Foxconn, which makes iPhones and other gadgets for global technology companies, plans to charge them more to partly cover wage increases at its mammoth manufacturing compound in southern China.
The raises followed 10 worker suicides at the Foxconn compound in the southern Chinese city of Shenzhen. Labour activists have linked the deaths to unduly harsh conditions at the plant, where more than 300,000 people are employed. The extent of price hikes will differ according to products, C L Huang, vice-president of Foxconn's parent company told a news conference.
Foxconn has become the world's largest contract manufacturer of electronics goods mainly because of its ability to cut down costs by mass producing, earning big profits for its clients such as Apple, the makers of the iPhone and the iPad, and Hewlett Packard, which makes computer and printers. But amid China's spectacular economic growth, Chinese workers are demanding better pay and working conditions, and companies like Foxconn that rely on China as a source of cheap labour are finding it harder to attract and keep workers.
Last month, the Taiwanese firm announced two raises, more than doubling the basic worker pay to 2,000 yuan (£195) a month for Chinese workers. It is unclear whether the planned increase to Foxconn's charges announced this week would result in higher prices for electronics goods like computer laptops or gadgets such as the iPad.
However, fierce competition among electronics companies is likely to keep retail prices down while in the case of Apple, it is selling so many iPads and iPhones it can probably absorb higher costs from manufacturing without raising prices.
The spate of strikes and other disputes at foreign-owned companies in China is hastening the eventual end of an era of cheap costs that helped make its southern coastal provinces the world's factory floor. Companies are moving manufacturing to inland provinces where wages are still lower or shifting some production to other low-cost countries in the region.Reuse content