U.S. original equipment manufacturer Flex has reportedly started to lay off employees since it earlier detained Huawei's assets privately and was removed from Huawei's supply chain. Experts noted if Flex's move was motivated by political reasons, it is highly possible for it to end up on China's unreliable entity list.
A source close to Flex confirmed with the Global Times on Monday that the southern plant of Flex's industrial base in Zhuhai, South China's Guangdong Province, has cut employees. Media reports said that the U.S. company has halted production at some of its plants in China and more than 10,000 jobs might be affected.
The southern plant of Flex's Zhuhai industrial base has started procedures to lay off employees with a compensation plan of "N+1+salary of August+early signing bonus," reported Caixin on Monday. N equals the number of years of employment, times the employee's average wage.
Some of the employees were not satisfied with the plan and launched protests in front of the plant on Monday, demanding a "2N+7" formula for compensation, said the report.
Several people who claimed to be former workers at the factory confirmed the protests, and netizens on Weibo vowed to put Flex on China's unreliable entity list.
As a former major smartphone assembler of Chinese telecom giant Huawei, Flex's Zhuhai plant privately detained material and equipment belonging to Huawei worth more than 700 million yuan ($102 million) for more than one month, a source told the Global Times previously.
"As trade tensions between China and U.S. are still escalating, this kind of non-commercial activity, whether it is under political pressure or not, will lead to possible penalties from China such as being put on the upcoming unreliable entity list," Wang Jun, chief economist at Zhongyuan Bank, told the Global Times on Monday.
If Flex's move was a follow-up to the Trump administration having put Huawei on a blacklist in May, "it would be a case of the U.S.' long-arm jurisdiction," Wang said.
Flex did not reply to the Global Times as of press time.
A source close to Flex said that the northern plant of Flex's Zhuhai industrial base is operating normally and hiring new staff, but the source didn't disclose how many people would be hired. "People who choose to transfer to northern plant will not get any compensation," the person said.
China has been an important market for Flex. According to Flex's financial report, its
revenue in fiscal year 2019 (April 1, 2018 to March 31, 2019) was $26.2 billion, of which revenue from China was $6.65 billion, accounting for 25 percent of revenue. That was a decline of 4 percentage points year-on-year.
