Foxconn's Huai'an plant in the distance, Jiangsu province. (Internet photo)
Real estate developers claimed to have been "duped" by Foxconn into investing in large development plans in Huai'an, Jiangsu province as the number of residents has not reached the scale the electronics manufacturer once promised, reports the Guangzhou-based 21st Century Business Herald.
"Hong Kang is an investment promotion enterprise that developed a recreational business district for the 100,000 employees Foxconn said it will bring," said an employee from the Hong Kang real estate company. "We can't pay off our debt because Foxconn has not kept its promise. Now the buildings are mostly unused."
"It is said that when Foxconn first came here, Terry Guo, founder and chair of the contract electronics manufacturer, said "if no one buys the place, I'll buy," recalled another developer. "His promise, along with the government's promotion, encouraged us to invest in building houses which now no one wants to buy." He said he felt like he was duped by Foxconn.
The place, which some locals jokingly named the "ghost town," is next to the Foxconn plant in Huai'an's Qinghe district. Once in a while two or three passersby appear on the wide street in the development area, but most of the time it is merely lines of empty condos with shops closed.
The situation was first unveiled by an overdue noticed announced by local business Ningbo Bird. The announcement stated that its loan of about US$8 million to Hong Kang, along with the US$160,000, has not been repaid.
That was Hong Kang's third overdue notice. Development in Huai'an began in 2007, and the first due date was August 2012.
Ningbo Bird is "working on aggressive means to demand the payment of debt to reduce risk," according to the company.
"There are many developers stuck in the mud just like us as a result of the chain reaction of Foxconn's failure to keep its promise," said the Hong Kang staff. "Foxconn estimated that more than 100,000 people will move in but up until now there's less than 30,000."
Jiangsu province-based Hodo Group and Shanghai's Dingli company are also among the developers that have invested in the area. The price of a house has dropped as low as US$470 a square meter. "The price is really low," said a salesperson at a local developer. "Still, no one's buying."
A public affairs employee of Huai'an Economic Technology Development Area's regulatory committee said that "not reaching 100,000 employees is the company (Foxconn)'s market behavior. The government has no rights to step in."
"How Foxconn puts in investment is based on market demand," and "developers made their own choices" building the houses, they said.
Several Foxconn employees said that the plant has a rather high labor turnover rate. It depends on the amount of purchase orders. Sometimes the plant has less than 20,000 people, they said.
A labor agent for Foxconn said that few locals are willing to work in the plant. A considerable amount of workers in the plant are from outside of the province, the agent said.
Foxconn is the trading name of the Taiwan-based Hon Hai Precision Industry, the world's largest contract manufacturer of consumer electronics, which counts Apple among its major clients.