Taiwan’s tech giants hit by Indian culture shock
A year after Apple supplier Wistron faced an uprising in India, its biggest rival Foxconn Technology Group faces a similar reprimand. This time their key customer is drawn into what should serve as a wake-up call for Taiwanese manufacturers in the South Asian nation.
Concerns over food safety and accommodation standards prompted Apple to take the unusual step of placing the plant near the southern Indian city of Chennai on probation. More than 17,000 people work at the facility and, in mid-December, hundreds of workers contracted food poisoning. More than 150 have been hospitalized.
The outbreak prompted workers to strike, once again shining the spotlight on the conditions of the tens of thousands of factory workers hired across India to make devices including smartphones and computers. When Apple investigated, it found that not only did food sanitation fall short of expectations, but employee dorms were also below par.
Apple and its Taiwanese partners have been here before. A year earlier, workers at a factory in Wistron near the Bengaluru tech hub ransacked that factory after they were fed up with delayed and underpaid wages. Police officers with batons were called in to quell the protest, but not before staff destroyed the equipment and set the vehicles on fire.
Foxconn apologized last week for the recent issues and said he is restructuring the local management team. But it’s not good enough. Despite Wistron’s failure a year earlier, it looks like Taipei’s leaders still don’t get it.
After decades of developing their business models, Taiwanese companies such as Foxconn, Wistron, Pegatron, and Quanta Computer have come to dominate global electronics manufacturing from facilities located across China. They have done well in the world’s most populous country for the past 50 years, in part thanks to a common language and the pro-business policies of successive leaders who have made it easier to set up factories and hire workers from them. near or far.
Today, faced with labor shortages and the recognition of their over-reliance on China, Taiwanese companies are making the smart decision to move their operations to the next largest country.
But they learn that India is not that easy. Whether it is language barriers, cultural differences or rude democracy, Taiwanese executives are struggling to adapt. It is yet another sign that India is not the next China, but a nation with its own traits and nuances.
Part of the challenge is that India does not have the infrastructure that Taiwanese companies are used to relying on when setting up local facilities. When Foxconn founder Terry Gou toured China, pitting local governments against each other in the battle to land the next iPhone factory, he was able to secure commitments to provide housing for workers and the many other support services required for a massive manufacturing operation. .
In the Wistron case, local entrepreneurs appear at least in part to be responsible for the wage payment problems that have escalated to the point of exploding. Yet management itself has failed to adequately monitor its own suppliers to ensure compliance. Foxconn appears to be facing similar issues, exacerbated by the fact that international travel has been curtailed by the COVID-19 pandemic.
It would be incorrect to conclude that Chinese workers are simply more docile than their Indian counterparts, as evidenced by the 2012 riots at a Foxconn factory in China. But when things go well, Taiwanese management generally found that Chinese governments would side with the companies rather than the workers. This is less likely in India, where leaders need the support of voters at election time.
Perhaps the biggest challenge, however, is the management style. Taiwanese companies – which typically used their own executives in China – will increasingly rely on local leaders to set up and manage operations in India. This means providing adequate training and support so that they can combine the rigid Taiwanese approach to operations with a more relaxed work culture found in the local territory.
Their experiences in China, where such a divide also existed, prove that the challenge is not insurmountable. But tech makers have had decades to adapt to the local landscape as they slowly expanded their operations to meet the growing needs of their largely Western customers.
In India, however, Taiwanese businesses need to adapt more quickly. Customers need these new factories to expand quickly in order to reduce their dependence on China, while New Delhi and Taipei are in a hurry to forge a strong business relationship that can blunt Beijing’s economic might.
In the race to reorient the global production center, manufacturers do not have the luxury of time.