Rethinking the Foxconn model: the plight of Foxconn and its industrial upgrading

Fu first said an allusion to Mr. Zhongshu, who was said to have once said to a British lady who was on the phone that "if you eat an egg, why do you know the hen that lays the eggs?"　　Mr Zhongshu's humorous metaphor dispelled the idea that visitors wanted to meet the author. What role does Foxconn play in so many suicides? As there is no evidence, we are not in a good mood to comment.　　But we found a very interesting phenomenon: although many people accuse Foxconn of this hen is not, but for the hen's eggs are flocking, very few people because of the hen to exclude these eggs. Consumers just eggs regardless of hen's condition, which may be a significant feature of modern manufacturing. When we buy goods in the market, who cares about the situation of the workers who produce this product?　　There may be two reasons for this: One reason is that modern social production chains are so long that ordinary consumers have no way of knowing the specifics behind them; the other reason is that the quality of the product itself and the plight of the workers who produce it are completely different. And capital favours such companies, because they see Foxconn's core competitiveness: cost--mainly labor-cost control.　　One can be used as a reference: Foxconn International (02038.HK) 2009 earnings showed that the number of Foxconn employees increased by 9.7% compared with 2008, the total cost of staff has been reduced by 28%, per capita cost is reduced by 34% year-on-year. It has always been the practice of factories and manufacturers to ignore workers ' feelings and keep their costs down.　　However, such a rule does not apply to the service industry: If a restaurant company has a Foxconn-like event, it's not too far from the closing date. The reason for this is worthy of our thinking. Because profits in the service sector are rarely raised by pushing down the wages of workers, there is certainly cost control in the service sector, but that control is more controlled in management and office costs than in trying to keep the labour costs down. Because the profit of the service industry is more the diversification service from the enterprise, start from the quality of the service providing. How to improve service level?　　To put aside many factors, one of the most important is to respect employees, so that customers enjoy the service through the staff and feel the pleasure of service. The unhappiness of the service workers is felt by the consumers through their services, and consumers will express their dissatisfaction with the service by using the voting mechanism of their feet, then the enterprise will find ways to improve the service level by increasing the satisfaction of the employees, and that's why.　　Labour disputes in the service sector may be far less than in the manufacturing sector, and the service sector will have higher wages than manufacturing. In terms of economics, we can interpret it as being in the manufacturing industry, whether it is technology-intensive or capital-intensive, as technology itself is capital, so capital gains may be considered "natural". But in services, whether labor-intensive orCreativity-intensive, labor, human capital is the core of value, so the management must respect the labor force, the proportion of elements in the distribution of factors must be higher than the manufacturing sector. If China's economic structure is still dominated by manufacturing, hens like Foxconn will be there forever, but when the share of the tertiary industry in China gradually increases, this phenomenon will become less. Therefore, the reduction of the incident, needs to be achieved through industrial upgrading, that is, the increasing number of service workers to replace our industrial workers.　　This is a difficult change, but it is a change that must be faced. (The author is the executive director of the Shanghai Institute of Finance and Law)