Foxconn Technology Group, Apple Inc.'s largest contract electronics manufacturer, has set up half a dozen financial services firms in China for the past year as it advances its plan to secure more share in China's financial market.
Formally known as the Hon Hai Precision Industry Co., the firms Foxconn has set up have begun providing loans and other financial services to electronics component suppliers.
Within a couple of years, the Taiwanese company will repackage the loan into financial products and sell them directly to investors, according to the firm's business unit Foxconn Financial Service Platform managing director Jack Lee.
In an interview with the Wall Street Journal, Lee remarked: "This is where we have a niche advantage. We know the suppliers' business statuses better than anyone because they are our customers."
This move is part of Foxconn's plan to be more than just Apple's contract manufacturer.
According to Lee, Foxconn's financial services unit has completed over 1 billion yuan worth of transactions since it started around a year ago. It has about half a billion yuan in outstanding financing.
Additionally, the firm is expanding its businesses into higher-margin services such as component manufacturing, robotics, financial and e-commerce services. Electronics contract manufacturing is considered as a low-margin business, with assembly fees only making up less than 1 percent of the iPhone's price ($800) in China.
Recently, more Chinese Internet giants have been offering online financial services, such as small loans, consumer credit and money-market funds, as part of their strategy to attract more users.