BYD Zhengzhou factory is massive.
Zhengzhou known as the "iPhone city" has a Foxconn manufacturing base.
From assembling phones to making cars is a quintessential story in industry upgrade.
Foxconn seeks to move more capacity out of China, here's how it'll effect the city
1/9🧵
Zhengzhou known as the "iPhone city" has a Foxconn manufacturing base.
From assembling phones to making cars is a quintessential story in industry upgrade.
Foxconn seeks to move more capacity out of China, here's how it'll effect the city
1/9🧵
The abusive work environment of Foxconn aside, Zhengzhou have almost exhausted in extracting the value from assembling iPhones.
Due to greed from Apple and Foxconn, the wage for assembling iPhones doesn't have much room to rise.
Due to greed from Apple and Foxconn, the wage for assembling iPhones doesn't have much room to rise.
Therefore, trying to retain Foxconn actually suppresses the local wage.
When a company stays in the same spot along a manufacturing supply chain, as Foxconn does, the room for profit increase is very low
When a company stays in the same spot along a manufacturing supply chain, as Foxconn does, the room for profit increase is very low
That is unless they move up the value chain and manufacturing something more valuable.
Hence in manufacturing, wage increases cannot be inflated based off of the wealth of your costumers, unlike the more intangible value associated with service jobs.
Hence in manufacturing, wage increases cannot be inflated based off of the wealth of your costumers, unlike the more intangible value associated with service jobs.
BYD started off as phone battery makers, then in 2003 they moved into the auto industry.
They are the perfect example of moving up the industrial value chain.
Left was the BYD flyer made in 2004.
Right is the BYD supercar Yangwang U9 less than 20 years later.
They are the perfect example of moving up the industrial value chain.
Left was the BYD flyer made in 2004.
Right is the BYD supercar Yangwang U9 less than 20 years later.
Zhengzhou is becoming less reliant on the foreign controlled Apple supply chain.
By moving to a mainland Chinese controlled supply chain, the high paying jobs in R&D can stay within mainland China.
In Zhengzhou these people would form a core sector of middle class...
By moving to a mainland Chinese controlled supply chain, the high paying jobs in R&D can stay within mainland China.
In Zhengzhou these people would form a core sector of middle class...
...driving up consumption.
Which can easily raise the wage of service sectors, intangible aspects of services can have its revenue inflated according to the wealth of your costumers.
Causing a general wage increase in the area
Which can easily raise the wage of service sectors, intangible aspects of services can have its revenue inflated according to the wealth of your costumers.
Causing a general wage increase in the area
Zhengzhou the capital of Henan province, circled in blue. Is the last holdout of relative poverty, preventing China from becoming a true high income country.
Because it's a densely populated agricultural region with low per capita arable land.
Because it's a densely populated agricultural region with low per capita arable land.
With investments from Champion companies like BYD into the hinterland provinces, it will very quickly improve the income of the locals.
This example should demonstrate to every country the importance of controlling your own supply chains and having your own champion companies.
This example should demonstrate to every country the importance of controlling your own supply chains and having your own champion companies.
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