Foxconn Technology Group, which supplies Sony, Apple and Nokia with IT components, is moving part of its major plant away from costly Shenzhen after hefty wage increases at its factories in the southern city, affecting hundreds of thousands of workers, China Times reported Saturday.
The Longhua plant, which comprises 11 business groups and has 300,000 employees, will retain only two highly profitable groups and merge with the Guanlan plant, which employs 100,000 workers, a source who works at a research and development (R&D) department at the Longhua plant said.
"We've got a notice today," the source said on Wednesday morning, adding that researchers who provide support for Hewlett-Packard servers will move to Tianjin in northern China, along with related production lines. The relocation is to be done in two months.
Other business groups will also move to less expensive Tianjin, Yantai or Wuhan, said the source. But the Taiwanese-owned Foxconn group will keep making iPhones in Shenzhen, the southern economic hub neighboring Hong Kong.
Analysts said the plan was aimed at reducing costs.
Suicide-plagued Foxconn announced on June 1 that wages for ordinary workers in Shenzhen will increase to 1,200 yuan from 900 yuan, and another announcement on June 6 said the wages would be raised to 2,000 yuan for workers who pass a three-month assessment.
Meanwhile, Shenzhen plans to raise its minimum monthly wage by 15.8 percent to 1,100 yuan ($161) citywide starting in July, while the minimum wage in Tianjin and Yantai is 920 yuan, and 900 yuan in Wuhan.
Worker responses were mixed. Some are trying to transfer to other business units to stay in Shenzhen and may choose to quit if they fail. Some are happy because living costs in other cities will be lower.