Foxconn's planned business headquarters a vote of confidence in mainland market

Foxconn, the world's leading electronics manufacturer, is set to build a new business headquarters in Zhengzhou, central China, in a move the Taiwan company described as "a crucial step" in expanding its presence on the mainland market.

Analysts say the decision highlights Foxconn's commitment to investing in the mainland, despite rising global trade protectionism and "decoupling" and "de-risking" rhetoric ratcheted up by certain Western politicians.

The tech giant recently won a bid for a 2.84-hectare plot at 150 million yuan (about 21.07 million US dollars) in the Zhengdong new district in Zhengzhou, capital of Henan Province, where it plans to build a headquarters focusing on key technology sectors, according to the Zhengzhou Public Resources Trading Center in a recent statement.

This initiative aligns with Foxconn's "3+3" strategy targeting electric vehicles, digital health and robotics, along with advancements in artificial intelligence (AI), semiconductors and next-generation communication, the company said.

Foxconn's planned headquarters will feature a construction area of approximately 70,000 square meters in its first phase, with an investment of 1 billion yuan. The company has not yet provided a groundbreaking date.

In a speech at the unveiling ceremony for the new business headquarters in April 2023, Chairman Young Liu emphasized that the headquarters will mark the beginning of a new journey for Foxconn's strategic industry development on the mainland, and the company's new businesses are both a response to global market trends and an embrace of the latest wave in technological advancement.

Henan's favorable infrastructure and business environment, as well as the collaborative relationship between Foxconn and the local governments, were pivotal factors in the decision to locate the headquarters there, Liu noted.

Between February and April 2023, Liu visited Henan three times, pledging to "build a new Foxconn" in the province. In July this year, the company signed a strategic cooperation agreement with the Henan provincial government to accelerate projects related to new business ventures.

Per the deal, Foxconn plans to leverage its expertise in smart manufacturing, along with its global technological capabilities and supply chain resources, to advance projects in the new energy vehicle, energy storage battery, digital health care and robotics industries.

Construction of a trial manufacturing center for new energy vehicles has started at Zhengzhou Airport Economy Zone, with operations expected to commence by the end of the year.

Foxconn's increased investment in Henan and its focus on future industries represent a win-win approach, said He Liang, an official with Zhengzhou Airport Economy Zone.

"We will continue to provide quality service and foster a first-rate business environment that is market-oriented, law-based and internationalized," He added.

Henan and Foxconn share a deep bond.

Foxconn, the principal assembler of Apple iPhones, established operations in the inland province in 2010. By the end of 2023, its Zhengzhou factory spanned around 2.8 million square meters and had recorded 12 consecutive years of growth in industrial output. Over the years, Foxconn has further expanded its footprint across Henan, setting up facilities in cities such as Jiyuan, Hebi and Zhoukou.

The cooperation has also transformed Henan's economy, turning the province into a global hub for intelligent terminal manufacturing. From 2016 to 2020 alone, the Zhengzhou factory attracted over 200 related supply chain enterprises to the Zhengzhou Airport Economy Zone, with total investments exceeding 300 billion yuan, according to the zone administration.

Analysts view Foxconn's moves as part of a broader bet on emerging industries, such as new energy vehicles, solid-state batteries, robotics, AI and semiconductors — sectors that are likely to shape the future of global manufacturing.

Song Xiangqing, deputy head of the Commerce Economy Association of China, noted that the company's increased investment in Henan underscores the opportunities created by the digital economy and technological progress on the mainland, as well as the resilience of its industrial chain and its shift toward high-quality manufacturing.

The world's second-largest economy has been steadfastly expanding its institutional opening-up in recent decades, rolling out various policies aimed at achieving high-quality development and offering the rest of the world new growth momentum and opportunities.

At its third plenum, the 20th Central Committee of the Communist Party of China renewed the country's commitment to the basic state policy of opening to the outside world and continuing to promote reform through opening-up.

The commitment to an open economy, paired with its massive domestic market, presents significant opportunities for companies that are aiming to scale up operations in China despite global headwinds.

In May, US carmaker Tesla began construction on a mega factory in Shanghai to manufacture its energy-storage batteries. In his recent visit to China, Apple CEO Tim Cook also reaffirmed the company's investment commitment in the country.