India's "Pig-Slaughtering" Scheme: Why Did Foxconn Leave India?

Tech 2024-08-20 15:16:05 Source: Network

India's "Pig-Slaughtering" Scheme: Why Did Foxconn Leave India?In July 2024, Foxconn formally announced its withdrawal from India and return to China, shocking the global business community. Behind this departure lies a series of absurd actions by the Indian government and the serious crisis in India's investment environment

India's "Pig-Slaughtering" Scheme: Why Did Foxconn Leave India?

In July 2024, Foxconn formally announced its withdrawal from India and return to China, shocking the global business community. Behind this departure lies a series of absurd actions by the Indian government and the serious crisis in India's investment environment.

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A few years ago, the Indian government ambitiously sought foreign investment, vowing to build a "world factory." At that time, many multinational companies, including Foxconn, responded enthusiastically, and India seemed destined to become the next economic miracle. However, reality proved to be much harsher.

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Foxconn's Difficulties in India: Low Productivity and High Costs

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The pass rate of Apple phones produced by Foxconn in India was less than 50%, far lower than the 95% pass rate achieved by Chinese factories. This astonishing data directly impacted production efficiency and cost control, highlighting the numerous challenges faced by India's manufacturing sector.

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The problems Foxconn encountered in India went beyond low productivity:

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Human resource issues: Indian workers generally have a lower level of education, leading to a lack of quality in their work. Frequent absenteeism further hindered production.

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Supply chain issues: India lacks sufficient local parts supply, necessitating the import of numerous components from China, increasing costs and extending production cycles.

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Infrastructure issues: Frequent power outages and an underdeveloped transportation network in India severely affected production schedules.

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Policy issues: The Indian government, citing the COVID-19 pandemic and the India-China border conflict, refused entry to Chinese engineers, resulting in a lack of technical support and further exacerbating low production efficiency.

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Faced with these numerous difficulties, Foxconn ultimately chose to leave and announced a series of significant investment plans to allocate resources back to China.

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India's "Pig-Slaughtering" Scheme: Unfounded Accusations Against Apple and Leaked Business Secrets

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Just as the dust settled on Foxconn's withdrawal announcement, a series of actions by the Indian government attracted renewed attention.

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In early August 2024, India's antitrust authority unexpectedly released an investigation report targeting Apple, accusing the company of attempting to monopolize the Android system and charging a 30% "Apple tax." The report even included Apple's business secrets, which were leaked to Apple's competitors.

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Apple strongly objected to these accusations, pointing out that its market share in India was not even among the top five, so the accusation of monopolization was unfounded.

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Following this, the Competition Commission of India issued another report accusing Apple of unfair competition practices in the App Store. Although these two reports were later withdrawn by the Indian authorities, they still felt like a sword of Damocles hanging over Apple's head.

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In fact, India's "pig-slaughtering" game against foreign companies is not new. Back in 2022, India froze Xiaomi's assets worth approximately $4.8 billion and imposed a $550 million fine, citing illegal transfer of funds. In the same year, Samsung was accused of tax evasion and fined over $200 million, while Vivo faced similar troubles.

India's Investment Environment Crisis: Fickle Policies and Lack of Rule of Law

Faced with India's seemingly enthusiastic yet treacherous investment environment, foreign companies have responded in different ways. Some have chosen to "vote with their feet," while others have turned their attention to Vietnam.

Vietnam indeed boasts unique advantages: an abundant workforce, lower wages, a friendly government, and incentives such as tax breaks and affordable land. However, this does not mean Vietnam is without its shortcomings; investors continue to be plagued by issues such as underdeveloped infrastructure, insufficient worker quality, and high employee turnover rates.

Industry experts have offered different interpretations of India's fickle approach:

Unstable investment environment: India's fluctuating attitude towards foreign businesses reflects the instability of its investment environment and shortcomings in its rule of law.

Conflicting mentality: India yearns to attract foreign investment to drive economic growth but fears that foreign companies might dominate the market, impacting the growth of domestic enterprises. This conflicting mentality has led to its inconsistent policies.

Protecting domestic businesses: India may be trying to create development opportunities for domestic businesses by pressuring Apple.

However, regardless of the reason, the negative impact of India's behavior is likely to gradually become apparent in the future. If India fails to recognize and address these issues soon, it could severely impact its future economic development.

Conclusion: Openness and Inclusiveness are Key to Future Development

In today's globalized world, no country can stand alone. For businesses, finding a secure foothold in an international environment filled with uncertainties is an eternal challenge. For governments, finding a balance between attracting foreign investment and protecting domestic interests is a complex task requiring wisdom and courage.

Both businesses and nations need to maintain an open and inclusive approach, continuously improving their competitiveness to secure a winning position in international competition. After all, in today's globalized economy, isolationism will ultimately become a stumbling block to development.

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