A A year after Apple Inc. supplier Wistron Corp. has faced an uprising in India, its biggest rival Foxconn Technology Group is facing a similar rebuke. This time, their main customer is drawn into what should serve as a wake-up call to Taiwanese manufacturers in the South Asian nation.
Concerns over food safety and accommodation standards prompted Apple to take the unusual step of placing the factory near the southern Indian city of Chennai on probation. More than 17,000 people work at the facility, and in mid-December hundreds of workers contracted food poisoning. More than 150 have been hospitalized.
This outbreak has prompted workers to go on strike, once again highlighting the conditions of tens of thousands of factory workers hired across India to produce devices including smartphones and computers. When Apple investigated, it found that not only did food sanitation fail to meet expectations, but employee sleeping quarters were also below average.
Apple and its Taiwanese partners have been here before. A year earlier, workers at a factory in Wistron near the technology hub of Bengaluru ransacked the factory after growing tired of delayed and underpaid wages. Police with batons were called in to quell the protest, but not before staff destroyed equipment and set fire to vehicles.
Foxconn apologized last week for recent issues and said it was restructuring the local management team. But that is not enough. Despite Wistron’s failure a year earlier, it would seem that the leadership in Taipei still doesn’t get it.
After decades of developing their business models, Taiwanese companies such as Foxconn, Wistron, Pegatron Corp. and Quanta Computer Inc. have come to dominate global electronics manufacturing from facilities scattered throughout China. They have done well in the world’s most populous nation over the past 50 years, thanks in part to a common language and the business-friendly policies of successive leaders that have made it easier to set up factories and hire workers from near and far.
Today, faced with labor shortages and over-reliance on China, Taiwanese companies are making the savvy decision to move their operations to the second-largest country.
But they learn that India is not so easy. Whether it’s language barriers, cultural differences or raucous democracy, Taiwanese executives struggle to adapt. This is yet another sign that India is not the next China, but a nation with its own unique traits and nuances.
Part of the challenge is that India lacks the infrastructure that Taiwanese companies are used to relying on when setting up local facilities. When Foxconn founder Terry Gou toured China, pitting local governments against each other in the battle to land the next iPhone factory, he was able to secure commitments to provide housing for workers and many other support services needed for mass manufacturing. operation.
In the Wistron case, local contractors seem at least partly responsible for the wage payment problems that escalated to the point of explosion. Yet management itself failed to adequately monitor its own suppliers to ensure compliance. Foxconn appears to be facing similar issues, exacerbated by the fact that international travel has been curtailed by the Covid-19 pandemic.
It would be incorrect to conclude that Chinese workers are simply more docile than their Indian counterparts, as evidenced by the 2012 riots at a Foxconn factory in China. But when the going gets tough, Taiwanese management has generally found that local governments in China side with business rather than workers. It’s less likely in India, where leaders need voter support at election time.
However, perhaps the biggest challenge is management style. Taiwanese companies – which typically used their own leaders in China – will increasingly rely on local leaders to set up and run operations in India. This means providing adequate training and support so that they can combine the rigid Taiwanese approach to operations with a more relaxed working culture found in the local field.
Their experiences in China, where such a divide also existed, prove that the challenge is not insurmountable. But tech makers have had decades to adapt to the local landscape as they slowly expand their operations to meet the growing needs of their largely Western customers.
In India, however, Taiwanese companies need to acclimate faster. Customers need these new factories to grow quickly to reduce their reliance on China, while New Delhi and Taipei are pressured to forge a strong trade relationship that can blunt Beijing’s economic might.
In the rush to reorient the global center of production, manufacturers don’t have the luxury of time. –Bloomberg
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