Recruiting in China

Taiwan-headquartered contract electronics manufacturer Pegatron Group is reportedly expanding its workforce, a move analysts said on Monday is aimed at gaining more orders of Apple's next generation product at the expense of rival contractor Foxconn.

Pegatron's plant in Shanghai has launched a large-scale recruitment activity, planning to hire 40,000 staff in August to prepare for the mass production of Apple's new generation smartphone, widely tipped to be named iPhone 6s, Shanghai-based newspaper IT Times reported Monday.

Calls to Pegatron remained unanswered by press time, but according to information on the company's website, its Shanghai factory is schedule to hire people in July.

"I heard that Pegatron is hiring a large number of people in Shanghai" and another round of recruitment is expected to take place in September, Wang Yanhui, head of Shanghai-based Mobile China Alliances, told the Global Times on Monday.

The mass recruitment drive indicates that Pegatron has already got large-scale orders from Apple, which usually produces a batch of new devices in advance to cope with the peak sales period right after the introduction of new products, said Wang.

Apple is likely to announce its next smartphones in September, Forbes reported on Friday.

Pegatron Chairman Tung Tzu-hsien was quoted in a February press release posted on its website as saying that without doubt, the company will this year maintain at least the same level of product delivery for Apple as 2014 or slightly higher.

Wang noted that Pegatron is encroaching into Foxconn, another major Apple contractor from Taiwan, in part due to lower costs.

A report issued by New York-based nongovernment organization China Labor Watch in February showed that Pegatron's plant in Shanghai possessed an 8 percent cost advantage over Foxconn's factory in Longhua, South China's Guangdong Province, in 2014, translating into a $61 million advantage per year at just one of many Pegatron factories that serve Apple.

When contacted by the Global Times about whether Foxconn also has plans of expanding Apple production lines, the company's spokesperson said that they are not allowed to make any comments related to its clients.

Against this backdrop, Foxconn has already started diversifying its business, launching its online e-commerce marketplace in March to mainly sell consumer electronics products in the Chinese mainland market.

"Companies like Foxconn and Pegatron need to expand into other businesses to offset the costs of idle labor, because their major client Apple usually demands huge amounts of deliveries in the first and second quarter. Demands for Apple products are prone to decline in the third and fourth quarter, as consumers wait for launch of new versions," said Wang.