Cook reinstated the charity price-matching policy, soon after he took over Apple. (Not that I'm saying that it redeems Apple, but they are moving in a more charitable direction.)

Foxconn is dominant in its industry. Moving to a another location may eat up way too much from the pie.

I'm not saying they shouldn't do the very least. A bit of CSR might be even good for business.

Foxconn makes stuff for a lot more companies than just Apple: https://en.wikipedia.org/wiki/Foxconn#Major_customers

They could ask, and even encourage, but not dictate. And Foxconn is not likely to do something that puts them at a competitive disadvantage.

They can certainly dictate. Apple has the money and volume to get anything they would like. If Apple told Foxconn that everyone making Apple products will be paid triple what they are making now and work no more than 8 hours a day, it could happen tomorrow.

What happens when Foxconn does that and every other company switches to Foxconn's competitors?

Just about every other company is already having trouble competing with Apple on price and quality. So, my guess as to what happens is that Foxconn attracts and retains the best (most productive + highest quality work) employees, leaving them, and their customers, at a disadvantage to compete with Apple + Foxconn, unless they too improve their wages and labor standards.

Apple's cost structure has much more to do with its ability to purchase in advance than the quality of the workers. The workers are exchangeable, but Apple buying up 100% of a components supply for a period of time is not exchangeable. Same for putting down billions for a new factory. They have more cash than the bank and play banker for a lot of people in the supply chain.

Apple do not use slave labour.