Foxconn Exodus Accelerates Global Supply Chain Pivot

The sudden closure of Apple’s largest supplier, Foxconn Henyang Hongfujin Precision Industry plant in China, occurred on September 30, 2025.

Analysts have described this event as exposing the “hollow core of China’s industrial economy.”

The abrupt cessation of operations at the facility, which once employed 30,000 workers and generated billions in output, has accelerated a global trend of multinational corporations (MNCs) relocating manufacturing capacity away from China.

China Exit by Foxconn: Erratic Policies and Investor Uncertainty

The primary catalyst for this massive restructuring is Beijing’s tightening grip and the erratic, unpredictable policy environment.

Foreign firms, including Foxconn and its key client Apple, cite a convergence of challenges: rapidly rising costs, arbitrary regulations, pervasive corruption, and the chilling effect of the prolonged US-China trade war.

This combination has created an atmosphere where foreign direct investment (FDI) can no longer operate with necessary certainty.

The resulting economic fallout in China has been immediate and severe.

Foxconn’s operations previously accounted for over 80% of Zhengzhou’s export volume and more than half of Henan province’s total trade.

Following the scaled-back operations and relocation, Henan’s phone exports plunged by 60% in the first quarter of 2024, dragging the province’s overall trade down by 23%.

Formerly bustling commercial districts near the abandoned factory complexes now resemble ghost cities, with displaced workers forced into unstable gig jobs like food delivery.

The Pivot: India and Vietnam Emerge as New Hubs

In response to the mounting risks in China, MNCs are actively accelerating a “China Plus One” strategy, focusing heavily on alternatives in Southeast and South Asia.

India and Vietnam have emerged as the most attractive destinations, largely due to their stable policy environments, proactive policy measures, and competitive fiscal incentives.

India, leveraging schemes like the Production-Linked Incentive (PLI) for electronics manufacturing, has successfully wooed major Foxconn investment.

Foxconn is reportedly committed to spending billions of dollars to expand its manufacturing footprint across India, aiming for a hub-and-spoke model instead of the single “mega-factory” strategy once deployed in China’s Zhengzhou.

Similarly, Vietnam continues to solidify its role, particularly in textiles and electronics, offering significantly lower labor costs and regional trade access benefits.

This exodus signifies a major restructuring of global supply chains, moving away from a China-centric model towards one prioritizing resilience, diversification, and policy stability across multiple regional anchors.

The shift, driven by geopolitical concerns and domestic policy failures in China, suggests a new era of dispersed and de-risked manufacturing is firmly underway.

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