(Yicai Global) April 6 -- Fewer workers are renting accommodation in a small town in central Henan province which is only a few kilometers away from the world’s largest iPhone factory run by Hon Hai Precision Industry, also known as Foxconn, as the Chinese Apple supplier slashes salaries and is reported to be moving production out of the country.

Zhangzhuang, a sleepy town that is normally home to 10,000 residents, at one stage provided accommodation to a floating population of 200,000, most of whom were young people looking for jobs and businessmen looking to capitalize on the large influx of migrant workers, a man who owns a scooter repair shop in the town told Yicai Global.

Fewer people from out of town are coming here now, said Guo Zhengang, who rents out 30 rooms. He has seven vacant rooms at the moment, which would normally be rented out.

Foxconn has cut wages by as much as 85 percent, said Wang Kun, who works at a recruitment agency. The iPhone maker is now paying a basic wage of CNY2,200 (USD320) a month, plus a bonus of CNY2,500 after three months, far less than the CNY15,000 (USD2,180) it was paying during peak periods last year.

As a result, many workers have resigned and the Taipei-based firm is also laying off staff, Wang said. Nearby businesses have also slashed wages, he added. Workers used to be paid between CNY20 (USD3) and CNY30 per hour and now they get around CNY17 an hour.

Normally, during peak seasons, a huge number of people would come into town, said hairdresser Zhao Jinhui. It could be that this is an off-season, but certainly there are fewer people on Zhangzhuang’s streets.

Li Xiaodong, who has worked at Foxconn for two years, prefers to live with his girlfriend in Zhangzhuang as even though the company provides dormitory for its employees, there is no privacy in dorms, he told Yicai Global.

The owner of a barber shop is planning to sell his business as there are reports that Foxconn is shifting production out of China. Foxconn will invest USD700 million to set up factories in India, creating over 100,000 jobs, Bloomberg reported earlier.

Editor: Kim Taylor