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MacRumors
Jan 5, 2012, 03:19 PM
http://images.macrumors.com/im/macrumorsthreadlogo.gif (http://www.macrumors.com/2012/01/05/foxconn-profit-margin-remains-tight-as-apple-flourishes/)


This chart, put together by Bloomberg (http://www.bloomberg.com/news/2012-01-04/apple-profit-margins-rise-at-foxconn-s-expense.html), shows the slim profit margins that Foxconn deals with to build millions of pieces of consumer electronics for clients like Apple -- which has seen its margins grow dramatically in recent years.

http://images.macrumors.com/article-new/2012/01/foxconnmargin.jpg


At the time of the iPhone launch in 2007, Apple's profit margins were at 15.4 percent, while Foxconn's was at 2.7. In the most recent quarter, Apple reported 30.8 percent margins -- double what it was 4 years ago -- with Foxconn at a mere 1.5 percent.

Foxconn has continued to grow with the tremendously successful launches of new iPhones and the iPad. The company has sacrificed margin growth so it can get volume and scale, something very important to Apple which puts extraordinary pressure on its suppliers for low prices.

While Foxconn's margins are extremely small in comparison to Apple, they do exceed those of a number of categories (http://biz.yahoo.com/p/sum_qpmd.html), including grocery stores and the global shipping industry.

Article Link: Foxconn Profit Margin Remains Tight As Apple Flourishes (http://www.macrumors.com/2012/01/05/foxconn-profit-margin-remains-tight-as-apple-flourishes/)



ssimpson205
Jan 5, 2012, 03:43 PM
#OccupyCupertino

*LTD*
Jan 5, 2012, 03:45 PM
While Foxconn's margins are extremely small in comparison to Apple, they do exceed those of a number of categories (http://biz.yahoo.com/p/sum_qpmd.html), including grocery stores and the global shipping industry.

So in other words, it's comparatively decent, given the business they're in.

DrMotownMac
Jan 5, 2012, 04:02 PM
I don't get the problem here. Who cares if Foxconn has a narrower profit margin than Apple? If they don't like it, they can either figure out ways to cut costs or raise revenue, like Apple does. For example, they can try charging Apple more money for the parts, but my guess is that Apple will look to competitors as an alternative. Or, they can try to reduce staff or sell off equipment, but then they might not be able to keep up with demand.

This is called life, and as everyone's father once told them, it's not always fair. But it seems to me that the executives at Foxconn are doing pretty well, otherwise they wouldn't remain at Foxconn and Foxconn wouldn't remain in business. If there were no Apple, they probably WOULD go out of business, so they should be happy they have Apple's business and call it a day. For them to try to raise prices with Apple would be stupid and suicidal.

As a physician, I get paid by insurance companies who have much higher profit margins than I do. But if I try to raise my prices, then Blue Cross Blue Shield would simply terminate my contract and I'd be out of business. So, what do I do? I shut-up and act happy that I have a fulfilling job I enjoy which makes me a comfortable living (at least until single-payer medicine is instituted, at which time I'll probably go into the computer business or something else, because I'll no longer to be able to operate my small medical practice).

Bottom line: This shouldn't even be a story. Foxconn is lucky to be in business and should be thankful Apple is doing as well as it is.

cvaldes
Jan 5, 2012, 04:02 PM
Guess who convinced Steve to get Apple to dump its factories and outsource manufacturing?

Tim Cook.

walnuts
Jan 5, 2012, 04:06 PM
Does the Apple profit margin take R&D into account? Though I'm sure Foxconn takes some time to optimize its processes and build its plants, there is likely comparatively less R&D at Foxconn.

cvaldes
Jan 5, 2012, 04:08 PM
Absolutely. R&D is a line item expense. It is deducted from gross margin. Net profit accounts for R&D, SG&A, taxes, etc.

But don't just trust me, go look at Apple's SEC filings. It's there for anyone to view.

cambox
Jan 5, 2012, 04:16 PM
Not sure how many employees Foxcon have on the Apple side of things but theres 80,000 in one of their plants alone. That's thousands of jobs at least Apple keep away from American labour. Is this called being morally corrupt? Business is no business if your consumers are destitue and jobless. Isn't it time Apple started to bring manufacturing home?

jontech
Jan 5, 2012, 04:49 PM
Foxconn doesn't just make Apple products, so how is Apple to blame for another companies slim margins?

*LTD*
Jan 5, 2012, 04:56 PM
Foxconn's problem (if they view it as a problem at all.)

They agreed to take on Apple as a customer. They saw the same terms Apple did.

TMar
Jan 5, 2012, 05:11 PM
Foxconn doesn't just make Apple products, so how is Apple to blame for another companies slim margins?

Generally in the PC market Foxxconn components are considered entry/sub-par...

wikus
Jan 5, 2012, 05:15 PM
Foxconn should give apple a taste of the apple tax.

Then they won't have much to worry about and apple's monopoly will diminish. :)

SKTHEPREZ
Jan 5, 2012, 06:04 PM
I don't know how to explain, but profit is good at least? :apple:

samcraig
Jan 5, 2012, 06:10 PM
I'll only comment that exploitation is exploitation. That's in response to those that say Foxconn should smile and be happy for what they have and all the people they employ.

I am not stating they ARE being exploited. Just pointing out that no one knows what is and isn't going on for certain, what the deals consist of and what leverage was/is being used by any parties involved.

brontophonic
Jan 5, 2012, 06:25 PM
Not sure how many employees Foxcon have on the Apple side of things but theres 80,000 in one of their plants alone. That's thousands of jobs at least Apple keep away from American labour. Is this called being morally corrupt? Business is no business if your consumers are destitue and jobless. Isn't it time Apple started to bring manufacturing home?

I would remind you that Apple products are themselves valuable tools in millions of American companies that provide jobs, and making them more expensive will translate into lower profits and fewer jobs in those companies.

Moreover, Americans aren't the only ones in the world who need jobs. If our foreign customers are all "destitute and jobless", who will we sell our products to?

*LTD*
Jan 5, 2012, 06:56 PM
Foxconn should give apple a taste of the apple tax.

Then they won't have much to worry about and apple's monopoly will diminish. :)

It doesn't make any sense for Foxconn to make their relationship with a major client difficult. Foxconn and Apple saw each others' terms. Foxconn and Apple agreed to those terms. Foxconn has a contractual obligation to Apple. I'm not sure where, in this scenario, giving a partner a "taste of their own medicine" (provided there is actually any wrongdoing in the first place) would actually be rational. :confused:

----------

I'll only comment that exploitation is exploitation. That's in response to those that say Foxconn should smile and be happy for what they have and all the people they employ.

I am not stating they ARE being exploited. Just pointing out that no one knows what is and isn't going on for certain, what the deals consist of and what leverage was/is being used by any parties involved.

The reality of any business relationship is that one party will almost always end up needing the deal more, or needing the other more. If Foxconn feels "exploited" then they can renegotiate with Apple. For now, they have an agreement in place. If Foxconn's workers feel exploited, then it's a matter that is between them and Foxconn, not Apple.

jontech
Jan 5, 2012, 07:16 PM
Generally in the PC market Foxxconn components are considered entry/sub-par...

I wouldn't say subpar. They don't make ASUS or Gigabtye type boards but they make many components for those boards as well as their own.

firewood
Jan 5, 2012, 07:18 PM
Foxconn should give apple a taste of the apple tax.

This "tax" is based purely on supply and demand. Nobody just "gives" tastes.

Apple can keep their prices and thus their profits high because a huge portion of their customer base has zero interest in buying a Dell or a Nokia thingy, even if it's 10%+ cheaper than Apple's stuff. The demand still strongly exists even at the higher price point.

However if Foxconn tried raising their prices more than just a bit, a whole bunch of other manufacturing companies would gladly jump in with a price in between, and many of Foxconn's customers would jump ship faster than a blur. The taste would be of a poisoned fruit Foxconn would end up eating themselves.

samcraig
Jan 5, 2012, 07:25 PM
The reality of any business relationship is that one party will almost always end up needing the deal more, or needing the other more. If Foxconn feels "exploited" then they can renegotiate with Apple. For now, they have an agreement in place. If Foxconn's workers feel exploited, then it's a matter that is between them and Foxconn, not Apple.

I don't disagree per se. However - they might not actually be able to renegotiate or their hands might have been tied in the first place IF they wanted to sustain their business.

Further - it DOES say something about Apple if (and I say IF) Foxconn workers are exploited. It's not JUST a matter between the employees and Foxconn.

You can't deny that the press just loves to run with stories when someone at Foxconn gets injured, commits suicide, etc. And whether or not it's "fair" to Apple is irrelevant. They get the bad press.

*LTD*
Jan 5, 2012, 07:32 PM
You can't deny that the press just loves to run with stories when someone at Foxconn gets injured, commits suicide, etc. And whether or not it's "fair" to Apple is irrelevant. They get the bad press.

This is certainly true. But it doesn't seem to filter down to consumers to the effect that they notice or care. Which is perhaps unfortunate, but not at all surprising.

samcraig
Jan 5, 2012, 07:38 PM
This is certainly true. But it doesn't seem to filter down to consumers to the effect that they notice or care. Which is perhaps unfortunate, but not at all surprising.

Unknown. You can say that Apple doesn't suffer from lack of sales. But you have no idea how many people are refusing to do business with Apple because of it.

Apple's doing just fine regardless - so it's not like they "need" the business of those that refuse them. But to say that consumers don't care or notice is just an assumption.

But I agree that it's unsurprising and unfortunate.

SandynJosh
Jan 5, 2012, 09:24 PM
While Foxconn's margins are thin, at least they are making money. That's something that many in the electronics industry can't say.

What is amazing, and everyone on this thread hasn't mentioned, is that Apple has been able to make extremely healthy profits on a large scale. Usually these kinds of profits are only possible in a tiny niche industry that is too small to attract wolves ready to make the same products for much smaller profits.

Apple protects their turf using a lot of tools, the patent suits being only one such. Rather then blast Apple for making healthy profits, one should laude them for doing what most other companies cannot figure out how to do: be innovative with their products, be innovative in setting up cost efficient production strategies, be innovative in marketing to their customers, and being innovative in hundreds (if not thousands) of unique ways.

Remember, Apple shouldn't have been successful with their stores, everyone predicted a huge failure. Remember how Steve Ballmer laughed at the idea Apple could be effective in the phone business. Remember how everyone's tablet up to the iPad flopped terribly. Apple is seeking to break ground in many areas where other's make very thin profits, including the TV industry.

It's almost like there's been a business tenet in place that if you are going to do large scale things in certain business sectors then you will only make razor thin profits. Apple is proving that idea wrong, and in doing so, may actually shock the business industry into rethinking some basic business tenets so that once again companies may start making money like it was the 50s or 60s again.

One more thing: do a search for an article in the New York Times titled Even a Giant Can Learn to Run.

It's about the turn-around at I.B.M. with the new C.E.O., Samuel J. Palmisano, in 2002. That's when the company shed the P.C. business along with other businesses that were not highly profitable. It's been so profitable that Warren E. Buffett, who typically shuns technology stocks, announced he had accumulated $10 billion of I.B.M. shares, a stake of more than 5 percent.

What I found most interesting about Mr. Palmisano is that he built the change at I.B.M. on four questions:
• “Why would someone spend their money with you — so what is unique about you?”
• “Why would somebody work for you?”
• “Why would society allow you to operate in their defined geography — their country?”
• “And why would somebody invest their money with you?”

It sounds obvious, but that's how change starts. Some companies break mental boundaries, and other can follow. There was a time no olympian could break the four-minute mile, however once one man did, it is now being done at high school meets.

carlgo
Jan 5, 2012, 10:38 PM
Guess who convinced Steve to get Apple to dump its factories and outsource manufacturing?

Tim Cook.

Is this actually true? The subject of Chinese production was pretty much avoided in the autobiography. Surprising as that is such a big part of the Apple story.

Jobs did lobby Pres Obama when he visited the area for some sort of tax holiday for the profits stashed away in overseas banks.

cvaldes
Jan 5, 2012, 10:52 PM
Is this actually true? The subject of Chinese production was pretty much avoided in the autobiography. Surprising as that is such a big part of the Apple story.
http://money.cnn.com/2008/11/09/technology/cook_apple.fortune/index.htm

By the way, there was no autobiography. Steve didn't write one. He authorized a biography written by someone else.

greg555
Jan 5, 2012, 11:38 PM
http://money.cnn.com/2008/11/09/technology/cook_apple.fortune/index.htm

By the way, there was no autobiography. Steve didn't write one. He authorized a biography written by someone else.

Great article. Thanks.

Greg

paul4339
Jan 5, 2012, 11:46 PM
Didn't Foxconn just open a Brazillian plant for Apple? So obviously, they are still trying to get more business from Apple...BTW, widening Foxconn's profit only makes Foxconn's shareholders more rich (like billionaire tycoon Foxconn chairman Terry Gou), not the workers (unless they offer their 800,000 workers some kind of major profit sharing plan).

So it's either money in Terry's back-pocket or Apple's coffers. Basically it's up to each company to negotiate the best for itself.

Widening Foxconn's margins does not guarantee they will give a penny more to the workers, they just keep it for their shareholders.


.

Cybbe
Jan 6, 2012, 03:17 AM
It's highly entertaining to see the fanboy brigade out in numbers, praising Apple as this god-like entity with a right to earn super-profits, asserting its suppliers should join in on the religious praise and be glad they are in business at all.

cambox
Jan 6, 2012, 03:43 AM
Foxconn doesn't just make Apple products, so how is Apple to blame for another companies slim margins?

If you read the post I say im not sure how many are working for Apple at Foxconn. I'm beginning to see why Apple dont bring manufacturing back!

whooleytoo
Jan 6, 2012, 05:47 AM
This is called life, and as everyone's father once told them, it's not always fair.

Hey, my Dad never told me this! That's so not fair... ;)

Guess who convinced Steve to get Apple to dump its factories and outsource manufacturing?

Tim Cook.

That doesn't surprise me- as one of the crowd who stood in a large assembly room with him as he assured us our jobs were safe and to continue working diligently (and two weeks later the vast majority of us were made redundant).

But I don't bear a grudge. Not me. No, sir. Grrrrrr. ;)

I can't really complain. Many here in Cork had jobs at the expense of higher-paid employees in the US; so we can't really complain when a lower-again cost alternative wins over us.

Moral of the story: unless you're a decision maker in a company, you're expendable. You need to make yourself non-expendable either as an individual by acquiring unique essential skills, or as a group by forming a indispensable collective.

As a company, you need a strategy too. Perhaps at some point in the future Foxconn will be so essential to Apple's plans that it would just be prohibitively expensive and disruptive to move to another vendor; and at that point Foxconn should be able to negotiate better terms. Somehow though, I think Apple are well prepared for that.

*LTD*
Jan 6, 2012, 08:27 AM
If you read the post I say im not sure how many are working for Apple at Foxconn. I'm beginning to see why Apple dont bring manufacturing back!

Apple doesn't bring manufacturing back to the US because it doesn't make any financial sense to do so. And yes, you're correct, production capacity/ability to allocate more workers also figures into the equation.

----------

It's highly entertaining to see the fanboy brigade out in numbers, praising Apple as this god-like entity with a right to earn super-profits, asserting its suppliers should join in on the religious praise and be glad they are in business at all.

What exactly should we all be bellyaching about? What is there to complain or feel outrage over?

Everyone has the opportunity along the line to earn a profit. Apple has agreements with their suppliers. There are no "dirty secrets" in these agreements that were kept from one party by another. Foxconn has agreements with all their customers.

What's the big issue here?

samcraig
Jan 6, 2012, 09:00 AM
What's the big issue here?

There's no real issue. What people are likely responding to is the David and Goliath representation. And Apple is now Goliath. Yes - deals are deals. But I think people look at how amazing Apple is doing and seeing little how that trickles down to their suppliers who you'd think would be doing pretty well. But the evil truth is - Apple is having record breaking profits BECAUSE their supply chain costs them what it does so they can turn around and make large profits.

And seeing how this country (the US) is spending a lot of time debating the 99% vs the 1% and the economy - it's only natural to identify with the underpaid and probably overworked factory employees who make little compared to Apple and Foxconn's executive team.

JHankwitz
Jan 6, 2012, 09:55 AM
Isn't it time Apple started to bring manufacturing home?

They certainly would do bring manufacturing to the States if you would be willing to pay the price. You, the consumer decide what products sell.

I work with a company that purchases components from China. They get quotes from USA companies on a regular basis. China companies bid at 10-15% of what the USA companies bid. Using the US components would cause the final product sale price to jump by 400%. Would you buy an iPad if Apple charged 4 times its current price? I don't think so. They'd be out of business in no time.

ericrwalker
Jan 6, 2012, 10:01 AM
LTD, I think this is the first time I have ever agreed with you on this forum.

Foxconn is just the contractor to build these APPLE PRODUCTS, they generally go to the lowest bidder. If Foxconn wants higher profits, bid higher on the next contract. They will risk losing the contract to another company. As long as they are profitting, they should count their blessings.

Everyone wants Foxconn to make more money, but I bet most aren't willing to pay more for their products to give them more money.

It doesn't make any sense for Foxconn to make their relationship with a major client difficult. Foxconn and Apple saw each others' terms. Foxconn and Apple agreed to those terms. Foxconn has a contractual obligation to Apple. I'm not sure where, in this scenario, giving a partner a "taste of their own medicine" (provided there is actually any wrongdoing in the first place) would actually be rational. :confused:

----------



The reality of any business relationship is that one party will almost always end up needing the deal more, or needing the other more. If Foxconn feels "exploited" then they can renegotiate with Apple. For now, they have an agreement in place. If Foxconn's workers feel exploited, then it's a matter that is between them and Foxconn, not Apple.

jasonv1
Jan 6, 2012, 12:47 PM
Apple wants low costs.
Foxconn wants the business, and can live with a small margin.

Of course Foxconn is setup to build for Apple at this point, so even if the margin goes to zero (or negative) for awhile they will shut up and keep assembling products.

This is pretty much what every Wal Mart supplier goes through. In addition, you better meet their tech needs too (use RFID tags, etc).

nylonsteel
Jan 7, 2012, 12:39 PM
re original article

i have to give foxconn kudos for stepping up to the plate

cranking out aapl products at tight margins

their hard work will probably pay off in the long run

GoodWatch
Jan 7, 2012, 05:28 PM
I don't get the problem here.

Bottom line: This shouldn't even be a story. Foxconn is lucky to be in business and should be thankful Apple is doing as well as it is.

So the multiple suicides at Foxconn don't bother you either? Just part of usual business? They should be thankful I guess. Yes, life can be tough.

Glideslope
Jan 7, 2012, 06:34 PM
Not sure how many employees Foxcon have on the Apple side of things but theres 80,000 in one of their plants alone. That's thousands of jobs at least Apple keep away from American labour. Is this called being morally corrupt? Business is no business if your consumers are destitue and jobless. Isn't it time Apple started to bring manufacturing home?

Not until Americans will work for $7.25 a day.

Americans will never work for the wages the FoxCon employees receive. FoxCon actually pays better then the vast majority of Chinese Manufacturers.

Besides, the world is supposed to end Dec 21st 2012. So, can we PLEASE at least try to get through the next 1st Q? :apple:

----------

So the multiple suicides at Foxconn don't bother you either? Just part of usual business? They should be thankful I guess. Yes, life can be tough.

Doesn't bother me at all.
Every culture has its share of Mental Health Problems. :apple:

ericrwalker
Jan 7, 2012, 07:14 PM
Are they committing suicide because they work at Foxconn? Is that Apple's fault? So if Apple stopped using Foxconn and produced in the USA, then I suppose the suicide rate would drop right off? The fact of the mater is, nobody is forcing these suicidal people to work for Foxconn, I am sure the conditions aren't great there, but apparently people still work there. Must be the best opportunity available for some people.

So the multiple suicides at Foxconn don't bother you either? Just part of usual business? They should be thankful I guess. Yes, life can be tough.

MattOfStLouis
Jan 7, 2012, 09:09 PM
Are they committing suicide because they work at Foxconn? Is that Apple's fault? So if Apple stopped using Foxconn and produced in the USA, then I suppose the suicide rate would drop right off? The fact of the mater is, nobody is forcing these suicidal people to work for Foxconn, I am sure the conditions aren't great there, but apparently people still work there. Must be the best opportunity available for some people.

Pretty much this, with the caveat that Foxconn's working conditions are probably better than many other factories in the area. Foxconn is subject to international scrutiny because of its size and customers. If the Ultra Steel Molding (Shenzhen) Co. Ltd has unsafe working conditions, few notice and there's little pressure on them to change.

Foxconn employs hundreds of thousands of people. This is a massive company. Just based on size of their workforce, there will be several suicides each year. If Foxconn employee's suicide rate was significantly above the Chinese national average, we should be concerned. But it's not.

thewitt
Jan 7, 2012, 09:53 PM
Profit margins for any Chinese owned companies are not to be believed. Anything they publish will be tightly controlled by the authorities.

Apple forces all of their suppliers to comply with extremely high standards of conduct and quality. Foxconn is no exception. Apple auditors are on site and pay attention to not only quality, but workforce treatment in all aspects; work hours and methods, living quarters, cafeteria, health care, quality of life, etc..

No Apple products are being manufactured by exploited workers in sweatshops anywhere in the world.

ryuok
Jan 8, 2012, 07:38 AM
There is nothing unfair about this. One is a great company with a great vision and great execution. The other is a good company with good management. You can't compare good with great.

ThunderSkunk
Jan 8, 2012, 10:45 PM
MacRumors reader goes inside Foxconn:

http://www.thisamericanlife.org/play_full.php?play=454&podcast=1

carlgo
Jan 8, 2012, 11:19 PM
http://money.cnn.com/2008/11/09/technology/cook_apple.fortune/index.htm

By the way, there was no autobiography. Steve didn't write one. He authorized a biography written by someone else.

Ooops...and I am usually careful about the difference. I even bought and read it. And the link is to the effect that Cook is the one who closed factories and sent the work to China. This to control inventory it says. Why this would be different making something here rather than there is a question. I tend to believe it is because Apple doesn't have to worry about regulations regarding pollution and such, and overseas income escapes taxation here, not inventory.

hh83917
Jan 9, 2012, 12:01 AM
Pretty much this, with the caveat that Foxconn's working conditions are probably better than many other factories in the area. Foxconn is subject to international scrutiny because of its size and customers. If the Ultra Steel Molding (Shenzhen) Co. Ltd has unsafe working conditions, few notice and there's little pressure on them to change.

Foxconn employs hundreds of thousands of people. This is a massive company. Just based on size of their workforce, there will be several suicides each year. If Foxconn employee's suicide rate was significantly above the Chinese national average, we should be concerned. But it's not.

Yes, and that is very true. I've visited several factories in Shenzhen, not electronic ones, but from those pictures, Foxconn's facility, wages, and conditions are some of the best I've seen. To my knowledge, the suicided workers get compensation from insurance companies for injuries/death at work that will cover their families for a long time and was said to be an easy way out to get a large sum of money. It may not happen in other factories because other companies doesn't even have worker's insurance. Critics can say all they want, but unfortunately almost all the crap we purchase in U.S is made this way. Unless, people are will to pay a fortune for the luxury items made in US, Italy, France...etc. where workers are better treated. It's like politics, it's the unavoidable evil in the business world.

Akack
Jan 9, 2012, 12:11 AM
Would have figured Foxconn's profit margin were a little higher.

hh83917
Jan 9, 2012, 01:15 AM
Would have figured Foxconn's profit margin were a little higher.

I believe they were, but that also can mean they have to make more and make them cheap. Foxconn has to answer to it's creditors/stock holders. They, or any company, will not want to reduce they margin and spare it raising their workers' wages. What happened few years ago when China government suddenly raised the minimum wage in the cities (ie. Shenzen), many businesses scrambled to leave the country. Foxconn survived by moving inland in rural areas in order to survive and compete. Entrepreneurs applauded Foxconn's strategy of keeping costs down, but in another point-of-view, that also means they will start to explore low wage labor at that part of China. Which is the same low-wage, maltreatment, ..etc. complaints from the 1st world countries over and over again. And to be fair, what people called sweat shops in the western world is NO sweat shops at all in the standards over there.

q64ceo
Jan 9, 2012, 02:00 AM
I feel very sick.

I do not want to buy items made by exploited workers.

I hate this country

----------

I don't get the problem here. Who cares if Foxconn has a narrower profit margin than Apple? If they don't like it, they can either figure out ways to cut costs or raise revenue, like Apple does. For example, they can try charging Apple more money for the parts, but my guess is that Apple will look to competitors as an alternative. Or, they can try to reduce staff or sell off equipment, but then they might not be able to keep up with demand.

This is called life, and as everyone's father once told them, it's not always fair. But it seems to me that the executives at Foxconn are doing pretty well, otherwise they wouldn't remain at Foxconn and Foxconn wouldn't remain in business. If there were no Apple, they probably WOULD go out of business, so they should be happy they have Apple's business and call it a day. For them to try to raise prices with Apple would be stupid and suicidal.

As a physician, I get paid by insurance companies who have much higher profit margins than I do. But if I try to raise my prices, then Blue Cross Blue Shield would simply terminate my contract and I'd be out of business. So, what do I do? I shut-up and act happy that I have a fulfilling job I enjoy which makes me a comfortable living (at least until single-payer medicine is instituted, at which time I'll probably go into the computer business or something else, because I'll no longer to be able to operate my small medical practice).

Bottom line: This shouldn't even be a story. Foxconn is lucky to be in business and should be thankful Apple is doing as well as it is.

I guess you would have (if you lived in that time frame) preferred cotton picked by American slaves because it was cheaper, too. I mean, those slaves were rather lucky that they got one meal a day, and should be thankful when their slavemaster increased his sales off of his own slaves back.

hh83917
Jan 9, 2012, 03:23 AM
I feel very sick.

I do not want to buy items made by exploited workers.

I hate this country

----------



I guess you would have (if you lived in that time frame) preferred cotton picked by American slaves because it was cheaper, too. I mean, those slaves were rather lucky that they got one meal a day, and should be thankful when their slavemaster increased his sales off of his own slaves back.

Just understand that you are lucky to be born in a country where everything is so readily available, where average salary is extremely high when comparing to the 2nd/3rd world countries. And view what China is going through as a process toward industrialization and high-tech. The communist government over there had opened up to a market economy couple years ago and is already seeing the benefits of it. They are already taking huge strides on improving when you think about other countries like Africa..etc.

And I think the factory owners in China is nicer than the plantation owners back in those day. Slaves don't get paid and weren't even counted as a person, they get raped, and are treated like animals that work 24/7.

Michaelgtrusa
Jan 9, 2012, 03:54 AM
I find this hard to believe.

MattOfStLouis
Jan 10, 2012, 08:22 PM
Profit margins for any Chinese owned companies are not to be believed. Anything they publish will be tightly controlled by the authorities.

I think the first sentence is generally true but maybe not for the reason given in the second sentence. Tax evasion is very common among Chinese companies. (A good explanation if anyone is interested. (http://www.chinalawblog.com/2012/01/buying_a_chinese_company_the_numbers_are_different.html)) I think it's more likely that Chinese owned companies underreport profits for their own reasons.

With respect to the article, I don't think Foxconn's profits are abnormally low. Profit margins vary greatly across different industries and manufacturing margins are typically on the low end. This is really an apple/oranges comparison because Apple & Foxconn are different types of companies.

elus89
Jan 27, 2012, 12:37 PM
It's not that Foxconn's profits are abnormally low (profits are a nebulous business term anyways), it's that Apple's are abnormally high. How many new American or European employees are they hiring in this recession?

Or how about Africans, since the Chinese are apparently so well off?