems the major problem here is compensation that was promised but not delivered.
One former worker said that the terms of a “retention allowance”, which had been promised to new employees who stay at the plant until February 15, 2023 had been changed, according to reports. Workers now need to stay until March 15 to receive the bonus - an extra month.
The problem now is that the first batch of people who have isolated have arrived at the Foxconn campus as new workers. Foxconn originally promised that new workers and original workers would live separately, but in reality they all live in the dorm buildings
The old employees haven’t done Covid testing for 7-8 days, which means that there are positive Covid cases living and working together with new employees. This caused panic among the new workers, who feel cheated. That was the first deception.
Last night everybody received a new contract from Foxconn, regardless if they were new employees who had already entered the Foxconn campus or employees who were still in quarantine, and the contract was totally different from the one issued by Foxconn at the time of recruitment
This situation is a major problem and this factory in Zhengzhou is the world’s largest iPhone factory. Now Foxconn has promised to pay each newly-hired worker 10,000 yuan (US$1,400) to leave the campus immediately in a desperate move to end protests that have turned violent
Ultimately how will this effect $AAPL and the holiday season ahead? Investor Dan Ives wrote "With demand remaining firm into holiday season, we would estimate this negatively impacting roughly 5% of iPhone sales this quarter based on impacted China production/supply issues.
The videos and images coming out of the Foxconn factory in #Zhengzhou are terrible and shows the massive level of frustration amongst the workers. This is not good for China as the country enjoys a good reputation for its reliable manufacturing.
It will be interesting to watch what the reaction from Apple will be over this situation and what China's government can do to help resolve the situation. Obviously workers original contracts should be honored and employees compensated correctly.
But with Covid cases rising across the country and more lockdowns going into effect. Companies manufacturing in China will have to consider the long term risk of supply chain slowdown and delays as China continues its fight against Covid 19
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