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The rising cost of labor is the major reason why Foxconn is heading inland, where wage demands are relatively lower than in Shenzhen.
Foxconn increased employee salaries twice in June, equivalent to 600 million yuan more in wages in Shenzhen. The increase has caused the company's profits to shrink by almost a third.
Analysts say another reason for the relocation is land demand. As a labor intensive contract electronics maker, Foxconn requires large areas of land. But Shenzhen is restructuring its economic development mode, by reassessing the city's land resources and attracting new and high-end industries. So Foxconn has to move its factories to other places, for greater room for development.