By Star Chang, posted Jul 16, 2010 at 12:47 PM, 377 views,

Foxconn denies receiving Apple labor cost subsidy

An executive from the Foxconn Group has denied a recent rumor circulating in China’s IT market that Apple is paying Foxconn a 2% subsidy on its labor costs as compensation for the company’s recent increases in minimum wages. According to Chinese news report, the rumor is purely a speculation and Foxconn has never received any subsidies from Apple.

Rumors had circulated that Apple was paying extra after word of a rash of suicides, but Foxconn later raised wages itself to both address financial pressure to work overtime and to avoid using the family benefit payout from a suicide as an incentive. The company later stopped paying for suicides to eliminate the motivating factor. While the Chinese media asked why the rumor has not denied at the start, Foxconn executive said that they are not eligible to deny such an inexplicable rumor, while they were solving the suicides cluster at that moment.

Well, it might be a speculation in the end but it still benefit Apple if they do subsidy on Foxconn’s workers. lt will not make Steve Jobs to become a horrible ‘blood-sucker’. According to some financial report, Foxconn had only about 4.3 percent gross profit in 2009, a net profit less then 1.9%, while Apple profit margin can reach up to 27 percent.

Source: National Business Daily