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choose to move to the foundry in Mainland China, and perhaps some of the more hidden source of profit, not seen in people's analysis. This source to the enterprise and local government contracts agreed to look

text  LIU Yan

the world's largest consumer electronics contract manufacturer Foxconn Technology Group to move the factory in Shenzhen attracted a lot of attention. Among them, the analysis of economists Foxconn is particularly interesting.

before moving in Foxconn, some economists have asserted that the workers requested salary increase, will ruin the Foxconn's investment in mainland China, because as of OEM Foxconn margins are dismal, wage costs a little bit to go up, will be a Foxconn life. There analysis by economists, Foxconn is likely because of rising labor costs and the mainland to return to Taiwan, or move to Vietnam and other Southeast Asian countries.

longer before April 2008, damaged

Foxconn did not move in Shenzhen Longhua factory in Vietnam, but to move to Langfang and other places. A year ago, predicted Zhang Wuchang China In June this year, Foxconn has announced the minimum wage this year, floating rate is 30%, some operator and the line head of the salary increase even more than 66%. Foxconn's behavior, it is clear departure from the conventional analysis of economists and conventional expectations.

land rental value of the secret

Foxconn is a business. Business benefits of marginal cost analysis done by acts, certainly much better than the outside analysts. External analysts such as economists, what must be missing some important costs,Gucci Wallets 150674, or income.

perhaps one explanation is that the human Foxconn also afford the current costs. According to Foxconn International 02038.HK filing shows the end of 2009, the company's average cost per employee was 27,800 yuan, while the end of 2008, the average cost per employee was 4.22 million, lower in 2009 than in 2008, 52 %, 30% overall increase is nothing, up 66% of isolated and can not be counted as EADS were mixed, so big deal for Foxconn to return to the level of labor costs in 2008.

but Foxconn report also showed, in 2009, Foxconn net profit 39 million U.S. dollars,Balenciaga handbag 084609, down 68%, gross margin and net profit margin of 5.9% and 0.55%. Moreover, if relocated to the Mainland and other places, such as Langfang, their transport costs are likely to increase,Louis Vuitton bag Monogram Canvas M51148, not decrease. This profitability is very worrying Foxconn relocation to the Mainland, what else could profit space.

Obviously, selection of representative processing enterprises in Mainland China, and perhaps some of the more hidden source of profit, not seen in people's analysis.

the profits to enterprises and local governments to reach a contract to find.

Zhang Wuchang It is China's 2,000 counties and horizontal competition, making local government actors as a company, the maximum rent for the assets of the rental value of land property rights, China's economy released a tremendous energy.

local governments and enterprises in landlord and tenant contract similar to the structure, the government transfer the land 4, and Sometimes, local governments and even to gave investors. subsidies and other means of competition display their talents. Despite the ambiguous attitude Foxconn, Foxconn Zhengzhou, Henan Development and Reform Commission approved a site of 2,000 acres of land already standing there.

a developing country, indeed, as Zhang Wuchang said, Efficient use of land by following the economy can not grow. Land costs and benefits, where a generation of processors, may take a great share.

to now, Foxconn has been established in the country, including more than 10 of the Shenzhen Science and Technology Industrial Park, which only in Shenzhen reached 3450 acres of industrial land, other localities have anywhere from several hundred acres, as many as several thousand acres, the total number up to several acres of industrial land. This is a still silence in the current huge assets, but also a treasure of great value to the appreciation of space. China's industrial land prices extremely low while commercial land prices, the national level, in general, the price of commercial land industrial land price of about 20%, Shenzhen, Beijing, Shanghai and other cities also lower than the ratio. The Foxconn has become the largest foundry company to take.

In addition to these is not yet realized the industrial land, Foxconn may have some other source of profits. For example, according to construction area of 50,000 square meters, will build,

investigation,Louis Vuitton handbag M950971_5900, according to the newspaper reporter, the cost of land at the time the two pens, a combined 405 million. According to estimates, land prices when the floor was 8100 yuan  square meter, the price premium was about half the floor. Today, although the real estate projects in 5 years, has not officially started local government did not withdraw, but the floor prices have been increased to 40,000 yuan jump up  square meter. Wait a land appreciation alone, the

the registered capital of 3.0 billion Hong Kong dollars in Shenzhen, Hong Kong Hin Shing Investment Co., Ltd., is a lot of the media refers to the operation of real estate business platform for Foxconn. Xuan Hong Kong Sheng Investment Co., Ltd., is intended to integrate And these cities are just a few of current importance Foxconn Technology Industrial Park location.

assume the operation of commercial real estate projects Foxconn is true, then perhaps the structure of such a contract or stealth to enter people's analysis of vision: Foxconn to invest in certain industrial projects, local governments will be more lower part of the price of commercial land will sell to Foxconn, as choosing to invest in return.

Foxconn Inland, the wages not much room for cost reduction. Such as Zhengzhou, the minimum wage, and increase the minimum wage in Shenzhen after just under 200. Langfang, but low 300 yuan, but the facilities are not fully, with the rising cost of living of workers, wages are a matter of. Coupled with the increase in logistics costs, without considering the land, tax incentives and rewards hidden factors such as Foxconn's account in fact does not pay.

contract between government and enterprises were divided into

Foxconn local governments in the location in the country were postponed,Gucci bag Classic 145957, meant less competition, negative rental value of land and the package has been no secret. But why,Gucci bag Classic 211983-1000, the local government is willing to bear the price of rent received Foxconn almost harsh conditions?

may be one of the local government is willing to give up future income and current profits, in order to voluntarily give up the long-term development as part of the land and tax revenue. For a particular local government, Foxconn such enterprises to enter, whether for local investment structure, promote employment, or related to driving, are within the scope of its terms. Local government is a rational economic men.

However, there may be another incentive to make the contract structure to become distorted. Local officials can be seen as an agent of the company. Local government officials generally tenure system, the different term of office has a different objective function. The longer term, the officials will consider some of the more policy instruments and current methods of long-term effects, whereas the opposite. In general,Gucci bag Classic 201482-1000, long-term incentive agents to better help enterprises, short-term system is more vulnerable to opportunistic behavior. In the investment process, some officials do not rule out the possible short-term achievements as factors which suppress the possibility of rent. After all, officials, this term, short term let boss see a huge enterprises have settled down a local is intuitive, and long-term rent receipts were much slower, a lot of costs can be apportioned to the next. Moreover, including the land transfer,Gucci Wallets 05474R 1000, including several fixed That is, the Therefore, the phenomenon of negative rent can also be seen as a short-term incentive for opportunistic behavior.

As for the succession of the next government, because the visual performance after investment has been credited to the account the previous government, but also the limited land resources, after all, was bound to launch a new round of investment be introduced to Teng for business.

very likely, because land prices in Mainland China and local governments with different objectives the difference between east and west on the lot,Balenciaga handbag 084824, the pattern of this local competition, but also in a very long time continue.

be down right?

Foxconn and other foundries Why should a wide selection of OEM locations around the country? In fact, even if the minimum wage over there is some difference, but the difference was not so great. The biggest difference is still the land and the invisible preferential treatment. These concessions do not have large land disposal is the power of government can not do. This is Foxconn will not choose the key reasons for Vietnam and other countries.

might say that it has a larger land disposal of the power factor is the competitiveness of Chinese competition mode where the most important factor. Another significant factor is that local governments bound by the farmers on the land and not offering them new immigrants in these cities to the equalization of public services, etc., indirectly depressed the demand for migrant workers, thus changing the actual employment of enterprises price.

if farmers can focus on use of land to build industrial parks, attract investment, Bing Huo Qu rent Zhi, and Zhan Kai Park Huan Jing and other services in the normal competition, Er Difangzhengfu Yebu an economic person and Zhijieganyu Park bought the land seller, only to provide basic market rules and order, then the Chinese model is likely to be another kind of landscape.

forced to leave the local government as the main body of the enterprise market, there is no land will be forced farmers the ability to own land, unless the farmers from the voluntary sale to buy. The main assumption of land transactions and Foxconn in China between farmers, the farmers will be keen to discount future earnings to the land, the local government did not as So, Foxconn's land costs are rising. Meanwhile,Gucci Wallets 120935-5774, as farmers increased wealth, labor force will be reduced, labor costs are bound to increase. This growth mode, growth rate may not be as it is now so fast, but its growth will be more reasonable and more durable.

the current Chinese model is sustainable depends on whether China will be lowered in the long term continuation of this land, labor and other factor prices in exchange for the export of The right to claim the concept of change and the extent will affect the sustainability of this model. If China is able to create a kind of built on the clear definition of property rights over the �� author Articles writer