I competed with Foxconn when I sold connectors for a competing Taiwanese company (in the US). It was my first job after B-school in 1997 – selling $.15 connectors. So I’m familiar with Foxconn. For example, I know that they tend to pay cheap, hire less-than-stellar people, and they preferred Caucasian men to work for their sales offices (several headhunters working for them had contacted me…I found out that last fact while teasing out information from them).

And it’s not like they are visionary. Foxconn execs don’t sit around and say “Lets open a base in Eastern Europe.” What happens is that the big customer tells them to open a warehouse and a limited production factory in the new location. That’s how they opened up in Texas with Compaq (now HP). Compaq had some idea about doing Just In Time inventory, and so told Foxconn to open a warehouse on Compaq’s factory grounds, and a factory in Mexico (for making computer cases…a very low-tech cheap commodity product). My point here is that its not Taiwanese manufacturers that drive this…its global big brand names like IBM which causes the supply chain providers to pick up and move. And IBM does not come and say "hey it would be nice if you put a factory here in Romania." They say, "Put a factory here or we will find someone else who will."

I need proof that they are the world’s largest CEM. How are you measuring this? Foxconn is not a great company. Sure they have been successful in business. But they never had the quality or innovation like, say, Solectron, Samina, Flextronics, etc. They were always known as a low-end components manufacturer. And known for competing with their customers. Furthermore, I don’t believe they manufacture really for Acer, which itself is a CEM. They have been manufacturing for HP since 1999 or so…they were making Compaq computers. And I would have to see really excellent proof that they make anything for Nokia besides putting Nokia’s lowest end cell-phone’s in a box with the instruction manual and accessories (believe it or not, many CEMs just put the finished product in the box and store it…its sort of a logistical value-add).

Taiwanese CEMs and Taiwanese companies in general make some exaggerated meaningless claims because they don’t understand marketing. For example, Acer called itself the World’s Third Largest Computer company. And if you added up the unit volume of computers Acer created for Dell and IBM, as well as it’s own branded computers, and added up the volume of components that its sub-divisions and sister-cousin-family-rival companies sold, then yes, maybe the third largest. I suspect the Foxconn does the same.