Archive for ‘productivity’

15/07/2014

Apple Manufacturer Foxconn Goes Green in China’s Guizhou – Businessweek

Guizhou may be one of China’s poorest and least developed provinces. But the flip side is an environment so pristine that President Xi Jinping recently joked its air should be bottled.

Terraced fields of rice paddies are farmed on June 4, 2013, in Jinping county, Guizhou province, China

Now, Taiwan’s Foxconn Technology Group (2317:TT), the world’s largest consumer electronics producer, with more than a million employees working in 30-some industrial parks across China, has set its sights on backward but beautiful Guizhou.

The maker of Apple’s (AAPL) iPad and iPhone and Hewlett-Packard (HPQ) servers is building an industrial park in China’s southwest, seemingly worlds away from its massive and gritty Shenzhen manufacturing base, that aims to be state of the art in energy efficiency and environmental friendliness. Set among karst hills on the outskirts of Guiyang, the provincial capital, the 500-acre park will keep about 70 percent of the natural vegetation undisturbed.

via Apple Manufacturer Foxconn Goes Green in China’s Guizhou – Businessweek.

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20/12/2013

U.S. Electronics Maker Knowles Adapts to a Changed China – Businessweek

If you’ve ever used a smartphone, phone, tablet, laptop, or camera, chances are you’ve used a Knowles Electronics product—and it may have come from Knowles’s factory in Suzhou, China. Based in Itasca, Ill., Knowles makes the tiny receivers and microphones that go into many products of Apple (AAPL), Samsung (005930:KS), BlackBerry (BBRY), and Huawei (002502:CH), among others.

Knowles, a subsidiary of manufacturing conglomerate Dover (DOV), is trying to figure out how to stay in China, which has changed beyond recognition since the company arrived in Suzhou in 1995. “When we came it was obvious that very low-cost labor was an important driver,” says Steven Lu, China managing director of Knowles, which also makes components for hearing aids. “Now wages for some positions have gone up five times and even more.” Rising land and raw materials prices and an appreciating yuan have further upended the business model.

Low-end producers of textiles, sneakers, and toys have been shutting their China operations and relocating to Vietnam, Cambodia, and India. That’s not an option for businesses that pack a lot of engineering knowhow into their products. “In the past 10 to 20 years, China has developed a very complete supply chain for us. The whole ecosystem is right here,” says Lu. “And all the major cell phones are now produced in China. Staying close to them is a major driving force” to stay put.

via U.S. Electronics Maker Knowles Adapts to a Changed China – Businessweek.

29/10/2012

* Under Chinese, a Greek Port Thrives

If only this phenomenon can be replicated across Greece and other Euro PIGS (Portugal, Italy, Greece, Spain) countries …

New York Times: “The captain gazed from his elegant office overlooking this port on the Aegean Sea and smiled as towering cranes plucked container after container from a giant ship while robotic transport vehicles fanned out to transfer the cargo to smaller vessels bound for the Mediterranean.

The cargo volume here is three times the level it was two years ago, before the captain, Fu Cheng Qiu, was put in charge by his employer, Cosco, a global shipping giant owned by the Chinese government.

In a 2010 deal that put 500 million euros ($647 million) into the coffers of Greece’s cash-starved government, Cosco leased half of the port of Piraeus and quickly converted a business that had languished as a Greek state-run enterprise into a hotbed of productivity.

The other half of the port is still run by Greece. And the fact that its business lags behind Cosco’s is emblematic of the entrenched labor rules and relatively high wages — for those lucky enough to still have jobs — that have stifled the country’s economic growth.

“Everyone here knows that you must be hard-working,” said Captain Fu, under whose watch the Chinese-run side of the port has lured new clients, high-volume traffic and bigger ships.

In many ways, the top-to-bottom overhaul that Cosco is imposing on Piraeus is what Greece as a whole must aspire to if it is ever to restore competitiveness to its recession-sapped economy, make a dent in its 24 percent unemployment rate and avoid being dependent on its European neighbors for years to come.

As the Greek government contemplates shedding state-owned assets to help pay down staggering debts, it might be tempting to consider leasing or even selling the rest of the port to China. But if the Cosco example is representative, the trade-offs — mainly a sharp reduction in labor costs and job protection rules — might be ones many Greeks would be loath to accept.

“Unionized labor will push back to keep the protection it has enjoyed,” said Vassilis Antoniades, the chief executive of Boston Consulting Group in Greece. But the Cosco investment, he said, “shows that under private management, Greek companies can be globally competitive.”

Captain Fu, for his part, says Greece has much to learn from companies like his.

“The Chinese want to make money with work,” he said. In his view, too many Europeans have pursued a comfortable, protected existence since the end of World War II. “They wanted a good life, more holidays and less work,” he said. “And they spent money before they had it. Now they have many debts.”

Greece’s troika of foreign lenders — the International Monetary Fund, the European Central Bank and the European Commission — has made similar arguments. Among other things, they are urging Prime Minister Antonis Samaras to end blanket protections for workers and unions and to require Greece itself to operate more like a productive modern business.

Besides the $647 million that put half of the port of Piraeus into Chinese hands, the Greek government is receiving more income from taxes as a result of the port’s pickup in business.

Other than a handful of Chinese managers, moreover, Cosco’s operation is providing around 1,000 jobs to Greek workers — compared with the 800 or so who work the dock that is still under Greek management.

On Cosco’s portion of the port, cargo traffic has more than doubled over the last year, to 1.05 million containers. And while profit margins are still razor thin — $6.47 million last year on sales of $94.2 million — that is mainly because the Chinese company is putting a lot of its money back into the port.

Cosco is spending more than $388 million to modernize its dock to handle up to 3.7 million containers in the next year, which would make it one of the world’s 10 largest ports. Beyond that, workers are also laying the foundations for a second Cosco pier.

The Greek-run side of the port, which endured a series of debilitating worker strikes in the three years before Cosco came to town, has been forced by the Chinese competition to seek its own path to modernization. Still, only about a third of its business consists of cargo handling; the rest is made up of more lucrative passenger traffic.

For years, the container terminal was a profitable operation. But Harilaos N. Psaraftis, a professor of maritime transport at the School of Naval Architecture and Marine Engineering in Athens, said it was inefficient “because worker relations were very cumbersome.”

The salaries of some workers reached $181,000 a year with overtime; Cosco is typically paying less than $23,300. On the Greek side of the port, union rules required that nine people work a gantry crane; Cosco uses a crew of four.

“It was just crazy,” recalled Mr. Psaraftis, who was the chief executive of the port from 1996 to 2002. “I told them, ‘If you keep this up, this thing will be privatized.’ But they didn’t listen.”

Since Cosco arrived, “competition has forced us to take initiatives to find better ways of working,” said Stavros Hatzakos, the general director of Piraeus Port Authority, which runs the Greek operation. “Employees think twice about strikes and labor action now,” he said. And the ones still on the job have taken salary reductions as part of the across-the-board wage cuts of 20 percent or more that the government has placed on public employees.

On the other side of the chain-link fence that separates the Chinese and Greek operations, Captain Fu said he would love for Cosco to run all of Piraeus if the government put it up for sale. That expansion would cement Chinese dominance of one of the most strategic shipping gateways to Southern Europe and the Balkans.

Such a move, though, might meet stiff opposition from Greek unions and officials at the Piraeus Port Authority, who criticize Cosco’s approach to labor.”

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