Foxconn Fighting For Millions In Financial Incentives Amid Chinese Government …

27 Mar 2015 | Author: | No comments yet »

Apple Is Reportedly Planning To Bring Its iPhone Trade-In Program To China.

Foxconn Technology Group isn’t satisfied with just making iPhones, and plans to break into the information security market through an upcoming joint venture.Apple chief executive Tim Cook (C-L) visiting the iPhone production line at the newly built Foxconn manufacturing facility at Zhengzhou Technology Park. On Thursday, the Taiwanese manufacturing giant announced it would set up in May a joint venture with Korea’s SK C&C, an IT services provider, to develop information security systems for the Chinese market.

Foxconn and other foreign businesses in China are fighting to save tax breaks and other benefits promised by Chinese cities and provinces, as Beijing ramps up a campaign against big spending by local governments. Bloomberg said Apple will work with Foxconn, the Taiwanese firm that manufactures its mobile devices, to accept older iPhones from customers in exchange for discounts on a newer model. The venture will be based at one of Foxconn’s factories in China, where it has hired over a million workers to assemble electronics for vendors that include Apple, Microsoft and Sony. As WSJ’s Gillian Wong and Lorraine Luk report: The crackdown could lessen the attractiveness of foreign investment in China, which totaled $119.6 billion in 2014. Foxconn will refurbish the older models and sell them to new customers online, via its own e-commerce sites and Alibaba’s Taobao marketplace, according to the report.

While experts say the total benefits at stake are difficult to quantify, Foxconn alone has been negotiating to preserve roughly five billion yuan ($804.6 million) in promised subsidies in a central Chinese city, according to people familiar with the matter. The discussions are holding up a proposed 35 billion yuan Foxconn plant to be based in Zhengzhou that would make high-end phone displays, the people said. Thursday’s deal with SK C&C will also involve the two companies working together on healthcare, finance and improving manufacturing processes, Foxconn said in a statement.

Local governments are now balking at honoring previous tax breaks, the groups say, while local officials are seeking guidance from Beijing on other goodies like promises to sell land at a discount or waive social-insurance payments. That ranking was very different one year before, when Samsung (18.8 percent), Lenovo (13.2 percent) and Huawei (10.2 percent) had outsold Apple (7.4 percent) and Xiaomi (6.5 percent). Business groups have complained that China uses its antimonopoly law to target foreign companies, though China says it has also stepped up enforcement against local companies.

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