What is the secret behind Foxconn’s success? Guo Taiming, CEO of Foxconn, once summarized the key factors: four talents, three-stream management, second-rate equipment, and first-class customers. This meant targeting major clients like Apple, Nokia, and Samsung, while leveraging China's low-cost and hardworking labor force. However, this model may be reaching its limits, as Chinese workers are no longer willing to endure exploitative working conditions.
In recent years, as Foxconn expanded rapidly, the downsides of its labor-intensive approach became more evident. Incidents such as 12 consecutive employee suicides in 2010 and a cluster of young employees in Shenzhen suffering from leukemia raised serious concerns about the company's strict militarized management and excessive overtime. Additionally, issues like "factory girls" and workplace violence have remained persistent within the factories.
Beyond internal challenges, Foxconn now faces a growing problem: rising labor costs and shortages, especially in coastal regions like Shenzhen. In 2012, the average labor cost per employee in Shenzhen reached $6,653, a 70% increase since 2008. To cope with these rising expenses, Foxconn has gradually shifted production to inland cities such as Chongqing, Chengdu, Zhengzhou, and Guiyang.
Despite these efforts, the labor shortage remains a critical issue. Younger generations are increasingly reluctant to take on monotonous, low-paying assembly line jobs, making it difficult for Foxconn to attract enough workers. As a result, the old development model can no longer sustain growth, and the company must explore new strategies to achieve future breakthroughs.
One solution is to boost automation by replacing human labor with robots. In 2011, Guo Taiming announced the “Million Robot Project,†aiming to install one million robotic arms by 2014 and complete the first batch of automated factories within five to ten years. However, progress has been slower than expected. Foxconn’s robots still face issues with stability and precision, and complex tasks like polishing iPhone casings are still done manually.
Despite setbacks, Foxconn hasn’t abandoned its push toward automation. The company has invested $40 million to build an advanced machine tool automation plant and a robot R&D center in the U.S., focusing on high-end smartphone and tablet manufacturing. This move supports its long-term automation strategy.
In 2015, Guo Taiming set a goal to reach 30% automation by 2020. Foxconn also plans to sell its self-developed robot, Foxbot, to other manufacturers in China. According to Dai Jiapeng, head of the Automation Technology Development Committee, Foxconn’s Chinese plants already operate 50,000 industrial robots and hundreds of thousands of automated machines. The company aims to add at least 10,000 more robots next year. However, the original “Million Robot Project†remains unfulfilled.
This year, Guo Taiming reiterated his commitment to increasing investment in robotics. Under Dai’s leadership, the focus is on improving assembly line automation, which many manufacturers are eager to adopt. At the same time, Foxconn is closely monitoring advancements in automated electronics manufacturing.
Foxconn has also partnered with Alibaba to invest in Softbank’s robotics subsidiary, helping launch the emotional AI robot “Pepper.†Softbank announced plans to collaborate with both companies to expand the global robotics industry.
Although Foxconn’s journey toward automation has been challenging, its efforts have sparked a broader movement toward “machine substitution†across industries. Experts predict that the industrial robot market will grow significantly in the coming decade, with automation becoming a key goal for many businesses.
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