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Cablegate: Ipod City - Consular Outreach to Foxconn in Shenzhen.

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UNCLAS SECTION 01 OF 02 GUANGZHOU 030894

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E.O. 12958: N/A
TAGS: CVIS ECON ETRD CH
SUBJECT: IPod City - Consular Outreach to Foxconn in Shenzhen.

REF: A) GUANGZHOU 30782 B) GUANGZHOU 031368 C) GUANGZHOU 018161

THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED. IT SHOULD NOT BE
DISSEMINATED OUTSIDE OF U.S. GOVERNMENT CHANNELS OR IN ANY PUBLIC
FORUM WITHOUT THE WRITTEN CONCURRENCE OF THE ORIGINATOR. IT SHOULD
NOT BE POSTED ON THE INTERNET.

1. (SBU) SUMMARY: Conoffs met with Foxconn executives August 25 to
discuss ways in which we could work together to facilitate issuance
of non-immigrant visas to the company's employees, the majority of
whom - along with Foxconn's products - do not appear to be a
Technology Alert List (TAL) concern. Foxconn is still sensitive to
prior allegations in the British press that it is a sweat shop and
would only allow Conoffs to visit a high-tech, very automated
assembly line for LCD screens. The company, which is the largest
contract manufacturer in the world with projected revenues for 2006
totaling USD 45 Billion, produces the iconic IPod as well as
everything from LCD flat panel monitors to auto parts for Toyota.
This is the second of three cables about the consular outreach trip
to Shenzhen. END SUMMARY

Purpose - Corporate Outreach and Officer Education
--------------------------------------------- -----

2. (U) This visit was part of an outreach trip organized by entry
level officers (ELOs) in consular positions to better understand the
South China business environment, major corporations' operations in
the region, and corporate needs for travel to the United States.
Companies selected - Wal-Mart Global Procurement (ref A), Foxconn,
and Shenzhen Mindray - provided officers with a perspective on
industries in the area, including those engaged in retail
procurement, electronics manufacturing, and medical devices.
Additionally, the three companies have a large and growing number of
visa applicants in Guangzhou. Foxconn is a Taiwan company with a
fairly transparent corporate structure. It enjoys a very favorable
relationship with the Chinese government because of the large number
of jobs it has created and the tax revenue generated.

Foxconn - Factory or City, Hard to Say
--------------------------------------

3. (U) The sheer size of Foxconn's Longhua Campus is staggering. The
company is currently the largest contract manufacturer in the world
and the largest exporter in China. The 10-year old Longhua
manufacturing campus in Shenzhen covers 850 acres, has 68 buildings
with 15 additional buildings currently under construction, and
supports an employee base of over 240,000 at this location alone.
In addition to manufacturing facilities, the campus has dormitories
for single factory workers and first-year engineers, a hospital,
numerous dining halls, banks, small shops, and recreational
facilities.

4. (U) Conoffs and LES met with Vice President of Human Resources
Dr. Jacob Chen and Vice President and General Factory Director
Anderson Ho who asked a number of questions about visa requirements.
Responding to Conoffs' concerns about the lengthy stays of many
Foxconn employees in the United States, Dr. Chen said that employees
often needed to stay three-to-six months to create new product
designs pre-production and to perform support staff training
post-production. He further stated he would like to work with the
Consulate to standardize documents the company HR staff could
provide the company's applicants to assure Conoffs of employment
claims and travel purposes.

5. (SBU) Still sensitive to claims made in mid-June in the British
newspaper The Mail accusing Foxconn of running a sweatshop at its
Longhua campus, Dr. Chen declined to show Conoffs the company's
signature IPOD assembly line, opting instead to show them Foxconn's
newest factory, a vast collection of clean rooms and robotics
building LCD screens for use in everything from mobile phones to
computer monitors. He proudly detailed Foxconn's plans to enter the
LCD television manufacturing sector next year and commented that
many of the buildings now under construction in Longhua were for
that purpose. Conoffs suspect that he wanted to display a high-tech
factory - staffed completely by college-educated engineers in clean
suits working with robotic assembly lines - to avoid questions about
labor practices. Dr. Chen mentioned that Foxconn still imports most
of its high-tech manufacturing equipment from Japan and the United
States.

6. (SBU) Conoffs also had a chance to see Longhua's testing center,
a modern, high-tech facility that tests all products built in the
Longhua campus's factories to ensure that products do not interfere

GUANGZHOU 00030894 002 OF 002


with other devices or exceed noise requirements. Conoffs also were
shown products, both boxed and unboxed, going through simulated and
real tests to determine tolerance to being dropped, knocked over,
and crushed. Dr. Chen offered Conoffs a chance to see Foxconn's
worker dormitories but a tight schedule did not permit the
inspection. Commenting on housing conditions, Dr. Chen said workers
lived four-to-six to a room and all rooms were air conditioned and
had a bathroom.

7. (SBU) Dr. Chen said that Foxconn only hired from the top 30
universities in China. Starting salaries for engineers with
bachelor-degrees is RMB 2500-3000 (USD 312-375) per month, plus
housing and medical benefits. Factory workers, whose average length
of stay with the company is three years, are required to have a high
school diploma and come primarily from the interior of China. To
help retain its employees, Foxconn has training programs that can
even lead to graduate and doctorate degrees from the prestigious
Tsinghua University.

SIPDIS

Comment
-------

8. (SBU) Foxconn's campus was clean and well organized. The town of
Longhua around the factory campus, which used to be one of the more
economically depressed in Shenzhen, is doing quite well due to the
growing presence of Foxconn and its neighbor Huawei. Foxconn
executives recognize that Longhua lacks space for expansion, so they
are building additional facilities elsewhere in China and in Russia,
India, and Brazil to ensure access to large amounts of low-cost
labor and a pool of well educated engineering talent.

9. (SBU) Due to the technical nature of the company, Conoffs have in
the past considered submitting visa Mantis SAOs for Foxconn
employees. However, Foxconn is not generally a TAL concern. It is
primarily involved in contract manufacturing of consumer
electronics; most of its products are designed by other firms. There
seemed to be very few items which could be of military dual-use
concern.

GOLDBERG

© Scoop Media

 
 
 
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