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["I promise, I will never die."] --retracted by Foxconn  (Source: Paramount Pictures)
Turns to employee relocation, pay raises after yet another death

Taiwan's Hon Hai Precision Industry's Chinese Foxconn unit has been having some problems at its Shenzhen plant lately.  A string of suicides has compelled Apple, Dell, and HP to launch a string into the supplier.  Foxconn previously responded by playing Buddhist music, offering employee counseling, and most requiring employees sign a letter promising not to kill themselves.

Apparently that's not working out so well.  On late Thursday, an employee slit his wrists, and according to the 
AFP has since become the eleventh to die this year.

After receiving news of the latest attempt Sony, Nintendo, and Nokia joined a pending probe into the company's business that currently included Apple, HP, and Dell.  In response to criticism about the letter, Foxconn CEO Terry Gou retracted it, saying it was inappropriate.

Guo is also trying yet another tactic in hopes of convincing its employees not to jump off high buildings -- giving them a pay raise.  Foxconn does give occasional raises, and claims that it has been planning to do so for some time, but never got around to it.  Currently entry level workers are paid 900 yuan (about $131.80) per month and also have the chance to earn overtime or bonuses.

According to Vincent Chen, an analyst at Yuanta Securities in Taipei, says that Foxconn typically bumps wages by 20 percent to meet holiday demand for consumer electronics.  However, he says that a pay raise of 50 percent is not outside the realm of possibility.

The pay raises will reportedly raise Hon Hai's operating costs by T$2.7B ($84M USD) and cut the company's profits by 10 to 12 percent, according to analysts at Citi.  Other analysts disagreed, though.  Chen comments, "I don't think this will impact Hon Hai's profitability...Hon Hai has raised salaries by up to 50 percent in the past, and it's still doing well."

It is believed that at least some of the suicides were financially motivated.  According to various employee accounts families of suicide victims with the company are typically paid between 8.5 and 10 years of pay.  Faced with scant salaries, some depressed employees reportedly think they are doing their families a favor by killing themselves.

Foxconn is also planning a mass relocation of about one fifth of its 400,000 employee Shenzhen workforce in Southern China to a plant in Western China.  Workers often migrate to get jobs at Foxconn's plants.  By moving the workers closer to home, Foxconn believes it can decrease their discontent.



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Wait a minute...
By MrBlastman on 5/28/2010 9:12:40 AM , Rating: 3
So Guo says he might raise pay by as much as fifty percent (50%), yet, it will _only_ impact their bottom line by 10 to 12 percent.

Hmm... that makes you think for a moment... If they really had narrow margins, it would make a much larger impact on how profitable they are.

That tells me one thing: They employees are being _grossly_ underpaid here--by an extreme amount. Guo looked pretty smug with a girl almost half his age in another picture. I can clearly see where the bulk of pay is going--into his pockets so he can live a lavish lifestyle.

Maybe, just maybe, if the company realized the merit in paying their employees far more fairly, it would go a long way towards boosting morale and creating an even more productive workplace. I gather from this article they could increase pay WAY more than 50% here and still be very profitable.

Perhaps, Foxconn, you should look into that.

$131.80 a month is a travesty, that is 1581.60/year. The poverty line in America is 10,830.00 for a single person family. In China, I gather they may have three (one child rule), so that makes it $18,310.00. That is a huge disrepancy.

However, in China, the poverty line is $1.25/day. That is far less than these people are being paid. If the companies profits were more greatly effected by payraises, I'd say their pay should stand as is. It isn't, so, despite the poverty levels in China, employees _should_ get their fair share of the profits. After all, they are the ones working hard to make the company the money they have.

Give these guys some respect, won't you, Foxconn?




RE: Wait a minute...
By Spivonious on 5/28/2010 9:43:19 AM , Rating: 3
$132 a month sounds low, but remember that the cost of
living in China is much much lower than here. The average restaurant charges $1 per person for a full meal.


RE: Wait a minute...
By gamerk2 on 5/28/10, Rating: -1
RE: Wait a minute...
By Seemonkeyscanfly on 5/28/2010 10:26:04 AM , Rating: 2
Raising the minimum wage will directly effect the cost of good sold (raising them). However, no it does not always effect lifestyle. Many more things are need to determine effects on lifestyle. Example, you could give a 20% increase to minimum wage and have a great increase in lifestyle because - employment is at 99.5%, average savings is up X%, consumer spending index shows an all time high, and people are feel great about their future. Of course you could have that 20% increase to minimum wage - an everything else the opposite of what I listed - then you will see a huge drop in lifestyle.
Though I agree, minimum wage should not be raised very often... I'm sorry but a kid's first job should not be paid $18. per hour. They need to learn how to be a good worker (earn the wage).
P.S. Regan gave us some of the greatest economic improvements the US has ever experienced. He pulled us out of one the worst economic times the US ever experienced. If you do not think so then you are not old enough to remember those times. The problem with what he created was he assumed other politicians that followed him would do what is best for the nation and not what is best for their own personal goals. So, politicians took a great and working plan and twisted it for their self needed goals and we are left with our current economic state.


RE: Wait a minute...
By ValorMorghulis on 5/28/2010 1:30:13 PM , Rating: 2
I have to dispute your take on Reagan's economic success. Sure the U.S. was very prosperous during his terms especially compared to his predecessors. However, I think you might overestimate the effect a president has on the economy. Reagan certainly didn't screw anything up, but perhaps more of the credit should be given to Paul Volcker the Fed Chairman. Which isn't to say we shouldn't give Reagan some credit, sometimes the best you can do as president is not screw it up.

(For a more in depth explanation of why the Fed Chairman is more important than the president do some research into Keynesian economics and the differences between fiscal and monetary policy.)


RE: Wait a minute...
By Seemonkeyscanfly on 5/28/2010 3:30:33 PM , Rating: 1
Errr... Do you forget Volcker was reappointed in 1983 by President Ronald Reagan. Paul Volcker only 4 months under Carter. Regan worked very, very closely with Volcker to snap us out of stagflation. At the time the people thought Volcker was nuts for his methods and they thought less of Regan because he allowed Volcker to continue on with his method.... This alone is big thing for any President... Standing behind his man and say, "I do not care about what others say or think, I'm letting my man do his job." He took a big chance, if he was wrong he would have never been re-elected.

Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983


RE: Wait a minute...
By C'DaleRider on 5/28/2010 7:39:27 PM , Rating: 3
In January 1981, when Reagan declared the federal budget to be "out of control," the deficit had reached almost $74 billion, the federal debt $930 billion. Within two years, the deficit was $208 billion. The debt by 1988 totaled $2.6 trillion. In those eight years, the United States moved from being the world's largest international creditor to the largest debtor nation.

Interest rates rose in the late 1980s and early 1990s, the economy slowed, then slipped into recession, and productivity barely advanced.


RE: Wait a minute...
By XZerg on 5/28/2010 10:46:59 AM , Rating: 2
The only problem with this equation is that people already have the inflated $$$ and you can't turn back time. And with the amount of money the countries/world have thrown in to stop/slowdown/prevent recession (well not all countries had one), the only expected outcome of this is people have more $$$ eventually compared to today. Hence the trend cannot be paused or turned back...


RE: Wait a minute...
By ValorMorghulis on 5/28/2010 1:11:28 PM , Rating: 3
The problem with economics is that its never that simple. In the short run, if wal-mart reduced its pay everything would be cheaper and the cost of living would decrease for everyone who doesn't work at wal-mart (i.e. you, me and most people). Basically we would seem richer because everything was cheaper. But in the medium term, most companies would start laying people off because the wal-mart employees would buy fewer products from them. The newly laid off employees would stop spending, mean more companies would have to have layoffs etc. Remember that the largest influence on the American economy is consumer spending (~70% of GDP).

This deflationary spiral occurs because there is a delay as markets adjust. In the very long term everything would return to equilibrium just with a different valuation of the dollar.


RE: Wait a minute...
By The0ne on 5/28/2010 11:11:48 AM , Rating: 3
Actually, that $1 meal is street meal. Shenzen is a big city and in most, if not all, big cities prices are similar to what we pay over here in US. In some cases where brand name is "important", the prices are actually MUCH higher. Cost of living, however, remains cheaper but with their own real estate boom, even those cheap homes/apartments are really rundown places. Again, in bigger cities not a small town.


RE: Wait a minute...
By Estee on 5/28/2010 1:35:14 PM , Rating: 2
Too bad, this isn't in Shenzhen proper. It is in a little town called Long Hoa, about 30 minutes away...


RE: Wait a minute...
By iFX on 5/29/2010 2:52:38 PM , Rating: 2
Never heard of a Metro area I take it? I live in a town of 14 thousand which is arguably 30 minutes from the "city center" of my metro area but I am very much in town. I would have to drive over an hour to see an open space - this isn't in NY or Chicago either, this is a medium sized US metro area with 3 million people.


RE: Wait a minute...
By Yawgm0th on 5/28/2010 11:19:57 AM , Rating: 3
quote:
$132 a month sounds low, but remember that the cost of living in China is much much lower than here. The average restaurant charges $1 per person for a full meal.
So people earn in one month one less than one fifth of what I earn in one week, but it's okay because their restaurants charge one fifth of what Subway wants for a foot-long? I mean, they can eat a full 90 times a month on that and still have $42 left for housing, clothes, and everything! Wow, China sounds great.

Don't try to rationalize low wages with cost-of-living nonsense. These workers live lives of unimaginable poverty. I would literally rather be homeless in any American city than work for Foxconn in China.


RE: Wait a minute...
By Solandri on 5/28/2010 1:47:34 PM , Rating: 2
quote:
Don't try to rationalize low wages with cost-of-living nonsense. These workers live lives of unimaginable poverty. I would literally rather be homeless in any American city than work for Foxconn in China.

He's not trying to rationalize it. It's the way economics works. The workers there live lives of relative luxury compared to most Chinese. Average wage for a farm worker there (where most of the factory workers worked before moving to the city) is something like $100/yr.

As the economy, manufacturing, finance, and services become more efficient, wages go up and cost of goods (cost of living) goes up in turn. You can't just take a wage in the U.S. and plop it in the middle of China and expect it to work, just like you can't take restaurant prices in the U.S. and plop it in the middle of China and expect it to work. The entire economy has to grow to where the wages and prices you see in developed nations becomes the norm.

If things didn't work like this, there would be no economic incentive to improve areas of low wages/prices. Because wages are lower in undeveloped nations, there is an economic incentive for factories to move their operations there. Which spreads wealth there, helping raise wages/prices there. If companies were required to pay the same wage regardless of location, they would stay right here in the U.S. And undeveloped nations would have a much harder time become developed, thus propagating the low standard of living there which you're trying to stamp out by arguing for U.S.-level wages.


RE: Wait a minute...
By Chadder007 on 5/30/2010 11:11:25 AM , Rating: 2
I wouldn't even call it relative luxury if they are all wanting to kill themselves.


RE: Wait a minute...
By DanNeely on 5/28/2010 9:56:26 AM , Rating: 3
Actually it doesn't.only If labor is a small fraction of their total expenses, increasing it significantly would have fairly limited impacts even at narrow margins.

Hypothetically, if labor is only 1% of their total cost a 50% pay raise would result in a .5% increase in total cost. This would be a 10% drop in profitability if they only had a 5% margin before the raise.


RE: Wait a minute...
By Seemonkeyscanfly on 5/28/2010 10:02:14 AM , Rating: 2
If the poverty line is $1.25 per day in China which based on 30 days would be $37.5. Average wage at Foxconn $131.80 / $37.50 = 3.514666 times over the poverty line. So, to compare in the US, poverty line of 10,830 x 3.51666 = $38,063.84. That is in the area of the national average income in the US. However the problem is you are dealing with averages. So how many of the employees are really at that wage? Not all, probably not even half. Remember the manage wages are worked into that average. So, in short yes the increase could probably help most of the employees. When Guo said he was planning on it but just did not do it. Well he might as well say, I was just waiting to see if the peasants would revolt. If yes, I hand a plan to get my butt out of trouble and put down the revolt. If they do not revolt then I have that much more money from their hard work.
Yes, a company is entitled and needs to make a profit... but a work also deserves to have a good wage and proper time off to "recharge" himself or herself. If a worker can not provide a home, food, some savings,and other basics then they are being underpaid. Of course maybe the company can not afford to pay the needed amount but when Guo say, they can give 30 to 50% pay raise, well that just says he does care for the company but very little for the employees.


RE: Wait a minute...
By MrBlastman on 5/28/2010 10:13:22 AM , Rating: 2
He only cares about the next hot girl he can have in his arms.

No matter what a countries poverty line is, if a company is making out like bandits and producing revenues and income well above that line, it SHOULD be shared with the employees. They worked their butts off to get it there, the corporate culture should lift up its employees thus ultimately lifting up the economy. Apparently here, the only thing being lifted up is Guo's caulk.

Executives should be compensated as they have a large impact on corporate direction. There have to be limits though, caps if I might say, unless you built the company from the ground up. All I see here is employees getting the shaft.

You're right--Guo doesn't have to give that raise. He only dangled out the bait saying he's thinking of it.

You can think about something forever. Only when you act does it really matter.


RE: Wait a minute...
By Seemonkeyscanfly on 5/28/2010 11:08:40 AM , Rating: 2
I agreed, a nations poverty line is not important, but it can give us a line to compare our lifestyle to their lifestyle, otherwise you can not understand if they are living a good life or bad life. Well money wise....

Guo would learn and benefit from just one hour study of Yin and Yang. Balance and Harmony.

As I stated before, the company needs to make a profit and the employees need to be paid a fair wage. (provide a good family life). If one side receives less then their fair share the other side in time will also suffer.
Guo did not pay enough, now his employees are killing themselves so their family can receive the 8 to 10 years worth of pay they give to those families.
In the US we have the reverse happening... Yes, there is a need for the unions, but the auto union has become to out of balance. From this out of balance state the auto sales and quality has slipped for decades in the US, thus giving us the latest issues in that industry.


RE: Wait a minute...
By Solandri on 5/28/2010 1:57:24 PM , Rating: 2
quote:
No matter what a countries poverty line is, if a company is making out like bandits and producing revenues and income well above that line, it SHOULD be shared with the employees. They worked their butts off to get it there, the corporate culture should lift up its employees thus ultimately lifting up the economy. Apparently here, the only thing being lifted up is Guo's caulk.

This gets into the minimum wage. The way it should work is that the minimum wage is tied to the maximum wage. The more that goes up, the more the minimum wage goes up.

Unfortunately, in the U.S., the minimum wage is decided by commission based on cost of goods. That creates an artificial floor for the price of those goods, instead of a dynamic system which can scale up or down.

quote:
Executives should be compensated as they have a large impact on corporate direction. There have to be limits though, caps if I might say, unless you built the company from the ground up. All I see here is employees getting the shaft.

That's something I've been mulling over too. The problem is the executives/owners are in charge of setting their own compensation. If ordinary grunt-level workers were in charge of setting their own pay, I'm sure you'd see the see their wages spiraling out of control too. The question then is how do you make executive/owner pay based purely on merit, and not on nepotism. I haven't found a good answer to that.


RE: Wait a minute...
By Seemonkeyscanfly on 5/28/2010 4:05:30 PM , Rating: 1
I guess you do not know much about upper management, owner executive positions. 100% is base on merit... If you fail to do a good job and lead the company to greater success the company will fail and go out of business. Think of the CEO as the Captain of the ship and the workers the rowers. The workers can bust their butt off, but if the captain leads them into a sharp, rocky, rough coast front... the workers hard work will be in vain as the ship will sink because of the captain bad leadership.

That is the problem many corporation are having today. They have lossy leaders. They think just because the Graduated from an Ivy league school with an MBA or something else they deserve a starting pay of 6 million or something crazy. When in real the only thing they done is graduate with an MBA from an Ivy school (not easy thing but it's not like they invented the wheel). So they leaders deserve their wage but the people we are putting as the leaders do not deserve the position. If you want to argue the leaders of today should earn a good wage just not a crazy pay, but then be able to take home huge bonus when the company is profitable. I will agree with you, because their leadership will have caused those profits.

You should never have a maximum wage... nor any tie between top wages and bottom guy. That is just silly. Can you imagine telling Bill Gate, "oh sorry, we know you created this company, worked many year on a very low wage, invested everything you had into the company, gave up social life for many years, created many of the programs, promoted and marketed the day lights out of this company, but your wage is unfair and way too much compared to the new hire Bob in sanitation. So, we need to cut your wage by X% and give Bob and "fair and balanced" increase in his wage." Now, Bob has a good job and it's needed work, but he does not deserve a wage that has some percentage link to Bill's wage. Believe it or not people like: Bill Gate, Steve Jobs, Richard Branson, Henry Ford, and so on earned the wage they are or were paid.


RE: Wait a minute...
By Solandri on 5/28/2010 9:40:22 PM , Rating: 3
quote:
I guess you do not know much about upper management, owner executive positions. 100% is base on merit... If you fail to do a good job and lead the company to greater success the company will fail and go out of business.

You're honestly saying that after the near global financial meltdown we just had? No, it's not 100% based on merit. At best I'd say it's about 70% based on merit. The rest is based on who you know, I scratch your back you scratch mine, and negotiation based on unrealistic or incomprehensible value estimates.

quote:
Think of the CEO as the Captain of the ship and the workers the rowers. The workers can bust their butt off, but if the captain leads them into a sharp, rocky, rough coast front... the workers hard work will be in vain as the ship will sink because of the captain bad leadership.

Funny you should use a ship captain as an example. Ship captains typically only makes about 5x more than the lowest mate.

I don't judge the value of a position based on the job's potential to improve or reduce the bottom line. By that measure, the lowly engineer or scientist who comes up with a new invention worth millions or billions should receive that much. But for some reason that's considered ridiculous, while the owner of the company who hired the guy getting the millions or billions is considered "right".

I judge the value of a job based on how easily the market can replace you. Joe the sanitation worker can easily be replaced. A CEO is harder to replace. But if he can be, he wouldn't be able to negotiate a multi-million dollar severance parachute. Right now top executive pay seems to value many of them as irreplaceable.

quote:
You should never have a maximum wage... nor any tie between top wages and bottom guy. That is just silly.

Why not? Why is it silly? Look, I'm pretty much as pro-business as they come. But you seem to be basing your opinion on what you see in the U.S. The U.S. is pretty mild in terms of CEO/worker pay ratio (though it has been getting worse). Some of the ratios I've seen in Asia and Central/South America are just insane. In some places basically less than 1% of the population controls over 95% of the wealth. There is no way that can be right. Everything I know about economics and running a business tells me that's not natural, and is detrimental to the country's economy as a whole.

Owners and upper management pay themselves as much as they can while trying to pay line workers as little as they can. That's what I see a tie between min/max wage preventing. Either you try to pay everyone (including yourself) as little as possible. Or you try to pay everyone a lot (including Bob the janitor). Or something in between. Just take the same standard for determining a wage, and applies it to everyone. As I said, the intrinsic problem is that owners and top executives typically set their own salaries (or have it set by close friends and co-workers), while being hostile to raising the wages of average and lower workers.

quote:
Believe it or not people like: Bill Gate, Steve Jobs, Richard Branson, Henry Ford, and so on earned the wage they are or were paid.

Need I point out that Ford paid his workers the highest wages at the time? He understood that companies during his time were (either through collusion or unfair labor practices) paying workers below fair market wages. That represents a market inefficiency. The owners and executives made more money for themselves that way, but the cost was that the economic growth of the middle and lower class (and thus the country overall) was stunted.

Ford realized that he could do better by paying something closer to fair market wages, and proceeded to wipe the floor with the competition. He got happier, more productive workers who could afford to buy more things - including the very cars he was producing. He saw the bigger picture - that a wealthy, thriving middle class was better for business than having only an elite upper class able to afford his cars.


RE: Wait a minute...
By Seemonkeyscanfly on 6/1/2010 12:10:50 PM , Rating: 2
quote:
TextNeed I point out that Ford paid his workers the highest wages at the time?

No you do not need to point it out, you need to understand I listed him there because he a good example.

I know I will be marked down here because like most people out there, they do not know what it takes or is to be on top or own a business. No, Bob the janitor that's been on the job for a few days does not have financial ties into the company at all. If the company he works for goes BK or fires him he just finds another job. If an owner of a company has his company go BK, not only does he lose his job, he many time loses his house, car, any sort of retirement, then when all is said and done that owner is usually in court to settle any unpaid bills/pay that the business had/has. Years later Bob barely remembers the company name... The owner however, is still paying for the BK settlement fees. There is no tie not even close to a tie between minimum wage and maximum wage (to have a tie you would need at least equal risk factor).
I of course do not know about wages in other countries. So, I will not speak about them... but I stated we (meaning in the US) have lost the good leaders. The wage is not the problem. The quality of work out of the the upper management is not at the level it was in the past... but they think they still deserve a very high wage.... You will not see this behavior out of founders or true owner (they have to much to lose).
Your example of the scientist or lab guy(s) discovering something then not receiving to share the wealth. That a perfect example of something done correctly. Of course he does not get to share the wealth... Why should he? First of he receives a pay check once or twice a month - a wage he agreed to (owners do not always receive a pay check). If he wants his share of the wealth he should have bought his own lab, his own material, supported himself, paid for the other staff, paid for the electricity he used, the heating bill, water, the accountant and every other expense (including his own pay which let him live a nice lifestyle, while he had failure after failure after failure, ring up expenses with no worries until he finally had the successful results.) How simple and shall your thinking on this subject must be to think this is not coming out of someone pocket book. To add you think this person who paid for everything - including paid the scientist to do the research, does not deserve to collect on his investment? How many of these research guys fail over and over again and still collect a pay check? So, all the profits that come from you one success results ends up covering a lot of failures... but you just expect the money to magically appear for your next project.

quote:
TextI don't judge the value of a position based on the job's potential to improve or reduce the bottom line.

And as long as you think that way you will never be able to run a successful business. Of course, you must remember, these people need to be paid on their success, not on the future of their success... Other words if they have a really bad year, and business is down 60%, well then they should be seeing a 60% lower wage. This is they way of the old leaders in the USA.
I will agree with you that some of todays leaders think or act like they are irreplaceable... Truth, no one on this planet is irreplaceable.


RE: Wait a minute...
By therealnickdanger on 5/28/2010 10:06:41 AM , Rating: 2
That's great and all, but what happens when all of Foxconn's partners dump them for cheaper suppliers? When you're dealing with razor-thin, ultra-competetive markets like this, do you think Apple will stick around if another company can supply the same product for 0.0003% less?

Call me a glass-half-full kinda guy, but I think employing all those people at ~$4/day is better than not employing them at all and using robots or something. The workers come from 20-30 miles away and basically live at the plant in order to make enough money to improve the lives of their families. They have NOTHING else! The fact is that as dire as we rich Americans (90% in debt) view the life that the Chinese live, every product we buy containing a Chinese-built part is contributing to it.

I hate to say it, but it's almost a necessary evil for any developing nation. When my great-great-great grandparents moved to this country, they had to relocate to find work and work under similar conditions for years before saving and earning enough to find better work in better places. Without the millions of workers like them, this country would never have turned into the thriving world power it is (or was...) and we certainly would not be enjoying the luxuries we enjoy today like having enough food, medicine, multiple televisions, video games, refrigerators, air conditioning, heating, etc. Even the vast majority of our poverty groups enjoy these luxuries today! These things wouldn't exist without the struggles our ancestors went through.


RE: Wait a minute...
By MrBlastman on 5/28/2010 10:07:59 AM , Rating: 2
To further elaborate on this as it bothers me so much...

Imagine Acme Inc., it produces won-tons and is quite profitable at it with a 10% profit margin.

It's simplified income statement reads as follows:

Revenues: 1,000,000
Costs of Goods Sold: 150,000.00
Gross Profit: 850,000.00

Operating Expenses/taxes/interest etc.,: 844,651.00

Net Profit: 5,349.00

Okay, so 0.5349% profit margin (this is Foxconn's REAL profit margin). Simple math follows:

2*(5,349.00*.12)=1283.76 (this is the total amount that accounts for employee pay)

1283.76/1,000,000 = .13% of the total revenues. That's right, salaries only account for .13%, and of the profits, 24%. It sounds to me like Foxconn could be paying them quite a bit more. The raise they are getting is only 641.88... they could double their pay and still be making a profit. Apparently, they are misappropriating money somewhere if the salaries of their staff accounts for such a small portion of their revenues considering how many people they employ.

If I dig further, that means that if they have 400,000 employees, 286.963 Billion in Revenue (real figure), they have 2.546 Billion in salary expenses. 72 Million/400,00 = 180.00. That's right, 180.00 USD. Something doesn't add up. So I dig further, Hon Hai (Foxconn), has 1.959 TRILLION dollars in Revenues (Yuan). That makes salaries account for 2.546 Billion. 2.546 Billion/486,000 equals 5,238.00/per employee (Yuan), converting this equates to about 766.40 US Dollars (Hmm). This is a paltry sum of money in the grand scheme of things, when you consider that the numbers don't add up.

Foxconn's Revenue to Employee dollars is 590,450.00
Walmart's Revenue to Employee dollars is 194,387.00

I can assure you Walmart doesn't pay that well, but, @ minimum wage even Walmart pays its employees @ 15,080.00/yr (assuming 40/hr workweek, 52 weeks a year pay). I think we can all agree here Walmart is one example bottom of the barrel in America when it comes to employment. Per Revenues, that equates to about 7.775% of Revenues in employee pay (@ minimum wage assuming 2.1 million employees w/408,214 Billion [actual] 2010 revenues). 7.775% Revenues versus 0.13% Revenues...

There is no way the Revenue-to-dollars add up correctly here.

Even using exchange rates, that is still only 5,238.00 Yuan purchasing power in China, so parity would mean they'd have to TRIPLE pay to get there (though, with their poverty line so low I'd garner goods do cost a fair bit less in China).

Foxconn needs to step up here. I could break this apart a million different ways but the numbers don't lie. They're inefficiencies here are _not_ in their employees, it is in OTHER areas of the company--that executives control. Areas that _they_ should be getting paid far less for seeing that their linemen are working so hard.

This stinks, Foxconn.


RE: Wait a minute...
By Iaiken on 5/28/2010 10:46:20 AM , Rating: 5
At my employer, our CEO makes my annual salary in one week. There are numerous CEO just in north america that make my annual salary in an hour and there are some that make that much in 15 minutes.

Asking for Chinese workers to get a fair share of the profits is hypocrisy because that still doesn't happen here in North America unless your company has a ridiculously good profit sharing plan or it is a co-operative.

When individual CEO's are taking home 30 million dollars plus and management teams are breaking the 500 million dollar mark, that is a huge liability on a balance sheet even if the company is making billions.

I'm fine with owner/operators paying themselves exorbitant salaries because it is their company. However, when a board is stupid enough to lot someone a $17 million a year compensation package, I become very skeptical. In some cases I find it so revolting that I simply refuse to invest in their company on grounds of principle.

One of my favorite investments right now has been profitable and paid out 8-10% dividends like clockwork on top of moderate stock capital gain. Interestingly enough, the CEO of said brewery only makes $140K/year in total compensation and he doesn't get a raise unless he can justify giving everyone from the janitorial staff on up raises. They are proof that don't have to be a co-op or a communists to be fair.


RE: Wait a minute...
By ajoyner777 on 5/29/2010 6:00:51 AM , Rating: 2
Do you really think a person can have any kind of a life making 11k a year? I would say as an American you need to make at least 30k a year to even live halfway decently (afford a decent apartment, cheap car, etc.) I'm sure one can apply this same philosophy to China. You can justify the low pay however you want, but the truth is we need to be making this stuff in America, not China.


RE: Wait a minute...
By PrinceGaz on 5/29/2010 1:16:04 PM , Rating: 2
If they want a decent wage, the Chinese workers should join their trade-union which will fight to get decent employment rights (I assume there is a trade-union available as China is generally considered a socialist/communist country so there certainly should be one).


RE: Wait a minute...
By hashish2020 on 5/30/2010 4:15:48 PM , Rating: 2
Trade unions in China are run by the government. So are most companies (or at least the private ones are using guanxi/connections, and taking the local party boss out for food, drink, and whores)...

Yay crony capitalism (and free market nuts here in the US use China as an example of why the free market is perfect...proves their ignorance as to what is happening in China)


RE: Wait a minute...
By hashish2020 on 5/30/2010 4:12:58 PM , Rating: 2
I lived like a king in Shanghai, China's most expensive city, on about 1750 a month with one free meal (which was garbage Han Chinese food, so I usually skipped it) while paying my own rent in a gated community and dropping almost 200 dollars every weekend going out

Oh, and I saved enough money to travel through SE Asia, Europe, and still have seed money to set myself up in Vancouver

That being said, these guys are making nothing near that

Middle class in China starts at about 2500 RMB a month in the cities (enough for an apt, an electric bike, and some savings) which is around 350-400 dollars a month


RE: Wait a minute...
By Jalek on 5/29/2010 7:17:29 PM , Rating: 2
Comparing dollars to yuan and making assumptions about the labor market based on American norms, makes perfect sense...

They can have employee-owned factories and profit sharing, these workers have apparently foregone those things to take these jobs. The percentage impact only shows that labor isn't their largest cost, and there are several cases in America where that would also be the case, albeit a bit unusual.

AFAIK, these are not compulsory jobs. It may be a cultural thing that quitting a job isn't acceptable, and if so, they may need to reconsider how their industrial model meshes with their societal norms and recruitment practices. I don't know enough about the specifics to really know what's going on, but it's incredibly typical for Americans to not need data to make judgments based on projection and the US labor market, which if you haven't noticed, isn't exactly thriving.


RE: Wait a minute...
By Fritzr on 5/30/2010 8:14:19 AM , Rating: 2
Give Guo some slack on his salary ... an American CEO earning 1000 time the line workers salary is often considered underpaid by salary setting committees. Gotta make sure the executives have enough to pay the mortgage even if it does mean canceling paid medical for the workers ... after all the rank and file are replaceable.

Here in US if given a choice between worker's health and CEO bonus it's a no brainer ... the CEO gets the bonus ... Foxconn at least is willing to spend money to benefit the rank and file. From the statement that this has been done before, it seems they do not even need bad publicity, unlike US based companies :)


RE: Wait a minute...
By FishTankX on 5/30/2010 4:37:04 PM , Rating: 2
Having lived in China for 5 years, I can *roughly* estimate that $131/month is roughly the purchasing power equivalent of $800/month in America. A dismal wage to be sure. Especially because of the forced overtime. But it's nowhere near the destitution you might assume.

For instance, a ride on the bus is somewhere around 10 cents, a taxi ride a short distance (2 miles) is probably about a dollar, a bowl of ramen in a resteraunt is about $0.6, a cabbage might run you about 10 cents, and so on.

What really needs to change are the stupidly long hours. If the works were working eight hours a day with a 15 minute break every 4 hours, along with a half an hour lunch break, and had malls and cinemas playing free movies inside the cinema block, you would probably have much happier workers, and completely banish suicides for good. You wouldn't even necessarily have to raise wages, just nip overtime in the bud. However, something tells me for Foxconn's specific situation, it can't afford to eliminate overtime because it's already accepted production loads that require it, even with 500,000 people. So the best solution is probably 15 minute breaks every 4 hours, and the half hour lunch break. And maybe (this may sound ridiculous) a high chair so that workers could sit down as they work.


RE: Wait a minute...
By swizeus on 5/30/2010 10:36:04 PM , Rating: 2
Don't blame the foxconn, blame the customer of foxconn who wants to get cheap prices


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