Hon Hai Plans Massive China Investments

The world’s largest contract maker of electronics products, including the iPod and PlayStation 2, plans to invest US$1 billion at a new technology industrial park in Huai’an, China, and is looking to further expand to the nation’s interior.

Hon Hai Precision Industry, which makes a range of tech products on behalf of customers such as Nokia, Dell, and Sony, plans to build a series of factories in the Huai’an area and help develop a new science park there, according to a statement on the Huai’an Municipal People’s Government Web site. The company operates under the trade name, Foxconn Technology Group.

“Foxconn Technology Group investments have already lent huge support to the development of the northern Jiangsu area, and we hope it leads to even greater development for Huai’an,” the statement says.

Huai’an is a city on the East coast of China, located in Jiangsu Province, which is also home to Nanjing and Suzhou, major investment destinations for Taiwanese companies such as Hon Hai.

Hon Hai officials have remained tight-lipped about the investment plan, but one representative said that the Taiwan government has only approved US$66 million in investment to Huai’an so far. Taiwanese companies face intense scrutiny over their investments to China. Beijing has long vowed to attack the island if it declares independence, and maintains an arsenal of hundreds of missiles aimed at Taiwan from its southern provinces. The two split in 1949 amid civil war.

The company is also looking into investments in China’s vast interior, according to a news release from the Wuhan Municipal Government on Tuesday.

Hon Hai executives visited the city of Wuhan, the capital of Hubei province and the most populous city in central China, on Tuesday, the release says. The chairman of the company, Terry Gou, met with Yu Zhengsheng, a major political figure in Hubei and a member of the Communist Party of China’s central committee.

Hon Hai has already invested more than $800 million in China.

Beijing has worked hard to entice companies to build factories further inland in recent years. Up to now, most of the development in China has been focused on the coastal region. Complaints about the uneven development of the country have been on the rise, including mass protests in some areas. Politicians hope that by encouraging companies to invest further inland, development in the nation will even out.

Intel was one of the first major technology companies to invest in China’s hinterland. A few years ago, the chip maker announced a plan to spend $200 million on a chip assembly factory in the southwestern Chinese city of Chengdu. Analysts believe companies gain tax breaks and other incentives for building plants further inland.

The Taiwan government, conversely, has tried to slow investment to China, asking its companies to focus elsewhere in Asia, mainly in countries such as Vietnam, Thailand and India. Taiwanese companies prefer to invest in China because the people share a similar language and culture with Taiwan. China remains the leading destination for Taiwanese investment.

-Dan Nystedt, IDG News Service (Taipei Bureau)

Related Links:

• Hon Hai China Investment Tops $1B

• Apple Looks Into iPod China Sweatshop Report

• Apple Finds Few Violations at Chinese iPod Factory

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