Hon Hai Fallout Could Include Relocations

The recent spate of suicides at a Shenzhen factory of Taiwanese electronics maker Hon Hai Precision Industry, which assembles Apple (AAPL) products, has spurred the company, its Hong Kong listed Foxconn International unit and even some of its rivals like TPV Technology to give salary increases for factory workers in China amid growing concerns about working conditions at their plants.

Such a move raises the prospect that rising inflation and production costs in Shenzhen, one of China’s main manufacturing hubs, could prompt global consumer electronics makers to look at other destinations such as Vietnam, India and Indonesia as well as poorer inland provinces in China itself, such as Hubei and Chongqing, and to choose to manufacture products there in the future.

Taiwan Electronic and Electrical Manufacturers’ Association Vice President Luo Huai Jia said Monday the organization, which represents the interests of electronic manufacturers on the island, is encouraging Taiwanese electronics makers to build new facilities in cheaper Asian countries such as Vietnam, India, Indonesia and Malaysia, because of rising wages in China.

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