Foxconn’s exit highlights risks for foreign firms in China

Foxconn’s Henyang plant closure exposed the fragility of China’s industrial economy, leaving 30,000 workers displaced and commercial districts deserted. Rising costs, erratic regulations, and the US-China trade war accelerated Apple and multinational firms’ relocation to India, Vietnam, Japan, and Australia.

New Delhi: The sudden closure of Apple’s largest supplier, Foxconn’s Henyang Hongfujin Precision Industry plant, due to the government’s erratic policies exposed the “hollow core of China’s industrial economy”, a report said on Friday.

The factory that once employed 30,000 workers and generated billions in output was closed on September 30, 2025, leaving commercial districts tied to Foxconn’s presence as abandoned towns, the report from Daily Mirror said.

---

Rising costs, arbitrary regulations, and the chilling effect of the US-China trade war created an environment where foreign firms could no longer operate with certainty, according to the report.

“The once-bustling commercial districts now resemble abandoned towns, with shuttered storefronts and displaced workers forced into precarious jobs like food delivery,” it said.

Apple, wary of Beijing’s tightening grip and erratic policies, accelerated its relocation strategy, pulling Foxconn’s capacity along with it. India and Vietnam, offering tax incentives and policy stability, became attractive alternatives.

Foxconn contributed over 80 per cent of Zhengzhou’s export volume and over half of Henan province’s total. When Foxconn scaled back and moved capacity abroad, Henan’s phone exports plunged 60 per cent in Q1 2024, dragging provincial trade down by 23 per cent.

Microsoft’s CSS team has recently shifted its positions to Japan and Australia, halting rehiring in China, part of a broader trend signalling multinational corporations overlook China for alternatives, especially India and Vietnam.

The situation arose from corruption, an unpredictable regulatory environment and labour exploitation. Local government officials are chasing short-term GDP figures rather than sustainable development, the report said.

Foxconn’s departure leaves workers at the mercy of “black factories” that thrive under lax enforcement and corruption, it said, adding that the Chinese Communist Party’s (CCP) failure to address corruption, enforce fair labour practices, and provide economic stability has left ordinary citizens in distress.