Foxconn Upgrade Mode Based On The Global Value Chain

Since Chinese reform and opening up, many international companies were attracted by China, and moved their production line to China, because of the cheaper labor and abundant natural resources. Chinese original equipment manufacturers also take this opportunity to participate into the international division of labor, and been integrated into the global value chain. Chinese original equipment manufacturers model not only created a huge value profit for the enterprise, but also brought about the rapid development of Chinese economy, and made an outstanding contributions.But the financial crisis in2008leads the shortcomings of OEM mode exposure. The factors such as the deterioration of the foreign economic environment, the sharply cost rising in domestic such as the human resource cost and raw material, as well as Chinese economic development pattern transformation policy, were making Chinese original equipment manufacturers into serious troubles. How to reform Chinese original equipment manufacturers to high value-added chain from the bottom, keep a competitive advantage and achieve sustainable development, have became the urgent problem. Foxconn, as the largest contract electronics companies in the word, the transformation and upgrading path and effect is a strong representation to reform the transformation of Chinese original equipment manufacturers.This graduate thesis describes in detail the Foxconn growing environment and its evolution both at home and abroad. Analysis the Foxconn’s reality by using the SWOT method, especially for its weaknesses and threats are analyzed in detail. By introducing the theory of global value chain and industrial upgrading, points out that the enterprises can either choose upgrading paths according to their own situations and growth stage, including upgrading paths based on technological capability, that is along the OEM-ODM-OBM path to transform, or can also choose to upgrading path based on market expansion ability, that is outsource the low value-added processing to third party manufacturers with a lower cost, and then focus on developing the market expansion, and finally to OBM. Foxconn is basically following up two of them for the transformation. This graduate thesis expounds the effect and process of transformation and upgrading of Foxconn, and aiming at the problems found in the process. The author raises up suggestion about how to establish its own brands according to the problems from the e-commerce developing. Finally, the graduate thesis proposed four safeguard measures of Foxconn’s transformation and upgrading, including establishing effective communication way, creating a learning organization, establishing the core values and strengthening human resources management, etc. Thus conclusion of this graduate thesis, the bright goal of Foxconn’s transformation and upgrading through these two paths, is to develop their own brands (OBM).In a world, this graduate thesis put forward two path of transformation and upgrade for Foxconn’s OEM mode basing on theory of industrial upgrading and value chain, and with this paper, we hope it can be a reference for the business development and transformation of other small and medium domestic OEM companies. Figure14, table6,50references.