The industrial complexes (no, not military-industrial complexes!) of mighty manufacturing concerns have had storied places in the annals of economic history: Toyota City in Aichi Prefecture, Wolfsburg in Lower Saxony (Volkswagen), River Rouge in Michigan (Ford). Now, the Taiwanese original equipment manufacturer (OEM) Foxconn is staking its claim to history with its industrial complex in mainland China. The walled city where it's sited called Longhua Science & Technology Park has a given workforce ("population") of 270,000. If you own an Apple iPod or iPhone, a Dell or Hewlett-Packard desktop PC, a Nokia or Motorola cell phone, a Sony PlayStation 2 or a Nintendo Wii video game console, you have a Foxconn-made product under an OEM arrangement. That is, Foxconn manufactures electronics marketed by other firms like those mentioned. Foxconn also markets a well-respected line of computer parts--especially desktop motherboards--under its own name.
The Wall Street Journal recently featured a story on Foxconn in general and its plant in Shenzen, China where it has established a large manufacturing presence. (Hat tip: All Roads Lead to China.) It's a somewhat lengthier feature than usual so I will just post a brief snippet here, though the video clip above summarizes the main points well:
With a work force of some 270,000 -- about as big as the population of Newark, N.J. -- the factory is a bustling testament to the ambition of Hon Hai's founder, Terry Gou. In an era when manufacturing has been defined by outsourcing, no one has done more to shift global electronics production to China. Little noticed by the wider world, Mr. Gou has turned his company into China's biggest exporter and the world's biggest contract manufacturer of electronics.
Hon Hai's revenue has grown more than 50% a year in the past decade to $40.6 billion last year. It is expected to add $14 billion in revenue this year. That is roughly the equivalent of Motorola's adding, within a year, the sales of CBS Corp.
Throughout his company's rise, the 56-year-old native of Taiwan has maintained a low profile. Publicity, he says, risks helping competitors and alienating customers. "I hate that I [have] become famous," Mr. Gou said in a recent three-hour interview at Hon Hai's Taiwan headquarters. It was Mr. Gou's first interview with Western media since 2002, following more than five years of requests by The Wall Street Journal. "We are so big we cannot hide anymore."
Hon Hai, and its massive Shenzhen plant, provides a window into the sometimes-secretive world of manufacturing in China. Confidentiality is a selling point for contract manufacturers, whose customers count on them to shield their products and plans from outsiders. Secrecy has also been a central issue in China's recent tainted-product scandal, with the often-quiet relationship between U.S. companies and their suppliers complicating regulators' hunt for the source of defective goods. Recently, citing ongoing investigations, Mattel Inc. took nearly a week to identify its Chinese provider of toys believed to contain lead paint.
Hon Hai hasn't been involved in such scandals, and analysts and industry insiders say Mr. Gou has combined discretion with a solid record of quality control and competitive pricing to build a booming empire. The $43 billion market capitalization of Hon Hai -- a public company listed in Taiwan, which uses the trade name Foxconn -- is equal to that of its 10 biggest global rivals combined. Mr. Gou and Hon Hai control additional affiliates that report revenue separately. Mr. Gou is currently worth about $10 billion, a Hon Hai spokesman says.