Foxconn Suicides = Chinese push against competing firm

Candied goodies at the Matsu Temple in Dajia.

The Foxconn suicides have been in news lately. If you were suspicious that the whole thing was a media construction, the Falun Gong's Epoch Times has the report for you: they argue that it is part of the usual Chinese punishment of businesses that compete with Chinese firms in the same segment, like the attacks on Google.

In 2008, the nightmare for Foxconn began when Gou complained to Beijing authorities about its major local competitor BYD. BYD is headed by Wang Chuanfu, a member of the Standing Committee of the National People's Congress—the most powerful body of the Communist Party.

The tension between Foxconn and BYD started in 2003 when, according to Foxconn, BYD poached more than 400 key employees from Foxconn’s Nokia team. Internal company documents and information flowed to BYD with them. Foxconn also accused BYD of copying its business model.

In 2006, Terry Gou sued BYD for stealing trade secrets. BYD won the suit and countersued Foxconn for bribery and falsifying evidence, resulting in the arrest of some Foxconn employees.

During the same period, BYD captured a significant amount of businesses from Foxconn by undercutting their Taiwanese competitor. In 2008, BYD outperformed Foxconn in revenue and earnings per share. In 2009, Warren Buffett’s Berkshire Hathaway bought 10 percent of BYD for $230 million.

Gou decided to seek help from the central government, which, according to a former high-level Foxconn manager, was Gou’s fatal mistake. “Since then,” the retired manager said, “Terry Gou has had a very hard time surviving there.”

Kao Weipang of VICA said such communications with the central government often cause danger.

“As far as I know, over the years no Taiwanese victim has ever got justice [from higher authorities],” said Kao.

Epoch is not always reliable, but this has, as one of my favorite TV characters once remarked, "just the right ring of desperation." It smells very plausible. Note that Honda in China was also the subject of a strike recently. Epoch also claims that after discussion of the alleged work environment at Foxconn, which was certainly not much different than any other firm in China:

Then suddenly, reports and discussions about Foxconn were banned from Chinese media and major websites. This happened as commentators started looking beyond Foxconn management problems toward underlying issues with the nation’s political, administrative and legal systems.

I haven't much commented on this because I was wondering what the backstory was since it was obvious from the stats that the suicides were not unusual, and the whole thing was a media blitz. Read the whole piece, it offers some other interesting information.

Oh yeah, can't wait to sign ECFA with China! Already I can hear the planes full of Cargo circling to land on our Cargo Cult runways.....
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