On April 18, SinoCast reported that HP was partnering with Foxconn Technology Group to build a new printer production base with a capacity of 30 million printers in Chongqing. That same day, various IDG news outlets, including PCWorld, reported that HP had signed an agreement to build a new printer factory in Chongqing. HP CEO Meg Whitman, said the PCWorld story, participated in a signing ceremony. The article said that the factory would take two to three years to build and would produce 40 million inkjet printers, 20 million laser printers, and 150 million inkjet cartridges by 2015.
Other reports, such as an April 19 article in China Daily, said that Foxconn was the party that had signed the agreement with Chongqing municipal government. The China Daily article also said the move was part of HP’s strategy of gaining share in China’s PC and printer markets and that HP’s PC market share in China has declined by 50 percent between 2009 and 2011. That article said the factory would produce 30 million printers annually.
Taiwan-based Foxconn conducts contract manufacturing for many technology companies, with the majority of its factories located in China. The company manufactures HP laptops and desktop PCs in Chongqing. Recently, Foxconn has come under scrutiny regarding labor conditions at its factories in China, including recent coverage of facilities building iPads and other products for Apple.
The news about the new manufacturing base left us with lots of questions. Some reports mentioned Foxconn, while others did not, and we wondered to what extent each party was involved in the proposed factory. Also, reports varied on what the facility will produce. If, as the PCWorld article stated, the facility would be producing laser printers, that would be particularly big news as Canon is HP’s exclusive laser manufacturing partner. So, we wondered, is Canon a partner in this endeavor? And if not, was this story even bigger news and was HP contracting with a new laser manufacturing partner?
HP, however, indicates that reports that the Chongqing factory will be producing laser printers and inkjet consumables are inaccurate. The new factory will make only entry-level inkjet printers for HP.
HP’s official statement on the new factory is as follows:
· HP’s local manufacturing supplier is planning to build a manufacturing facility in Chongqing.
· HP expects to use this facility, once completed, to manufacture entry-level HP Inkjet printers.
HP confirmed today that Foxconn is HP’s “local manufacturing supplier,” and clarified that Foxconn, not HP, signed an agreement with the Chongqing government regarding building the new facility. However, HP did sign a domestic sales contract, under which the local government agrees to support sale of HP products in China.
It does not appear that HP has plans to shift manufacturing from its current facilities for making printers or supplies to the facility in Chongqing or to consolidate all manufacturing operations in China.
HP indicates that only Foxconn can provide details on when the new Chongqing facility will be operational, and the company declined to comment on details such as the size of its or its partner’s investment, the size of the facility, or the eventual number of employees. HP did confirm that it expects to produce as many as 15 million inkjet units annually at peak periods.
Thus, while the news of HP’s new manufacturing base for entry-level inkjet printers is significant, to be sure, it does not seem that the Chongqing facility represents quite the seismic shift in HP’s printer and supplies manufacturing base as was first reported.
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Original source:HP Clarifies Details Regarding Chongqing Printer Factory