That factory is handing out "gold bars," that person is "on the run," and those issues are "never-ending"…

International Zheng is a bit of an ordeal; at Foxconn, workers can’t run away; in investment promotion, they’ve been poaching talent.

Could Foxconn shut down? Let’s get to the truth…

It’s undeniable that Foxconn and Zhengzhou are inseparable. The company contributes, and the government provides support. Who would throw out the baby with the bathwater?

This incident is like someone with athlete’s foot—treat the foot, not amputate it. If you amputate, will they still be able to walk?

But understand this principle:

In local investment promotion, there is no era without Foxconn—only Foxconn in this era.

A spur-of-the-moment decision with careful preparation

Originally, Foxconn had been operating in Shenzhen for 20 years. However, due to changes in the domestic and international landscape, Shenzhen began pursuing industrial transformation.

So, when Foxconn decided to relocate inland...

When it comes to Foxconn’s ties with Zhengzhou, the story dates back to 2007.

Back then, Zhengzhou went to great lengths to “land a big fish.” It is said that the government established a high-level task force to keep a close eye on this “live fish” as it surfaced.

Back then, everyone wanted to catch big fish, buy live fish, and raise them well; “building a nest to attract the phoenix” was standard practice.

In particular, Foxconn—a fish that thrived in the vast rivers and streams of Shenzhen—possessed a vitality quite different from that of a fish raised in a small pond. This is easy to understand: when buying fish at the market, live fish cost 10 yuan per pound while dead fish cost 5 yuan per pound; anyone would choose the fresh, live fish.

Coinciding with the wave of industrial relocation to central and western China, many provinces launched a frenzy of investment promotion. A variety of preferential terms were thrown at Foxconn.

In 2010, Foxconn’s founder, Terry Gou, visited Zhengzhou for an inspection tour.

As soon as he stepped off the plane, he discovered that the person greeting him was none other than the then-governor of Henan Province.

By that time, the governor had already been waiting for Terry Gou for an hour in 35-degree heat.

To “swallow” this fish whole, Zhengzhou threw in all sorts of “seasoning”:

No corporate or value-added taxes for the first five years, half the amount for the next five years, and full payment starting from the 11th year.

They even requested bonded zone policies from the General Administration of Customs and personally assisted Foxconn with recruitment.

That year, at the strong invitation of the then-governor of Henan Province, Foxconn decided to build a factory in Zhengzhou.

Looking back now, this was a classic win-win situation.

Before 2010, Henan was primarily an agricultural province. Five years after Foxconn began production, Zhengzhou had already become a national central city, proclaiming the slogan “International Zhengzhou.”

Today, the total scale of Zhengzhou’s electronics and information technology industry has surged from less than 20 billion yuan in 2011 to nearly 500 billion yuan.

Foxconn Zhengzhou is China’s largest export enterprise, accounting for 80% of Zhengzhou’s exports and 60% of Henan’s.

In the first half of 2022, Henan’s total import and export value reached 395.83 billion yuan, ranking first in Central China—achievements that would not have been possible without Foxconn’s contribution.

However, Foxconn and Zhengzhou have mutually benefited each other.

As a province with a large population, Henan has also provided Foxconn with a steady stream of labor. If Foxconn were to establish a similar industrial base in other countries or regions, it would require a workforce of over 100,000.

Without Henan’s cost-effective labor force, Foxconn would operate at a loss.

At the same time, Foxconn has benefited from policies even more favorable than those in coastal cities. Originally, Foxconn’s presence was driven by the “replacing old industries with new ones” industrial policies of coastal cities; their partnership has resulted in a win-win situation. It is not a case of everyone rushing in when there is profit to be made, only to scatter when trouble arises.

Self-Reliance in a Decade-Long Cycle

In the past, Zhengzhou was a “city built by trains.” Today, with Foxconn’s support, it has finally taken flight.

Leveraging Foxconn’s momentum, Zhengzhou has attracted over 300 related enterprises—including ZTE, Skyworth, and OPPO—across the entire industrial chain, forming a world-class electronics and information technology cluster.

From this perspective, Zhengzhou has drawn on the “Shenzhen model.”

While developing mobile phone manufacturing, Shenzhen launched a comprehensive offensive into computers, display panels, integrated circuits, and smart wearable devices, resulting in the emergence of “smart hardware giants” such as CSOT, DJI, and BYD.

However, Zhengzhou remains dependent on Foxconn.

Foxconn and Zhengzhou are now experiencing the growing pains that follow the initial honeymoon period.

As a contract manufacturing giant, Foxconn has undoubtedly contributed to local economic development. However, the company operates primarily at the lower end of the industrial chain, with low gross margins and limited growth potential. If an economic transformation relies solely on Foxconn, the outcome will likely be unfavorable.

Market analysis has shown that the cost of an iPhone 6, which retails for over 10,000 yuan, is 1,227 yuan, while Foxconn earns only 25 yuan per unit. Working so hard in the supply chain yet reaping such meager returns exposes the hidden pain of contract manufacturers.

As China serves as the world’s factory, must we settle for the broth while those upstream feast on the meat?

That’s the reality: when it’s time to drink the broth, we should drink it first. Once we achieve independent R&D, lead the world, and have other countries buying our products, whether the industrial chain shifts or not will naturally cease to matter.

Until we have that capability, we must import technology and build up our strength gradually.

It’s just like quitting a job: if you don’t have the skills to walk out on a whim, calling it “brave” is putting a nice spin on it; calling it “reckless” is more accurate.

The Boom in Investment Attraction

Currently, aside from Foxconn, the automotive industry has become the second-largest contributor to Zhengzhou’s economy.

Back when Tesla was planning to build its second factory in China, numerous cities scrambled to become Musk’s “second mistress.”

Zhengzhou also demonstrated full sincerity in this round of “courtship wars.” In addition to land, loans, and tax incentives, it offered a complete industrial supply chain, a sufficient pool of highly skilled engineers, and the added bonus of an embassy “right next door.”

In the battery materials sector, Henan is home to Duofu Duo, which signed a strategic cooperation agreement with BYD in 2021.

In terms of battery manufacturers, Zhongchuan New Energy has become the third-largest battery supplier after CATL.

Additionally, with automotive suppliers like Xuji Electric—and particularly under the leadership of Yutong, a leading manufacturer of new energy buses—Zhengzhou has long established a comprehensive supply chain spanning raw materials, core components, and complete vehicle assembly.

Conversely, regions that rely on a single pillar enterprise may see one-third of their tax revenue and one-fifth of their GDP coming from that single company.

It is no exaggeration to say that a single industry or a single enterprise dominates.

If a single pillar enterprise were to falter, the entire economy would face paralysis.

More than 100 years ago, the United States gave birth to the world’s first “Motor City”—Detroit. The history of this city’s decline clearly highlights a major hidden danger: an overly narrow industrial structure.

The idea that a single industry determines the fate of a regional economy may not seem entirely reasonable, yet it is a true reflection of the reality in some places. Putting all your eggs in one basket may create temporary glory, but the hidden risks will eventually erupt.

When a single industry or a single company dominates, it creates a “crowding-out effect,” stifling the development of other sectors. Once resources are nearly depleted, or the pillar industry faces difficulties, and there are no alternative industries to rely on, the local economy will experience a “cliff-like” decline.

Therefore, manufacturing requires steady, long-term cultivation and investment; it is an industry that demands persistent, behind-the-scenes dedication, ultimately yielding significant results through accumulated strength. Once a leading advantage is established, it is difficult for latecomers to catch up.

It is worth noting that greater emphasis should be placed on nurturing small and medium-sized enterprises (SMEs). While they may not be large in scale, they can occupy the industry’s commanding heights, securing significant market share and high profits—a fact that should give local governments deep pause when attracting investment.

Conclusion

Regions where SMEs thrive tend to have more vibrant economies, greater development potential, and stronger resilience to risks.

As local governments transition from being “manufacturing hubs” to “manufacturing powerhouses,” they should place greater expectations on SMEs to stand at the forefront of the times, grow in scale and strength, pursue excellence, and become experts in their fields.

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