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Foxconn Technology Group, which supplies Sony, Apple and Nokia with IT components, is moving part of its major plant away from costly Shenzhen after hefty wage increases at its factories in the southern city, affecting hundreds of thousands of workers, according to ChinaDaily.com.

The Longhua plant, which comprises 11 business groups and has 300,000 employees, will retain only two highly profitable groups and merge with the Guanlan plant, which employs 100,000 workers, ChinaDaily says, quoting a China Times report.

“We’ve got a notice today,” a source was quoted by China Times as saying, adding that researchers who provide support for Hewlett-Packard servers will move to Tianjin in northern China, along with related production lines. The relocation is to be done in two months.

Other business groups will also move to less expensive Tianjin, Yantai or Wuhan, the report adds. But the Taiwanese-owned Foxconn group will keep making iPhones in Shenzhen, the southern economic hub neighbouring Hong Kong.

Analysts said the plan was aimed at reducing costs.

Suicide-plagued Foxconn announced on June 1 that wages for ordinary workers in Shenzhen will increase to 1,200 yuan from 900 yuan, and another announcement on June 6 said the wages would be raised to 2,000 yuan for workers who pass a three-month assessment.

Meanwhile, Shenzhen plans to raise its minimum monthly wage by 15.8% to 1,100 yuan (NZ$232) citywide starting in July, while the minimum wage in Tianjin and Yantai is 920 yuan, and 900 yuan in Wuhan.

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