Foxconn to open 10,000 electronics stores in China
Update: December 1, 2009
It has been almost 1 year since the rumors began circulating about Foxconn expanding their retail electronics stores in China and selling Macs and iPhones direct to the public. The rumors are now closer to fact. China Daily reports that over the next 3 years Foxconn plans to spend 10 billion Taiwan dollars to open up to 10,000 consumer electronics retail stores in China. This is an ambitious goal. A quick back of the napkin calculation shows that to hit the 10,000 store objective within the 3 year timeline, Foxconn will have to open 278 stores per month.
One of Foxconn’s objectives is to leverage their new retail presence to win additional manufacturing contracts from Apple, Dell, HP and others. According to China Daily reporter Lin Ruiming:
Foxconn is exploring ways to shift its business model from an “OEM-centric” model towards an “OEM + distribution” model to create, more opportunities in the Chinese market. With its entry into the Chinese distribution market, Foxconn could make both production and distribution available in China, which would contribute to saving logistics costs and an increase in OEM orders.
The Taiwan-based Foxconn is already China’s largest electronics manufacturer, churning out USD $55.6 billion in goods last year or almost 4% of China’s total exports. The China Daily report suggests that Foxconn’s production number is lowballed and the true output from Foxconn in 2009 may be closer to USD $100 billion.
A Tech Crunch report on the same topic states that “until now they (Foxconn) have not had a significant retail brand or presence.” That may not be quite accurate. Foxconn owns Cybermart, a chain of superstores across China. Cybermart devotes significant shelf-space to consumer electronics.
I was in Shanghai two weeks ago and did some market research (shopping) at Cybermart. I would hope that Foxconn will police their 10,000 “on the drawing board” retail outlets a bit more carefully than they do Cybermart. Just about every other sub-store, in the multiple Cybermart floors devoted to consumer electronics, would sell you a grey-market iPhone. That’s not the problem. The issue is the liberal use of unauthorized Apple signage – “Apple Authorised” (sic) by vendors, and even worse, the blatant display of Shanzhai (counterfeit) iPhones for sale. The photo of the Shanzhai iPhone (above) was taken by yours truly at the Shanghai Cybermart on November 18, 2009.
Update: January 7, 2009 – See important update – rumor denied > HERE
Posted By ChinaTechNews.com Editor On January 5, 2009 @ 12:04 am In Gadgets & Electronics |
Taiwan-based technology manufacturing group Hon Hai Precision will become the general agent for Apple’s (AAPL) products on the Chinese mainland and the company will start its large-scale deployment in the mainland channels market later this year.
According to the reports in Hong Kong and Taiwan media, Hon Hai will initially target the mainland market through its consumer electronics division and its mainland channel supplier subsidiary CyberMart. Having become one of the largest electronics original equipment manufacturers in the world, Hon Hai’s next goal is to become the largest channel supplier on the Chinese mainland. The company hopes to create new business opportunities through combination of manufacturing and channels.
On December 23, 2006, Chinese media reported on Apple’s unfair after-sales service for iPods sold in China, saying that Apple’s Global Repair Policy contradicted the Consumer Law of China. However, Zhao Jiaoli, secretary general of the Shanghai Municipal Consumer Interest Protection Commission, said in March 2007 that Apple was the first international electronics company that has made such great commitments to improving its after-sales services after listening to Chinese consumers’ requests. This latest deal with Hon Hai appears geared towards addressing some of those ongoing consumer concerns.
In 2006, Apple was also the target of international condemnation when Hon Hai’s subsidiary Foxconn, an OEM for Apple’s iPod, was reported in Britain to have been unfairly treating its employees in China. Subsequent investigations found the British tabloid’s report overblown, but it did draw attention to both Apple’s labor relations and business interests in China via Hon Hai.
Apple opened its first self-owned stores in China in 2008 after operating for many years through various agents.
According to media reports from Hong Kong and Taiwan, Hon Hai Precision Industry (which uses the trade name Foxconn) has confirmed that it has obtained general distribution rights for mainland China from Apple Computer. Starting this year the company will begin arranging distribution channels in the mainland market, and in early stages will actively seek business opportunities for Apple through its consumer electronics division as well as its mainland subsidiary channel distributor Cyber Mart.
Since becoming one of the world’s largest outsourced manufacturers for consumer electronics, Hon Hai Precision Industry’s next aim is to become the largest channel distributor of consumer electronics for mainland China.