Hon Hai Cuts Costs With Employee Relocation In China

To broaden sources of income and reduce expenditure, Taiwan-based technology manufacturing group Hon Hai Precision Industry Company is planning to implement large-scale employee relocations to third-tier Chinese mainland cities that can offer preferential tax policies in addition to reducing its operating budget for 2009 by 20%.

According to reports from Taiwan local media, the company, which is the parent company of Foxconn, will reduce the number of its employees in the Shenzhen Longhua plant from 260,000 to 100,000 and will transfer its focus to inland areas such as Wuhan, Hubei province and Jincheng, Shanxi province. Edmung Ding, a spokesperson from Hon Hai, said facing the severe global economic situation, Hon Hai started to re-deploy its human resources around China two years ago.

But Ding points out that the company has no layoff plan in its Longhua plant, contrary to news from published reports. In addition, he emphasizes that the 20% budget reduction will be carried out in accordance with the actual situations of different units and will not be enforced under a unified standard.

Ding says during the recession, Hon Hai will stick to three strategies, including broadening income resources, transferring employees from coastal cities to inland cities to cut costs and actively implementing regional merge strategy around the world to enlarge market share.

Having established 13 plants in such Chinese mainland cities as Shenzhen, Shanxi, Shandong and Wuhan, Hon Hai once had nearly 680,000 employees worldwide.

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