Culture shock

Taiwan’s tech giants face culture shock in India: Bloomberg report

Taiwan’s tech giants had decided to set up companies in India by 2019 as a way to increase supply chain options amid the ongoing trade war between the United States and China. However, since 2020, the decision to switch stores has proven to be a major culture shock that could impact the bottom line of these tech giants. According to an analysis of Bloomberg, the Taiwanese tech giants have found themselves in a new controversy. Apple supplier Foxconn Technology Group is facing a reprimand from workers after a series of protests at the factory near Sriperumbudur, Tamil Nadu, over unsanitary food safety and accommodation. A NDTV report in December 2021 said 250 women working at the Foxconn factory near Chennai were treated for food poisoning, 159 of whom were hospitalized. The factory employs nearly 17,000 people to manufacture devices including smartphones and computers. To assess the situation, Apple sent in auditors and found that not only did food hygiene fail to meet expectations, but employee sleeping quarters also failed to meet standards.

An Apple spokesperson said, “We hold our suppliers accountable to the highest industry standards and conduct regular assessments to ensure compliance.” Foxconn said, “We are truly sorry for the issue experienced by our employees and are taking immediate action to improve the facilities and services we provide at the remote dorms.” He further added that all employees will continue to be paid while improvements are made before restarting operations. “Foxconn’s facility at Sriperumbudur has been placed on probation and we will ensure that our strict standards are met before the facility reopens. We will continue to monitor conditions closely,” the Apple spokesperson said.

History repeats itself for Taiwanese tech giants

Apple Inc.’s supplier Wistron Corp. has seen a similar uprising in India in the past. Wistron Corp was going through rapid expansion in 2020, however, according to The prints report, this strained the resources of the company and the management team was unable to deal with the growing number of grievances from the workers. The number of employees increased to around 9,000 in November 2020 from 2,000 during the pre-pandemic period, sources said. The company’s human resources team, which the report said numbered just three people, faced erratic attendance records as well as delayed wages and overtime pay. This led to a riot in December 2020.

Bloomberg’s analysis indicates that despite Foxconn’s apology and local management’s promise of restructuring, there is a clear gap where Taiwanese technology management has failed to respect the working culture in the Indian market. Large Taiwanese companies such as Foxconn, Wistron, Pegatron Corp. and Quanta Computer Inc.’s manufacturing divisions in China have dominated global electronics markets. Their success in China is largely due to the benefits of the common language and pro-business policies of the Chinese government that have contributed to the expansion of factories and labor. However, in an attempt to break free from the Chinese comfort zone, the recent move to the second largest country i.e. India has not been easy.

Cultural barriers still intact

Cultural differences, language barriers and political systems have left Taiwan’s tech giants struggling to adapt. The Bloomberg report goes on to state that India currently lacks the infrastructure these companies are used to since Foxconn founder Terry Gou reportedly pits Chinese local governments against each other in order to set up the iPhone factory. He was able to secure commitments to provide worker housing and the many other support services for the massive manufacturing operation.

While in the Wistron scenario, local Chinese contractors can be partly blamed for the wage payment issues. However, management itself had failed to ensure compliance and monitor its suppliers. This does not mean that Chinese workers are more compliant than their Indian counterparts. The 2012 riot at the Foxconn factory in China is proof that this conclusion would be incorrect. However, Taiwanese management has found that Chinese local governments have often put the interests of the company above its workers. This is less likely in a country like India where politicians need the support of voters at election time.

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The change in management style is the biggest challenge these companies face if they hope to successfully run their operations in India. With the Foxconn factory still on probation by Apple Inc. and not expected to reopen until January 7, 2022, it is clear that the leaders must rely on the local leaders of India to manage the operations. This would involve offering cultural training and support to help integrate the rigid Taiwanese approach to operations with a relaxed, worker-centric culture in India.

Taiwan’s manufacturing journey in India has been difficult with the added problem of complicated bilateral relations between India and China. India has been slow to issue visas and work permits to Chinese engineers who were crucial in Taiwanese tech factories in February 2021. With growing pressure from Western customers to reduce manufacturing dependence on China, Taiwanese companies have had to adapt more quickly to this sudden change. Unfortunately, manufacturers haven’t had time to try to weaken Beijing’s global grip on production.