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Two factories, two fates: Foxconn ascends on cheap labor, Sharp hangs on

Jay Alabaster and Michael Kan | Sept. 28, 2012
Shige Watanabe remembers the boom days.

The fortunes and failures of the two companies are felt keenly in the surrounding communities.

In Zhengzhou, Liu Zhanjun sells Chinese flat bread at a shop nestled among a long line of restaurants and convenience stores near a large, apartment-like Foxconn dorm complex that resembles a normal city block. The factory and its surrounding dorms have been a boon to the area, he said.

"Before there was not much here. It was very poor," said Liu, who opened his shop two months ago. "Now I'm making more money than before."

In Yaita, the outlook is darker. Yasumori Ogawa manages the ramen shop just outside the front gates of the Sharp factory. Many Sharp workers are regulars, as are employees at the dozens of supporting businesses that dot the area. The fate of the company is constantly on his mind.

"It's a major concern - the things I hear from customers, what I read in the papers," he said. "We just have to deal with the reality."

Yaita also faces problems that other fading manufacturing havens, like the Detroit auto belt, have had to deal with. Local citizens have protested strongly against government plans to build a new facility to hold toxic industrial waste that has built up over the decades. A sign just outside the town's main station warns children to stay away from drugs and paint thinner in bold lettering: "Fall to temptation and sacrifice the happiness of your family."

And Foxconn has had its growing pains. A spate of worker suicides in 2010 was covered closely in the international press, as were incidents like a riot that broke out last week at a separate complex in northern China. In Zhengzhou, some say that despite the business brought by Foxconn, most in the working class have yet to see any real benefit.

"For us, the area's economic rise hasn't mattered," said a 26-year-old worker named Wang, who also didn't want his full name published. Instead it's been the local government and real estate companies who have reaped the rewards. "The economic success is just a government statistic," he said.

Monthly salaries are higher than in other places, but still so low that workers have no choice but to put in extra hours, he added. Protective measures limiting overtime have had the unwanted side effect of reducing his salary.

"I'm grateful for Americans for paying attention to our working conditions, but this has affected our pay," he said. "My one-month salary can't even buy an iPhone. It's really ironic."

Foxconn is having no trouble drawing new recruits to Zhengzhou, however, and Sharp appears to see little alternative to negotiating with its deep-pocketed Taiwanese rival. The two companies have already completed a deal that saw Foxconn take part ownership in its flagship LCD panel factory in southern Japan, a once unthinkable move for the proud manufacturer.


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