If Foxconn really runs away, do we have to worry about the upcoming wave of unemployment?

If one company is used to represent Made in China, there is a well-known company that may get quite a lot of votes. This company is Foxconn, a super factory that manufactures for world-class companies such as Apple. Since Foxconn landed in the mainland in 1988, it has become a typical representative of Taiwanese companies in the mainland. With its massive production capacity and large workforce, Foxconn is often mentioned whenever people mention Made in China.

According to data from Foxconn's official website, by the end of 2016, Foxconn's total import and export volume accounted for 3.6% of China's total import and export volume. It has set up factories in 38 cities in China, including the Pearl River Delta, Yangtze River Delta, Bohai Rim, and central and western China. It has more than 1 million employees in mainland China alone. It is not only the world's largest electronics technology manufacturing company, but also one of China's largest manufacturing companies. However, recently, this super giant has a piece of news. Is it going to run away?

1. Did Foxconn really run away?

Speaking of Chinese companies or entrepreneurs running away, we have heard this news quite often. Since the end of last year, a series of Chinese entrepreneurs, represented by Cao Dewang, have started to build factories in the United States and other overseas countries, transferring domestic industries overseas. Han Ge has also talked about this topic more than once in his articles. In fact, everyone can accept the entrepreneurs setting up factories overseas before, but this time even Foxconn has run away? What is going on?

According to Tencent's report citing overseas media, on August 2, US President Trump claimed that Foxconn Chairman Terry Gou had privately told him that the company planned to invest $30 billion in the United States, instead of the $10 billion that had been announced. In response, Foxconn did not directly respond to the figure on Wednesday, but reiterated its previous investment plan.

According to Trump's remarks to a group of small business leaders at the White House on Tuesday, Foxconn CEO Terry Gou privately told him that he would invest up to $30 billion in the U.S. The company signed an agreement with Wisconsin last week to build a $10 billion display panel factory there, and Trump did not elaborate on where the additional investment would be used.

On July 26, local time in the United States, Foxconn Group Chairman Terry Gou, Trump and Wisconsin Governor Scott Walker jointly announced that Foxconn plans to set up a liquid crystal display (LCD) panel factory in Wisconsin, which is expected to initially create 3,000 jobs for the state. The factory may create up to 13,000 jobs in the next few years.

Although it is well known that Mr. Trump is notoriously loud-mouthed and unreliable, even someone like Trump would not dare to speak carelessly about such business investment and job creation. It seems that this is a true story. Because for American leaders, job opportunities are always the most important thing to win the hearts of the people, which is why he, as the president of the United States, has to endorse a Chinese company. For an entrepreneur like Trump, 13,000 jobs for one company are enough for him, the president of the United States, to condescend.

2. Why did Foxconn run away?

The transfer of manufacturing industry has always been a matter of concern to countless people. Take Foxconn's super-large factory in Longhua, Shenzhen as an example. The number of workers employed by Foxconn in Longhua, Shenzhen has reached a staggering 300,000. This number is not much different from the population of many domestic counties. It can be said that each Foxconn factory is a city, which is not an exaggeration.

When Foxconn is mentioned, almost everyone will unconsciously label it as a low-end manufacturer and a sweatshop. This is indeed the current situation of Chinese companies, especially manufacturing companies. As early as the beginning of reform and opening up, China became the object of favor for most of the world's manufacturing industries, especially low-end manufacturing industries, because of its massive cheap labor resources and cheap land. A large amount of capital and technology were concentrated in China. China became the world's largest manufacturing factory by taking over the transfer of the world's manufacturing industry, especially the transfer of low-end manufacturing industry. It also became the first pot of gold earned by most companies after the reform and opening up.

Friends who have studied economics know that there is a labor and technology substitution curve in economics. In most developed countries, why are there such advanced manufacturing technologies? One of the important reasons is that the local labor costs are very expensive. In order to combat the high labor costs, enterprises try to use cash technology to reduce costs. However, there is a strange phenomenon in China. That is, many manufacturing enterprises do not regard reducing labor costs through technology as their most important thing, because most enterprises accidentally discovered a fact in the actual operation process, that is, China's labor is so cheap, and there is a large number of industrial reserve forces formed by surplus rural labor. Do you think the salary is low? It doesn't matter. If you don't do it, there are plenty of people to do it. In such an overabundant labor situation, most enterprises choose to use labor substitution. Why do they still need to upgrade technology? This is China's demographic dividend.

However, the demographic dividend is not unlimited. With the impact of China's one-child policy, China's demographic dividend has reached a critical point. The so-called Lewis turning point has appeared, and the increasingly common labor shortage is sweeping Chinese companies. In addition, the rising real estate prices in the southeastern provinces in the past few years have led to a rise in land prices. Naturally, wages have to be paid more when people cannot be hired. The rising land prices mean that the costs of enterprises will be higher. As a result, more and more Chinese manufacturing companies have fallen into a situation where it is difficult to make a profit. Many manufacturing companies in the southeast coastal areas can only run away or close down if they are small in scale. Larger ones choose to move to third- and fourth-tier cities in the mainland, and even larger ones, such as Fuyao Glass and Foxconn, choose to build factories in the United States. According to Cao Dewang's original words, although the labor force for building factories in the United States is more expensive, other costs are very low, so it is still relatively cost-effective.

3. Is an unemployment crisis coming for Chinese companies?

As for Chinese manufacturing enterprises such as Foxconn and Fuyao Glass building factories overseas and even industrial transfer, Han Ge thinks that this matter is not worth worrying about. To borrow a sentence from Chairman Mao: If it rains, let it rain and if it wants to marry, let it be. Because, for the development of the world economy, no country's industry can remain unchanged for a long time. The history of economic development in the world is a history of continuous globalization and transfer of industries. When China leaves the era of low-end manufacturing development, economic progress will inevitably bring about industrial transformation and upgrading. Low-end manufacturing will be squeezed to places with lower costs. This is an inevitable trend of industrial transformation and upgrading.

However, the problem is that Chinese companies must inevitably go through a period of pain in industrial transformation. During this period, low-end manufacturing has been transferred away, but high-end manufacturing or high-end service industries have not yet been fully developed. This may lead to the embarrassing situation of changing the cage for new birds, with the cage empty but no birds coming in. This is the biggest problem, but it is also an inevitable stage in the development process and is indispensable.

Of course, for each of us individually, the biggest problem with this kind of industrial transfer is the unemployment crisis. Chinese people are rooted to their land, and any movement is something most people do not want to see. If the industry is transferred domestically, we can still follow the company. But if a company like Foxconn moves entirely overseas, it will be difficult for us individuals to follow the industry transfer. This is the biggest problem.

From the perspective of the development of the world economy, industrial transfer must be a gradual process. It is impossible for all enterprises to move away or close down overnight. Therefore, the so-called unemployment crisis in many media can be said to be a bit groundless. However, the problem does not exist, because the trend of industrial transfer has been formed, and the path of industrial transformation and upgrading has been determined. In this process, if you still rely on the old methods and live in the old routines of the past, you will inevitably be eliminated by history. Therefore, everyone's sense of crisis is indispensable. We must firmly establish a sense of crisis and improve our multiple abilities as much as possible, so that we can adapt to market changes through multi-ability cultivation.

As the saying goes, survival of the fittest. In this era, the only constant is change itself. Facing industrial transformation, although the unemployment crisis will not come, a personal career crisis may come at any time. How to improve our abilities and increase our risk response capabilities depends on ourselves.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.