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In the first half of 2024, Henan, which had long been the top province in foreign trade in the Central Plains, saw its export growth rate fall to -19.1%, ranking third from the bottom in the nation. The fluctuation in Foxconn's production capacity, specifically, a significant year-on-year decline of 49.1% in mobile phone exports, was the main reason.

At the critical moment, Foxconn "came back" again. In July, Foxconn signed a strategic cooperation agreement with Henan, announcing an investment of 1 billion to build a new headquarters and seven major centers in Zhengzhou. The leaders of Henan even stated directly:

"Hope Foxconn will strengthen its confidence in investing in Henan."

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01 The iPhone Arrives

In 2010, Guangdong began the "cage replacement and bird flight" strategy, which means promoting the transfer of labor-intensive industries to inland areas and instead developing high-tech, high-value-added industries.

The Shenzhen municipal government expressed at the two sessions that year that Shenzhen was facing four unsustainable issues of "land, energy, environment, and population," and the promotion of a new round of industrial upgrading was imminent.

At that time, the intensifying labor shortage and rising labor costs were also urging labor-intensive enterprises to rethink their production layout.

From March to June, a series of employee suicide incidents made Foxconn the focus of attention. Shortly after, Foxconn reached a consensus with Shenzhen to retain the research and development center and two high-tech business groups, while other industries moved inland.As soon as the news broke, inland provinces such as Henan, Hebei, Tianjin, and Shandong quickly joined the competition for Foxconn's internal relocation.

For inland cities, attracting Foxconn not only solves employment issues, generates tax revenue, and stimulates foreign trade, but also has the potential to drive the development of local technology industries, and even represents a significant opportunity to change the fate of local industrial economies.

According to a security guard at Foxconn's Shenzhen campus at the time, leaders from various provinces and cities during that period were almost trampling the threshold of Foxconn. Without a referral, even if you were a city-level leader, you couldn't enter the doors of Foxconn's Investment Planning Department. Many places had their top officials leading the charge for investment attraction, but they didn't even get a chance to negotiate.

Henan's attempt to introduce Foxconn began in 2007 when the Zhengzhou municipal government established the "Foxconn Technology Group Zhengzhou Investment Project Coordination and Promotion Leading Group," with the mayor personally serving as the group leader and several deputy city-level officials as deputy leaders. The group members were all heads of various relevant departments, but progress was minimal. In the words of a leader from the Provincial Department of Commerce:

"At that time, Foxconn had little interest in Zhengzhou."

Over the years, although the list of leaders responsible for investment attraction changed, Henan's efforts for Foxconn remained unchanged. When Foxconn itself began to feel the pressure of capacity layout, a turning point came in March 2010.

Foxconn sent an advance team to Zhengzhou for a week of inspection. Although they never mentioned whether they would invest, they asked many questions related to the IT industry and human resources.

A government official who participated in the reception recalled:

"At that time, Foxconn knew what they wanted to do, but we didn't."

After this inspection, Henan's response was swift, immediately elevating the level of engagement, with the secretary and governor taking direct responsibility. After four rounds of negotiations, Henan offered Foxconn enticing preferential policies on land and taxes, including: planning a 10 square kilometer super large production site; exempting corporate tax and value-added tax for the first five years of production, followed by a 50% tax reduction for the next five years; and applying for the establishment of a national-level comprehensive bonded area, etc.On June 20th, Terry Gou finally made a personal visit to Zhengzhou, accompanied by the provincial governor to tour the Central Business District of the new Zhengzhou area. During the dinner that evening, both parties confirmed their intention to cooperate.

Subsequently, the vice governor of Henan in charge of investment promotion led a delegation of dozens of people to Shenzhen to finalize the last details. The deputy director of the Zhengzhou Export Processing Zone Management Committee said, "During that period, we lived in Longhua, and Foxconn's matter was the only work."

On June 30th, the Zhengzhou municipal government and Foxconn signed a preliminary agreement, in which both parties agreed to cooperate in the fields of electronic information industry, optoelectronics industry, and the construction of sales networks.

As soon as Foxconn's first investment in Henan was finalized, in order to catch up with the production schedule, more than 100 staff members from the leadership to the employees of the Zhengzhou Export Processing Zone Management Committee slept on office sofas for a month. 2,000 workers worked around the clock in three shifts to complete the renovation and installation of power equipment for a total of 7 standard factory buildings with an area of 62,500 square meters.

During construction, when they could not buy the special specification cables and air compressors needed for Foxconn's factory, the municipal government officials went to the subway construction projects in the city to "borrow" them. "We can only let other construction sites wait, what else can we do, this is the 'provincial governor's project'."

From the signing of an agreement to the landing of the first part, Zhengzhou only took a month, and Foxconn was pleasantly surprised by the "Zhengzhou speed." Jeff Williams, the then Chief Operating Officer of Apple, also gave a thumbs-up, saying, "Zhengzhou is very focused."

Foxconn also brought surprises to Henan: it will produce the world's most valuable technology product here, which is what many Henan officials and the common people say can truly make the Central Plains region develop. The name of this product is:

iPhone.

02 Zhengzhou "Apple City"In October 2010, under the urgent application of Henan Province, the State Council approved the establishment of the Xinzheng Comprehensive Bonded Zone in Zhengzhou, which is also the first comprehensive bonded zone in the six central provinces. The comprehensive bonded zone is the highest level of openness, with the most preferential policies, the most complete functions, and the most simplified procedures among the types of special customs supervision areas, equivalent to "domestic and outside the customs", which can simplify the import and export process of enterprises to the greatest extent.

The Xinzheng Comprehensive Bonded Zone can almost be said to be established for Foxconn. The headquarters and production base of Foxconn Zhengzhou are located here, covering an area equivalent to four Foxconn Shenzhen Longhua parks. Because of the production of the iPhone, it is also known as "Apple City".

In November 2011, at the sealing ceremony of the Zhengzhou Xinzheng Comprehensive Bonded Zone, Terry Gou said with emotion: "Last year, I came here for the first time in June, and it was still a jujube garden and sandy land. Now, more than 1.3 million square meters of factory buildings have been built. The speed and efficiency of Henan are amazing, and the people of Henan are NO.1!".

After the policy, factory buildings, and personnel were ready, Foxconn took the iPhone as the focus of production and launched the "Golden Craftsman Central Plains" plan, using Zhengzhou, Luoyang, and Shanxi Jincheng in Henan as the three cities, forming the Central Plains Golden Triangle manufacturing base: Zhengzhou is responsible for the assembly and manufacturing of the iPhone product, Luoyang is equipped with a glass panel production base, and Jincheng is the production base for core components, and Taiyuan produces iPhone shells and other materials.

The arrival of Foxconn has brought many changes to Henan. During the peak season of labor demand, from the township, county, city to the province, all levels of government departments in Henan have recruitment task targets for Foxconn, and the staff of the local human resources and social security bureau are the recruitment contacts for Foxconn.The streets were lined with "Foxconn recruitment registration consultation points," and many workers from Henan no longer had to travel far to the Pearl River Delta for work. Instead, they stepped into the modern assembly lines of Zhengzhou Foxconn, quickly making it the world's largest smartphone manufacturing base.

In October 2014, Apple CEO Tim Cook visited the Xinzheng Free Trade Zone, accompanied by Terry Gou, and entered the iPhone 6 assembly workshop. This was his second visit to Zhengzhou, with the purpose of overseeing the production of the iPhone 6.

At that time, Zhengzhou had 94 production lines for the iPhone 6 and iPhone 5s, with a daily output of 500,000 units.

Dressed in a white work uniform and shoe covers, Cook experienced the role of a packer at the workbench and sat next to a female worker, chatting for a full 5 minutes.

The iPhone 6 was the first large-screen phone introduced after Cook took over as Apple's CEO. With global sales of 224 million units, it made him an instant legend and also brought Henan's foreign trade import and export scale to an all-time high.

The process was quite dramatic.

In the first eight months of 2014, Henan's monthly foreign trade import and export was still hovering below 30 billion yuan. With the sales of the iPhone 6, its monthly import and export from September to December consecutively broke through 50 billion, ending the year with a total import and export value of 399.44 billion yuan, setting a historical record.

The photo of Cook and the Foxconn female worker with beaming smiles also spread worldwide, refreshing the image of Zhengzhou.

From 2010 to 2016, the output of Zhengzhou Foxconn's mobile phones achieved an annual growth rate of about 30 million units, with a cumulative production of over 460 million iPhones.

In 2015, one out of every seven mobile phones in the world was produced in Zhengzhou.During the entire "13th Five-Year Plan" period, Foxconn in Zhengzhou has cumulatively driven more than 200 related industrial chain enterprises to settle in the aviation port area where the "Apple City" is located, completing an investment of 300 billion yuan.

Since its establishment in Zhengzhou, the output value of Foxconn Zhengzhou Science and Technology Park has achieved a "twelve-year increase," driving an average annual export value of 30 billion US dollars, with the cumulative import and export value accounting for about 60% of Henan Province's total import and export value and 80% of Zhengzhou's.

As a result, Zhengzhou has become the world's unique "Apple City."

03 Joint Transformation

In recent years, affected by factors such as Sino-US trade friction and the epidemic, Apple has increased its production capacity layout in India and Southeast Asia. As its main contract manufacturing service provider, Foxconn's production capacity adjustment in Mainland China has become the most concerned topic.

Two viewpoints have also become popular: one viewpoint believes that Henan cannot be separated from Foxconn, and a "sneeze" from Foxconn will cause Henan's economy to "catch a cold"; the other viewpoint believes that Foxconn cannot be separated from Henan, as the quality rate of iPhones produced in India is very low, and without the hundreds of thousands of industrial workers in Zhengzhou, the supply of iPhones cannot be guaranteed.

It is undeniable that the dispersion of Apple's supply chain and the transfer of production capacity will indeed have an impact on Foxconn in Zhengzhou, which will affect Henan's electronic information industry, impact foreign trade output value, and drag down the economic development of Henan; Apple and Foxconn also indeed need the production capacity support of Foxconn in Zhengzhou to ensure the continued success of its iPhones.

However, it is an objective fact that neither Foxconn, Henan, nor more partners cannot survive without each other.Henan is not just about Foxconn. In 2023, Foxconn's annual revenue was 476.34 billion yuan, while Henan Province's GDP was 5.9 trillion yuan; there is no so-called dependency on Foxconn. As the world's 27th-ranked Fortune Global 500 company, Hon Hai Group's business is not limited to Henan, and even iPhones are not exclusive to Zhengzhou for production.

Therefore, the true mindset for development should not be about who cannot live without whom, but rather how to better coexist, how to better need each other, cooperate with each other, and, in layman's terms, to move forward together more effectively.

In fact, behind the concept of dependency, Henan and Foxconn have been striving to move closer to each other in both directions.

On one hand, even if Apple aims to shift 25% of iPhone production capacity to India, Foxconn in Zhengzhou will remain the most important production base for iPhones. Taking the iPhone 16, which Apple has high hopes for, as an example, the product is currently in the stock preparation cycle, and Foxconn in Zhengzhou has entered its peak production season. The hourly wage for workers has increased from 21 yuan to 26 yuan, with a bonus of over 8,000 yuan for those who work full-time in the manufacturing workshop for three months. According to Caixin reports, in July alone, 50,000 new employees joined the factory.

On the other hand, Henan and Foxconn are also cooperating on more projects. With the iPhone as an entry point, the Zhengzhou Airport Economic Comprehensive Experiment Zone, known as "Apple City," has seized industrial opportunities and explored a development path for the transformation of the electronic information industry, focusing on new display technologies and intelligent terminals.

Under this path, the Zhengzhou Airport Economic Comprehensive Experiment Zone is upgrading from labor-intensive to technology-intensive, expanding from single mobile phone manufacturing to related industries such as backend modules, semiconductors, and integrated circuits. Henan is building a full industrial ecosystem of "core, screen, network, terminal, and device."

Liu Yangwei, the current chairman of Hon Hai Group, stated, "Digital transformation is an important phase for Hon Hai to transition from 'labor-intensive' to 'brain-intensive.'" Currently, this transformation is also reflected in their investment and development in Zhengzhou and Henan.

Since 2023, Foxconn has been continuously active in Henan, with the unveiling of a new business headquarters in Zhengzhou and the establishment of Henan Foxconn New Energy Vehicle Industry Development Company, among several new companies.Liu Yangwei has visited Henan three times, promising to create a "new Foxconn" in Henan. At the unveiling ceremony of Foxconn's new business headquarters, he said:

"Will continue to deeply cultivate Henan, and accelerate the implementation of transformation and development strategies, including electric vehicles, semiconductors, and other directions."

According to incomplete statistics, since the establishment of the factory, Foxconn has trained more than 3.5 million skilled industrial workers. It not only effectively alleviated the employment difficulties in Henan, a province with a large labor force, but also helped many migrant workers become industrial workers. This is also the huge wealth it left for Zhengzhou and Henan, which cannot be transferred away.

Zhengzhou and Foxconn may just be a microcosm. In the process of China's industrial transformation and upgrading, and the changes in the global supply chain and market, both China and enterprises investing in China will face new changes, and even separation and integration. But no matter what:

What is important is not who cannot do without whom, but how to be better together, to work together to respond to changes, and to continue to create the future.