A Research On Foxconn OEM Transformation And Upgrading

Under the background of economic globalization, OEM (Original Equipment Manufacturer) used to be a effective path for China’s export processing&manufacturing business to join international division of labor and global value chain. Such kind of OEM enterprises, represented by Foxconn, has ever made positive contribution for our country’s economic growth and social employment. However, these enterprises are currently facing challenges of rising costs and questions of "Low-value added" world factory. Therefore, in face of challenges and questions, how to cultivate competitive advantages and how to increase the added-value of products, to realize their business transformation and upgrade, is becoming urgent issue to explore for these OEM enterprises. As the world largest electronic contract manufacture, Foxconn does have advantages in manufacturing and technology, but as well it confronts many problems such as rising costs, declining profitability, missing of reasonable pricing, etc. Hence, Foxconn has strong representativeness in facing above challenges and further conducting business transformation and upgrade; it may have a profound impact on the development direction of China’s future OEM manufacturing mode.This paper uses global value chain and industrial upgrade as theoretical basis, and provides related analysis for domestic&oversea OEM mode’s current developing situation, challenges been faced, and necessity&feasibility of business transformation. After the theoretical analysis, take Foxconn as the research object to do case analysis, then base on a overview of Foxconn’s basic information and its present OEM situation, and then gives deep analysis for the existing OEM problems by Document retrieval method and Inductive analysis method, also it presents selections of business transformation and upgrading path for the mentioned problems. The path includes:Set foot in new market by taking over the material supplies that formerly occupied by suppliers through strategic mergers and value chain vertical integration; Cultivate company’s core competence by transformation form pure OEM to OBM (Original Brand Manufacturing); Step into e-commerce, to provide online market opportunities for self-owned brand products, expand sales and value adding channels, and develop into the high-end of the value chain; This paper put forward selections of transformation and upgrade path for Foxconn’s OEM mode basing on theory of industrial upgrading and value chain, and by this paper, we hope it can be a reference for the business development and transformation of other small and medium domestic OEM companies.