Foxconn staff cost down One-third due to transfer of capacity to the mainland

Author: Sunyan Facing rival BYD Electronics (00285.HK) and product gross margin of the double pressure, the global mobile phone foundry giant Foxconn International (02038.HK) in addition to transfer factories and production capacity to lower cost areas, it seems that in the short term there is no better coup.　　By contrast, although Foxconn's workforce has increased by 9.7% compared with 2008, total staff costs have fallen 28% from a year earlier, and per capita costs have fallen by 34%.　　16th, Foxconn International released 2009 earnings, revenue of 7.241 billion U.S. dollars, down 22%, to achieve net profit of 39.62 million U.S. dollars, a sharp decline of 68%.　　Samuel, chairman and chief executive of Foxconn International, said that most of the new industrial park construction projects invested in the mainland had been completed by the end of 2008, and that the relocation work and the rationalization of global capacity had been largely completed last year, so that no longer had to be spent on capital expenditure as in previous years. Per capita cost reduction of more than 30% earnings, as at the end of 2009, the number of employees reached 118700, compared with 108,200 in 2008, an increase of 9.7%, but the total cost of staff from 2008 to 672 million U.S. dollars, reduced to 485 million U.S. dollars in 2009, year-on-year reduction of 28%.　　The cost per capita fell from $6210 trillion in 2008 to $4086 trillion last year, down 34%, to only 3753 dollars per capita cost of 2007, or about 9%. Now, Hebei Langfang and Beijing mobile phone factory production of mobile phones accounted for more than 70% of domestic mobile phone production.　　"Foxconn's new factory in the mainland has been in operation last year," said an in-house employee at Foxconn Technology Group. In fact, since 2008, the Shenzhen municipal minimum wage from 750 yuan to 900 yuan, to the Foxconn international operating costs brought great pressure, the total cost of staff from 2007 to 465 million U.S. dollars to 2008 of 672 million U.S. dollars, the rise reached 44.5%. Now mobile phone capacity to the Hebei Langfang and other regions, indeed eased the Foxconn international operating costs continue to rise pressure.　　Because, Langfang Development Zone's minimum wage standard is 750 yuan. In fact, the total cost of the company's staff can also be significantly reduced. "An internal employee at Foxconn International said Foxconn and other mainland Taiwan enterprises, from Taiwan to the mainland cadres are known as" Taiwan Dry ", in mainland China to train cadres for" salaries "," Taiwan dry "wage level is generally higher than" salaries "three or four times times.　　Although the Foxconn Science and Technology group launched its localization campaign in the past two years, the current "salaries" ratio in Foxconn international has not increased and decreased. The low gross profit margin of the Bureau reported that the overall product gross margin of Foxconn International last year has fallen to 5.9%, while 2007 was 9.2% and 2008 was 6.9%.　　Compared to rival BYD's overall gross margin level is much more optimistic. Despite the same face mobile phoneThe gross profit margin of the foundry industry continued to decline, but BYD's gross profit margin last year remained at 14%, down 6% from 2008 's 20%.　　In addition, BYD's electronic revenue and Foxconn's international Gap, also from 2008 to 6.4 times times reduced to 3.4 times times last year. "Compared with BYD electronics, Nokia mobile phone orders have become a chicken of Foxconn international." "A person who has worked at Foxconn points out that with the rise of Chinese handsets in overseas markets, squeezing the margins of Nokia's mobile phones has naturally affected the profit margins of Foxconn International."　　According to Foxconn International's 2008 earnings, Nokia's orders accounted for 43% of total sales.　　In addition, BYD Electronics has also won more domestic mobile phone orders, so that its gross margin is much higher than Foxconn International.　　The people familiar with the matter said that international handset giants such as Nokia are facing the global market, and its management cost, operating cost and logistics cost to Foxconn International are much higher than that of BYD electronics. Samuel in earnings, said the company for the New South Korean customers business development, but also specifically sold in Yantai Land and holding company. People familiar with the matter pointed out that Foxconn International's customers were mainly Nokia, Motorola and Sony Ericsson, while Samsung and LG gave Foxconn international orders very little. Clearly, Foxconn International is trying to raise the proportion of Samsung and LG phone orders this year, after all, Samsung and LG handsets have already entered the top three in the global handset.