HP: Foxconn clampdown could push up prices

Higher wages in China could lead to more expensive PCs for Western customers

Nicole Kobie
24 Feb 2012

HP has said increased labour costs in China could drive up prices in the tech industry.

Apple sent in the Fair Labor Association to investigate conditions at Foxconn, following a spate of worker suicides and complaints.

The Chinese manufacturer is also used by other tech firms, including Dell and HP - both of which posted quarterly losses this week.

"If Foxconn's labour cost go up, their product cost to us will go up," HP's CEO Meg Whitman told Reuters.

If Foxconn's labour cost go up, their product cost to us will go up

"But that will be an industry-wide phenomenon and then we have to decide how much do we pass on to our customers versus how much cost do we absorb," she added.

However, Dell's chief financial officer told the newswire that labour costs are a "very, very small piece".

"It's not clear to us how that will play out in terms of our costs," Brian Gladden said. "It remains to be seen how that flows through the overall supply chain. We will continue to watch that."

Both firms have much smaller profit margins than Apple, making it more likely they will be forced to pass on even a small increase in costs.

So far, FLA investigators have praised Foxconn's facilities as "first class", but the industry-funded group has been criticised by other workers rights organisations, who have reported that under-age staff were "hidden" during the audit.

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