Managing Organisational Change at Foxconn’s Factories in Contemporary China
Managing organisational change at Foxconn’s factories in contemporary China
1. Introduction
Since China’s engagement to the global economy in the early 1980s, it has become the global manufacturing centre given its abundant supply of low-cost labours. International corporations have long taken advantages of this to have their goods produced or assembled in China, and they have been able to squeeze their costs and transform them into a lower product price for their potential customers. However, as the economic development and the workers’ perceptions toward lives have changed dramatically, these firms have faced severe issues with their corporate policies.
The raise of employee salary has become a trend in China and has given these manufacturers tremendous pressures on their financial performances. One good example would be the Honda Motor Co. incident happened in May 2010. Continuing strikes took place at Honda’s assembly plants in Foshan and Zhongshan, complaining poor pays to the workers, and it has forced the company to raise its employee salaries by 10 to 30 percent (Shirouzu, Chao, and Dean, 2010).
However, such issue is like a rolling snowball and is not likely to end. According to Lewis model, china has reached a turning point where shortage of labour force is driving up industrial wages and inflation as a result of China’s high economic growth (Thomson, 2006). The change in economic conditions and shrinking workforce in contemporary China are the signs to all the corporations which rely heavily on cheap Chinese labours that adaption of new business strategy, management style, and corporate structure is urgent.
In 2010, a series of tragedies among workers at Foxconn in China has again proved the necessities to initiate fundamental changes in accordance to the new social and economical conditions in China. A total of 12 deaths and 2 suicide attempts pointed out severe issues of Foxconn’s policies and management style, and has triggered a
1. Introduction
Since China’s engagement to the global economy in the early 1980s, it has become the global manufacturing centre given its abundant supply of low-cost labours. International corporations have long taken advantages of this to have their goods produced or assembled in China, and they have been able to squeeze their costs and transform them into a lower product price for their potential customers. However, as the economic development and the workers’ perceptions toward lives have changed dramatically, these firms have faced severe issues with their corporate policies.
The raise of employee salary has become a trend in China and has given these manufacturers tremendous pressures on their financial performances. One good example would be the Honda Motor Co. incident happened in May 2010. Continuing strikes took place at Honda’s assembly plants in Foshan and Zhongshan, complaining poor pays to the workers, and it has forced the company to raise its employee salaries by 10 to 30 percent (Shirouzu, Chao, and Dean, 2010).
However, such issue is like a rolling snowball and is not likely to end. According to Lewis model, china has reached a turning point where shortage of labour force is driving up industrial wages and inflation as a result of China’s high economic growth (Thomson, 2006). The change in economic conditions and shrinking workforce in contemporary China are the signs to all the corporations which rely heavily on cheap Chinese labours that adaption of new business strategy, management style, and corporate structure is urgent.
In 2010, a series of tragedies among workers at Foxconn in China has again proved the necessities to initiate fundamental changes in accordance to the new social and economical conditions in China. A total of 12 deaths and 2 suicide attempts pointed out severe issues of Foxconn’s policies and management style, and has triggered a
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