Local Governments Mobilize Veterans to Cover Worker Shortage at Foxconn over Revenue Loss Fears

Local governments in China are mobilizing military veterans to cover the worker shortage at Foxconn as violent protests over Covid lockdown measures continue to escalate at the world’s largest Apple iPhone factory.

The combination of the protests and the Chinese Communist Party’s ongoing zero-Covid approach has created a shortage of workers Taiwanese company Foxconn has its biggest factory in Zhengzhou city in central China’s Henan Province.

Municipal authorities of Zhengzhou city are now mobilizing ex-soldiers to make up for the shortage of workers caused by the ongoing zero-COVID approach.

Any civil servants in Henan Province were notified to mobilize grassroots cadres and retired soldiers to work at Foxconn earlier this month.

“The cadre is required to take the lead, and the working time is at least one month,” local authorities said on November 16, according to the Chinese portal Sina.

The province has distributed the recruitment task to specific prefecture-level cities such as Jiaozuo, Xinxiang, Zhumadian, Xinyang, and Luohe, as well as offices for various townships and streets.

A town in Zhoukou city can recruit 150 workers, and populous cities more than 200 people.

On Nov. 15, the Veterans Affairs Bureau in Henan’s Changge City called for veterans to proactively enroll in the Foxconn Zhengzhou recruitment drive, saying that Foxconn’s safety and security facilities have been renovated and that the factory, restaurant, and dormitory are all disinfected, Chinese financial media Yicai reported on November 17.

The official notice also reminded retired military personnel to “remember their military identity and mission of ‘When there is a war, we will return,’ and ‘Wherever there is a need, there will be the figure of a retired soldier.’”

Since late October, Foxconn Zhengzhou, which produces half the world’s iPhone supply, has been suffering a massive exodus and a severe staff shortage due to prolonged COVID-19 lockdowns.

The measures and subsequent secondary hazards are triggering employees to flee the plant.

On November 22, Foxconn workers in Zhengzhou gathered at the gate wanting to flee the company in mass.

Authorities deployed several hundred police officers to suppress their movements with tear gas and high-pressure water cannons.

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A November 23 Twitter post showed tens of thousands of people rushing out of the Foxconn plant and clashing with police in protective clothing.

Some of the police officers were armed with equipment and beat up the protesters who were standing alone. Some were beaten and bloodied, while others shouted, “Police are beating.”

It is very rare for a local Communist government to help a private enterprise recruit workers, especially a private enterprise from Taiwan.

“The Henan provincial government would be very anxious and worried that Foxconn will run away,” said current affairs commentator Yang Si, citing that the province has no other big industry and mainly relies on Foxconn.

“If Foxconn runs away, Henan’s economy will nearly collapse,” Yang said.

In 2020, Foxconn Zhengzhou was the largest export trading company in China, with an annual export value of $31.6 billion, accounting for 80 percent of the city’s total exports and 60 percent of Henan Province’s total exports, according to Chinese media.

Foxconn has about 200,000 to 300,000 employees at its Zhengzhou plant, which indirectly provides jobs for millions more people when considering the food, clothing, and transportation of these people. Hence, the significance of Foxconn is considerable to Zhengzhou city of 12 million population, and even Henan Province, Yang said.

On November 11, Reuters reported that Foxconn is expanding its operations in India and that the Foxconn India plant plans to hire 53,000 people within two years, bringing the total number of employees to four times its current level.

This is exactly what Henan’s government is worried about, Yang said.

“Henan’s need for Foxconn is much greater than Foxconn’s need for Henan.”

According to Foxconn Zhengzhou’s recruitment advertisement, employees do not need to have high technical skills, and require only seven days of training, with subsidies provided.

“Foxconn’s R&D and technology department is in Taiwan. If Foxconn relocates to India, it will at most lose some factories and equipment, this will not hurt the bones [of the business],” Yang added.

On November 6, Apple announced that due to the Chinese Communist Party’s (CCP) COVID-19 restrictions, operational capacity at its Zhengzhou assembly plant was dramatically reduced.

Despite a strong demand for the iPhone 14 Pro and iPhone 14 Pro Max models, the company warned that shipments of these phones will be lower than expected and customers should expect to wait longer to receive the new products.

In recent years after the unleashing of the COVID-19 pandemic, more Taiwanese companies have considered dropping doing business in China.

On October 4, the Center for Strategic and International Studies (CSIS), a U.S. think tank, released a report titled “It’s Moving Time.”

According to the report, Taiwanese companies appear to be moving their business out of China “at numbers far higher than in the past.”

The report, written by Scott Kennedy, a China expert with a long-standing interest in China’s economic development and cross-strait trade, surveyed 525 Taiwanese companies in late July and early August, of which more than 60 percent have ongoing operations in China.

According to the investigation, 25.7 percent of those Taiwanese companies said they have already moved some of their production or sourcing operations outside of China, while 33.2 percent said they are considering that option but have not yet done so—this adds up to nearly 60 percent.

In terms of cross-strait relations, 76.3 percent agreed with the statement, “Taiwan needs to reduce its economic dependence on China” and 67 percent said yes to “Taiwan should expand restrictions on high-tech trade and investment with China.”

The reasons for Taiwanese companies leaving China are complex, Kennedy points out, and some of the factors are geopolitical risks: cross-strait and U.S.-China relations have hit a near-historic low this year.

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By Nick R. Hamilton

Nick has a broad background in journalism, business, and technology. He covers news on cryptocurrency, traditional assets, and economic markets.

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