A good number of developing nations promote foreign investment in their countries. This is because such investments serve as a source of employment. However, various countries have become more concerned with issues of mistreatment of their citizens who choose to work with multinational companies.
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Several governments have also remained cautious with regard to practices of multinational companies. Many claims that multinational companies exploit the natural resources, as well give unfair competition to the domestic companies.
In the recent past, majority of developing and developed nations raised contentious questions as to whether policies should be enacted to safeguard countries interest given that most foreign companies tend to practice unfair business.
Although several disadvantages are associated with foreign investment, majority of governments still believe that foreign companies stand a chance to improve the living standard of a country. High living standards arise from reduced level of unemployment.
In order to identify a resourceful foreign company, an in-depth analysis should be conducted regarding the company, as well as the industry where it operates. This paper is set to discuss about Foxconn Company that is based in Taiwan. The government is considering whether Foxconn, which operates in the electronic manufacturing industry, is a suitable multinational company.
The Electronics manufacturing industry
These electronic industry services relate to designing, assessing, manufacturing, distributing, as well as providing services to electronic components. These services also extend to assembling manufactured products for various clients.
Although the electronic manufacturing industry experienced financial difficulties during the recession period, the industry is expected to recover from the economic difficulties in the near future.1 According to the Consumer Electronic Association, the industry revenues are expected to exceed $200 billion by the end of the year 2012.
Estimations made by the New Venture Research projects that the industry revenue will increase from 350 billion in the year 2011 to 478 billion in the year 2014. However, a number of questions have been raised over the expanding issues with regard to companies that have their investments in the electronic manufacturing industry.
Several analysts in the electronic manufacturing have argued that innovation will most likely spur growth in the electronic sector. Innovative products in the market such as tablets and smart phones are expected to witness huge profits from consumers who demand electronics that are more customized.
Consumer Electronics Association anticipates that wireless handsets will as well experience growth in 2012. Among the group of handsets, Smartphone is expected to experience the highest growth. As per the CEA estimates, Smartphone is expected to experience growth of twenty percent hence hitting revenue of $24 billion at the end of the year 2012.
Foxconn is a multinational company that is currently headquartered in Tucheng, Taiwan. The company specializes in manufacturing electronic products. Foxconn has clients in various countries including Europe, Japan and the US. Being the original designer and manufacturer of the electronic components, the company normally distributes finished products to a number of companies situated in different countries worldwide.
The types of products manufactured by Foxconn include I phone, Wii, I Pad and Xbox 360. Amongst the exporters of the Foconn’s products, China emerges as the largest exporter. In China, Foxconn is regarded as the largest employer in the private sector. It has employed both skilled and non-skilled employees in different sections of the company.
Although Foxconn is has reduced the rate of unemployment in China, the Company has faced a number of controversies regarding the working conditions of the employees. The Fair Labour Association was instructed by Apple to inspect the management of Foxconn.
Unlike other public companies, Foxconn trades its shares in a number of stock markets such as the TWSE, NASDAQ, SEHK and OTCB.2 Since its inception in the year 1974, the company has grown rapidly in the electronic manufacturing services industry to achieve global recognition.
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Under the management of Mr. Terry Gou, who is presently the Chairman and President of the company, Foxcxonn revenue was able to hit $59.3 billion in the year 2010.
This was an increase of 4.1% relative to the revenue achieved in the year 2008. The company’s net income stood at $2.2 billion in the year 2010. This amount indicated an increase of 31.1% from the year 2008 value. The company closed the financial year 2010 with 1.2 million employees.
Main customers of Foxcon
The company has clients in various countries as mentioned in the previous sections of the paper. Currently, Foxconn has the largest number of customers in the US. Amongst the customers that are based in the US, include Cisco, Apple Inc, Intel, Dell, Microsoft and Hewlett-Packard. Other clients that are based in the US include Amazon, Motorola Mobility and Vozio.
Many other countries also have the company’s customers. For instance, in Japan the company has several clients including Sony, Toshiba and Nintendo.
Finland has Nokia while South Korea has Samsung Electronics.3 Domestically, Foxcon sells its manufactured electronic components to a Taiwan based company known as Acer Inc. The high number of reputable customers in the world has enabled Foxcon to achieve high revenue for the last twenty years.
There have been a number of concerns over the poor working conditions of the company. The company has been accused on a number of occasions because of its long working hours. In China, the Taiwanese workers have been alleged of discriminating Chinese workers. This has led to poor working relationships at the company level.
Apple, which was called upon by the Fair Labour Association to inspect the Company working conditions, only managed to make an appraisal of the producer of the I Phones and I pods.4 The results found out that Foxconn complies with majority of sections provided by regulations guiding the employees working conditions.
The report only confirmed a few allegations concerning the underprivileged working conditions. However, concerns over the aloof working conditions gained momentum in 2012. Upon careful analysis of the working conditions in various sections of the company, it was found out that much of the media sources regarding the issue were fictional.
The Foxconn Global Code Conduct of Policy
Foxconn recognizes that as a member of the business community at the international level it should abide by the regulations concerning social and environmental responsibilities. Foxconn has an objective of complying with the international standards regarding its management.
Foxconn has realized that to remain successful at the market, it should display high standards of ethics. These ethics include:
The company has resorted to avoiding corruption and embezzlement at any level. The regulation as set out by the company provides that any contract or business deal, which will be associated with corruption and extortion, will be immediately terminated. In addition, a legal action will have to be taken.5 Any form of bribes or improper gratuities that have commercial value will not be accepted.
Disclosure of information
The company will disclose full information regarding its structure, performance and financial position. The disclosure of all information will be disclosed as per the international standards, as well as the established industry practices.
Fair Business and Competition
Regardless of where the company’s subsidiaries will be located, Foxconn will ensure fair business and competition are practiced. This will be done in order to evade unfair competition that leads to failure of similar companies in the industry. The company will ensure information that is fundamental to the customer or employee is safeguarded.
Human Rights and Labour
As per the regulations prepared by the Foxconn board of directors, the company is destined to ensure human rights of workers are treated with dignity.
It will also maintain all levels of human rights as outlined by the international community. This will include the most common standards such as ILO (International Labour Organization) and UDHR (Universal Declaration of Human Rights).6 The standards provisions on labour include:
Free choice of employment
Forced and involuntary prison labour will not be accepted. The management insists that any form of work is to be voluntary, and any employee should have freedom to leave upon valid notice.
Upholding Children rights and young workers protection
The company has resorted not to use child labour in its processes of manufacturing. This implies that any person who has less than 16 years should not work with Foxconn. The company provisions state that any person who has not attained the minimum age of completing compulsory level of education should not be employed.
The company also states that it will not employ an individual who has not attained minimum age of employment as stated by laws and regulations of the country where Foxconn has located its facilities. Workers under the age of 18 years should not be allowed to work in risky sections in the company.
The company has devoted to safeguard the rights of women with regard to health and working conditions. Women are provided with maternity leave and protection against discrimination and other aspects surrounding women.
The regulations provide that it is against the company’s regulations to terminate employment of a woman because of pregnancy. After the maternity leave, the women will be required back to the job at the same or equivalent position.
The company’s regulations provide that the company will comply with minimum wages, legitimate authorized benefits and overtime hours as per the international working standards. The company’s regulations also provide that deduction on an individual’s salary, as a punishment will not be allowed.
Like other organizations in the electronic manufacturing sector, Foxconn also ensures its processes of manufacturing are in line with the environmental regulations.
The company will ensure that it operates within the precincts of the laws concerning recycling and disposal of waste products.7 The company also makes concerted efforts in advising its suppliers to comply with the requirements of the Green Partner Environmental Approval Program.
Given that Foxxon is one of the successful companies in the electronic manufacturing industry, it would be necessary for the government to consider its operations in the country. The company has strong presence at the global market.
Therefore, it would be prudent to choose it given that its high volume of sales will ensure that a good number of citizens get employment opportunities. The company also complies with various rules such as those relating to working conditions and environment.
This would mean that the company would not misuse resources or mistreat the employees of a foreign country. However, due to many accusations regarding discrimination by workers who have their origins in Taiwan, the company will turn out not to be the best multinational company to choose.
Andresen, Alan. Ethics in Social Marketing. Georgetown: Georgetown University Press, 2001.
Armstrong, Gary, Kotler Philip & Brannan Ross. Marketing: An introduction. New Jersey: Prentice Hall, 2009.
Cunningham, Barton. The stress management sourcebook. Los Angeles: Cengage Learning, 2010.
Daft, Richard. Organizational theory and design. Mason: Cengage Learning, 2010.
Ernst, Young. Telecommunications: Transforming our society. New York: Lowell House, 2000.
Mills, Gordon. Retail pricing strategies and market power. Melbourne: Melbourne University Publishing, 2002.
Zimmerman, Richard. Designing customer surveys that work. New York: Quality Progress Press, 1996.
- Richard, Zimmerman. Designing customer surveys that work. New York: Quality Progress Press, 1996. P. 85.
- Alan, Andresen. Ethics in Social Marketing. Georgetown: Georgetown University Press, 2001. P. 96.
- Gordon, Mills. Retail pricing strategies and market power. Melbourne: Melbourne University Publishing, 2002. P. 69.
- Ernst, Young. Telecommunications: Transforming our society. New York: Lowell House, 2000. P. 89.
- Gary, Armstrong, Philip Kotler & Ross Brannan. Marketing: An introduction. New Jersey: Prentice Hall, 2009. P. 84.
- Barton, Cunningham. The stress management sourcebook. Los Angeles: Cengage Learning, 2010. P. 12.
- Richard, Daft. Organizational theory and design. Mason: Cengage Learning, 2010. P. 74.