Recently, some news reported that Xiaomi partners with Foxconn to build smartphone oem factories in India.
Foxconn has confirmed the news that the company will expand the development in India on a large-scale. It is said that the company will invest up to $20 billion and has planned to build 12 new OEM factories while hiring one million local Indians before 2020 year.
“The company has held a meeting to mobilize the staff to India with good position and higher salary than in China. But most people don’t want to India even with so favorable terms, not just because the living conditions are not good as China, but also because it is a strange place.” A senior manager from Foxconn tells.
Foxconn is absolutely the globe’s biggest OEM company in the past thirty years and benefits the most from “China manufacturing”. This Taiwan company has established several OEM factories which have over 1.2 million staffs in China mainland including Shenzhen, Langfang, Chengdu and Taiyuan. It is the largest OEM manufacturer for Apple iPhone and iPad. Besides manufacturing iPhone and iPad for Apple, Foxconn is also the OEM manufacturer for Xiaomi, which ranks the fifth in the global smartphone shipments ranking of 2014, Lenovo, Dell and HP. There are two meanings of Foxconn building factories in India: one is to adjust the company’s resource globally to eliminate the label of China; the other is that the IT manufacturing resource of smartphones and PC globalizes and the mark of Made-in-China will becomes blur.
Not just Xiaomi and Foxconn, other Chinese top smartphone brands like Huawei and Lenovo also have the intention to manufacture their smartphones in India or other southeastern Asia countries like Vietnam and Thailand.
Does this mean that China will lose the position of biggest smartphone OEMs center? It depends, but China’s position for Smartphone OEMs can’t be replaced in recent years by India and Vietnam.
First, China still has advantages in the worlds’ smartphone manufacturing business, for example, the workers are more mature and the nature geographic advantage in the supply chain.
Second, even China’s smartphone market tends to be saturate, as the cellular penetration rate is up to 90%, however, a report from HIS indicates that China smartpnone OEMs will overpass Apple and Samsung as the biggest consumer of smartphone sensor by 2019. From this point, China’s position in OEM phone manufacturing business can’t be easily taken by India and other countries. And the main productivity and core manufacturing techniques of every Chinese smartphone brand are still in China and can’t be copied to India or Vietnam in a short time.
Third, just like America and China, originally America manufactured high-tech products themselves and then migrated the work to China because of the labor cost and government policies. Even though China has become the worlds’ biggest manufacturing center, it does not influence America’s place in high-tech industry and America is still the world’s most creative and productive country in technology. After having been world’s biggest center of OEM manufacturing, China would have a place with core high-tech, cannot just be replaced by India or Vietnam.
And right now, China is still the main center in OEM smartphone business.