Caving to that demand, Foxconn has acknowledged that both employees and consumers around the world have come to expect China's bureaucrats and executives at global electronics firms to only once have had such sway. A statement from Foxconn also reflects just how quickly China's economy is changing. Many employers in the nation are facing labor shortages, which has put pressure on wages to rise, due to inflation and government demands to raise minimum wages. Workers welcomed announcements of pay raises and limits on overtime, but some were skeptical about how much actual change they would cause. "When I was at Foxconn, there were rumors of raises all the time, but I never saw the day happen until I left," said Gan Lunqun, 23, a former Foxconn worker. "This time, it sounds more credible." This month over a million migrant workers returned to their rural villages to celebrate China's Lunar New Year, otherwise known as Spring Festival. Traditionally, factories had no problem attracting those workers back. However, many cities in China are still facing severe labor shortages even weeks after the holiday ended. A recent Chinese government report said this year's labor shortage is more pronounced than in previous years. Social scientists say younger people here are less willing to accept long hours of factory work. Meanwhile, demographic changes mean that China simply has fewer young people entering the workforce. "This is the way capitalism is supposed to work," said David Autor, an economist at the Massachusetts Institute of Technology. "As nations develop, wages go up and life theoretically gets better for everyone." After announcing that it would raise salaries by up to 25 percent, or about 400 yuan per month, Foxconn became the subject of outrage over working conditions at its factories. In recent weeks, labor rights groups in various countries have staged coordinated protests following reports of harsh, abusive and dangerous conditions at some of Apple's Chinese suppliers. To stop the criticism, Apple hired a nonprofit labor group to inspect the plants it uses. "China can no longer guarantee the low wages and costs it once did," said Ron Tu of 3 Yuan Battery Enterprises, a consultancy in the battery industry. "Firms like Foxconn have developed international profiles, so they are worried about how people in places that live by very different standards see them." But the real test of Foxconn's reforms, analysts believe, will depend partly on how effectively the company can revamp an economic model that for most of the past decade relied on luring migrants to work long hours at cheap, sprawling factories that churned out smartphones, computers and other electronics. "But in China, this change is permanent, and consumers must be willing to bear the consequences. When people read about bad conditions at Chinese factories, they may have a moment of anger. But then they go to Amazon and pay the lowest price as ruthlessly as ever," he said. Some of its campuses are considered small cities with as many as 200,000 workers. Many are housed in dormitories near assembly lines and expected to be ready to rush into work when new orders flow in. And worried that the old model is dying, Foxconn has announced plans to invest millions in robots and automating production. There is no other company in the world with Foxconn's scale of production. Almost every global electronics company has ties to the manufacturing giant, and its ability to do so many things inexpensively with low-skilled workers and at a massive scale of operation makes China the single largest exporter in the world. The real change in the system, though, will require Foxconn, its competitors and their clients — including Apple, HP, Dell and other large electronics companies around the world — to convince American consumers and others elsewhere that higher-priced goods benefiting improved conditions at factories are worth it. Foxconn's model, though, is under pressure. While most companies operate similar dormitory systems, wage structures and work schedules, staffing Foxconn's large sites has become increasingly difficult. A new generation of younger people in China is less willing to migrate to coastal cities, live in factory dormitories and toil long hours. Many choose to stay closer to home because of new opportunities in inland provinces. That creates a labor shortage problem along the coast. Just as China's exporters struggle with labor shortages along the coast, they also face higher raw material costs and a strengthening Chinese currency, which makes Chinese goods more expensive in other countries. With 1.2 million employees in China, Foxconn is one of the largest employers in the country. It assembles about 40 percent of the smartphones, computers and other electronics sold worldwide. Foxconn's decisions set standards that other manufacturers compete against. If the logic is that workers won't move to the coast, then coastal factories should move to where the workers live. Relocating plants inland is one way large manufacturers like Foxconn are responding to these challenges. Plants that rely on workers for assembly lines often run six or seven days a week, usually for 14 hours a day. This allows people to almost continuously man the equipment as soon as they come up with these facilities. 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