
Apple explores moving 15-30% of production capacity from China - sndean
https://www.reuters.com/article/us-apple-china-restructuring/apple-explores-moving-15-30-of-production-capacity-from-china-nikkei-idUSKCN1TK0XN
======
semicolon_storm
The absolute dependence on China is something I'm surprised more companies
haven't tried to combat. There's so many efforts to try and diversify to
reduce risk, yet almost every hardware company remains at the whims of the
Chinese government due to their dependency on Chinese manufacturers.

~~~
devoply
No one else has workers that work for a pittance and have an average IQ of
100... and are willing to work very long hours. It will cost money and
probably quality to move this anywhere else without paying a lot more for the
same thing. Apple has put over a hundred billion into its pocket on the back
of these works, now let's cut them loose and pay someone else the money you
"saved" to do the same thing for more.

~~~
reaperducer
_No one else has workers that work for a pittance_

Africa. Bangladesh. Haiti. India(?) Look for where the clothing manufacturers
have moved.

Most people who can be trained to run a stitching machine can be trained to
work on an electronics assembly line.

~~~
gingabriska
I've been to China and lived there for 5 years and now living in India for 3
years.

The infrastructure scale in China is huge. Even in small towns electricity is
offered 24/7.

In India even in the largest cities there is constant load shedding, power
cuts often 1 or 2 hours daily.

Internet is slower in India, heck you can't find screws for sales on Amazon
India and in china even in the smallest towns, I saw speciality stores at
every few kilometres who stocked every kind of screws.

India might be able to compete in terms of population but it's decades behind
china in infrastructure.

No disrespect to India but I am afraid till India has insane custom duties on
foreign imported products, Indian talent will have a self imposed ceiling.

In Chinese market, you can find quality German tools but in Indian market,
even tools are hard to find, I've no idea how makers deal with this shit here.

If I had to tweak one policy in India, I'd remove all custom duties so that
youth is able to import quality tools and inputs from abroad and is able to
produce quality output from that.

India limits what you can import and puts tariff on that, this results in
using shoddy input for manufacturing resulting in shoddy output.

Garbage in garbage out.

Talent is crushed before kt gets a chance to blossom.

And whatever companies product in India do not sell buy export their stuff to
other rich countries and domestic market is kinda empty.

------
_cs2017_
I was curious to compare Apple's revenues from China with the payments it
sends to China for manufacturing.

Revenues (official data): ~$50B/year, down from $80B/year a year ago.

Costs attributed to China are very hard to measure. A lot of the official
"manufacturing cost" of the iPhone doesn't actually stay in China (as chips,
screens, etc. are all manufactured outside of China, and simply assembled
there:
[https://www.bloomberg.com/opinion/articles/2019-06-12/apple-...](https://www.bloomberg.com/opinion/articles/2019-06-12/apple-
s-iphones-are-already-made-in-u-s-not-china)). According to one source
([https://theconversation.com/we-estimate-china-only-
makes-8-4...](https://theconversation.com/we-estimate-china-only-
makes-8-46-from-an-iphone-and-thats-why-trumps-trade-war-is-futile-99258)),
about ~$8-9/phone stays in China. Also, Apple makes ~200M iPhones a year (not
all of them in China, but let's ignore that).

Assuming my numbers are not too far off, Apple contributes ~200M x $10, or
just ~$2B to the Chinese economy by manufacturing the iPhones there.

It seems that if China restricts (or even merely discourages) people from
buying Apple products, it will hurt Apple a lot more than Apple could ever
hurt China.

Of course, China cannot do anything to Apple without US retaliating. But as
the trade conflict escalates, this threat loses its power as there are fewer
things to retaliate with.

~~~
writepub
Your $2B number is way off. While most chips are manufactured outside China,
most chip packaging happens within. So, all the costs post mass chip
production (into cut silicon dies), including chip packaging, testing, PCB
manufacture, assembly, etc happens in China. You're off by at least 5X,
$50/iPhone is the money paid to Chinese vendors, or at least $10B.

Considering the 3X labor buying power compated to the US, $10B/annum is
directly supporting the livelihood of plenty in China. The indirect benefit of
training a workforce in cutting edge high tech manufacturing, and R&D, is
possibly much higher. So high in fact that Huawei, Xiaomi and Oppo combined
probably outsell Apple and Samsung combined

~~~
_cs2017_
Ah thanks, I wish I had better sources, the one I quoted was all I could find.
Yeah at $10B/year, the tables are turned I think.

Strictly speaking, it's still a lot less than the money paid by the Chinese
citizens to Apple. But that's not a fair comparison, since it's not like the
Beijing government can just take that money and use it to pay salaries to some
workers.

I suppose they could, over time, guide domestic consumption towards more
domestic goods, but it's a slow and uncertain process.

------
sunstone
Yes Mr. Xi has a lot of enterprises reconsidering their options with respect
to China. If I'm not mistaken the Chinese have a saying, "The measure of
someone's irreplaceability is the divet that is left in the bucket of water
after their fist is removed."

~~~
Fjolsvith
Looking for the missing hole in the water is ignoring the lower level of water
in the bucket and saying, "We've not lost anything!"

~~~
sunstone
Hey are you trying to mangle the metaphor? Back off :)

~~~
Fjolsvith
Nah. I just don't think that Chinese sayings are all that smart sometimes.
I've got a father-in-law that tries to pull similar "gems of wisdom" on me.

------
killjoywashere
Dear Apple, as a Vim user, the only thing that will get me to buy your
touchbar macbook is a stamp that says "Made in the USA". I will learn Emacs to
buy that laptop.

~~~
iezepov
My life changed when I remapped caps look to be Esc. You don't even need any
third-party software or configs to do that.

~~~
povertyworld
Is the whole escape key thing a joke that I'm not in on? Why don't you just
use the part of the touchbar that is exactly the same as an escape key all the
way down to saying "esc"? I don't get it man.

~~~
ctab
It's not the same. If you're used to typing without looking at your keyboard,
a fake key on the touchbar does not compare to an actual key where you can
feel without looking that your finger is in the right place, and can know by
the key travel that you've actually pressed it.

It's pretty much the same as the difference between a car where the air
conditioner and radio knobs are a touch screen vs. being real knobs that you
can safely adjust while driving.

~~~
burlesona
I thought that too, then I got one of the new MacBooks and used it for about a
week. I stopped noticing that the escape key wasn’t a key somewhere between
day 5 and 7. It’s very easy to hit, as you can trigger it by tapping anywhere
on the edge of the touchbar (not just the graphical button), and thus I think
it becomes very easy for your muscle memory to adjust.

I would still prefer a physical function row, but it’s not that big of a deal.
And actually some of the controls on the touchbar are really nice, for example
the volume and brightness controls for changing all your connected displays at
once.

~~~
povertyworld
Exactly. You can just swipe the corner of it like you're brushing off dust or
something, and it will register as a click. It's probably less effort than
having to mash down a button that far to the edge of the keyboard.

------
meruru
Two questions:

Is it easier to move away from China now than in the past due to more
automation meaning less need for cheap labor?

Will the need to move away from China going to accelerate the development and
adoption of automation technology?

~~~
bane
Manufacturing technology in China is not at a monopoly and is not highly
automated. In fact, if you look at what's being built in the Chinese tech hubs
(e.g. Shenzhen), it tends to be more of an advanced assembly hub than raw
component manufacturing because the that's where China wants to sit in the
value chain for now.

Manufacturing of the components can be done pretty much anywhere, even
incredibly high-tech components like CPUs (e.g. Intel has fabs in the US,
Ireland, Israel and China, but also used to be in Malaysia, Vietnam, Costa
Rica and so on). However, most component manufacturing is commodity stuff like
capacitors or springs or whatnot. Very low profit and growth. It's not to say
that China doesn't make a large number of those things, but those are even
_easier_ to manufacture pretty much anywhere and there's no real monopoly on
those things in China and once they're automated it means that there's no
specific reason they have to stay in China.

China manufacturers want to move up the value chain and thus are really doing
final assembly of the components or sub-assembly work (with final assembly
perhaps also being performed in China) of other people's designs. The next
step up the value chain is of course to sell their own designs, and services
around selling designs, and it's pretty clear that there's ample talent in
China's domestic market to get there very soon.

Anyways, what makes money and grows is figuring out how to put the existing
components together into novel products and then charge for profit for product
demand. A capacitor might cost $.01, but in an iPhone that same capacitor
might be "worth" $.03 as a fraction of the total sale price. It's better to be
Apple selling 1,000,000 iPhones than to be the capacitor maker selling
1,000,000 capacitors because Apple gets to pocket the extra $.02.

The reason China has become such a major manufacturing center is because of
two factors:

1) The raw components are readily available.

2) The labor is cheap.

As I've mentioned, #1 isn't really important for mass manufacturing. Over the
decades similar major tech manufacturing centers have sprung up in quite a few
places, for example Akihabara in Tokyo or Yongsan in Seoul. These places are
now shadows of their former selves, but you can _still_ go to Yongsan and buy
100,000 3" computer power supply fan motors for cheap if you really want to.

What made the whole thing work in China is #2 - cheap labor. And that exactly
why it used to work in Japan and then Korea. But the economy got better in
those places and the labor got less cheap. It's why Akihabara mostly just
sells used stuff and video games and nobody really buys computers and radios
at Yongsan anymore. The labor market is just simply got too expensive to keep
employed manually soldering tiny components together.

Folks I know now say that things aren't so cheap in Shenzhen anymore.
Facilities cost as much as any first-world country, and labor is getting to be
Eastern European levels or higher. The availability of components is still
unstoppable, but that only exists because the manufacturers exist and that
only exists because the labor was cheap. Which means Shenzhen is becoming more
and more of a good place to rapidly prototype and engineer designs for
manufacturing...but is starting to feel less and less like the place you want
to do the final factory work for a million copies of the thing you just
designed.

Once the labor pool prices itself out, the ubiquitous availability of parts
will eventually dry up and it will no longer be the manufacturing paradise it
was and won't even be a great place to design stuff. So where does it move to?
I don't really know, but you need a good combination of:

a) poor to not wealthy

b) reasonably well educated

c) ability to move materiel in and out

d) not a global pariah

e) a culture of hard work

f) not lots of other natural resource traps to focus the economy on

I think there will be a few years of fooling around with repatriating some
manufacturing in the U.S., but the conditions here are bad for electronics
manufacturing. So I think it'll eventually settle for a generation in maybe SE
Asia or somewhere in Latin America. Wildcards might be Eastern Europe (maybe
Poland, Slovakia, Czech, Hungary) or or a few places in Africa (Kenya,
Ethiopia, South Africa, etc.).

Or even more intriguing, the countries that China has focused their Belt and
Road program on -- after all China will need a future China to make cheap
stuff for them!

~~~
sonnyblarney
It's way more than that.

There is specialized machinery, a whole set of very specific skills, and the
supply chain is considerably more than 'resistors'.

Walking down the street in Shenzhen you see a vast array of all sorts of
components, like a raspi/makers candy land. And they are all cheap.

There's a layer of specialization on top of much of the assembly that requires
bonafide 'know how'.

We sent a factory a schema and 3D design, they basically had to redo
everything for the purposes of manufacturing, and it was more than trivial. We
had to work back and forth in a detailed way.

Also - there is the civil infrastructure, access to capital, export friendly
terms - etc.

The electricity is stable in China, not so in India. etc.

So yes, it's mostly volume and labour, but it's much more.

I think your list of a-f applies to things like sewing shoes, but not to
iPhones, for example.

~~~
bane
> There is specialized machinery, a whole set of very specific skills

This is true, but it's only as sticky as how long it takes to place the
equipment and to train people in the next place.

> I think your list of a-f applies to things like sewing shoes

It wasn't really all that long ago when China could only manufacture things
like shoes and was considered to be basically a third world country. The only
special conditions that China had that made it the next Akihabara was access
to a cheap and reasonably well educated labor pool (and one could argue a
government that had the political will to push for rapid economic development
pushed forward by Deng Xiaoping style reform).

Every other thing that's happened, happened after that. Every nut, bolt, high
temperature vacuum sealer...every special soldering skill and QA plant, every
automated CAD driven metal milling machine. All of it came to a place that
made cheap shoes.

> Walking down the street in Shenzhen you see a vast array of all sorts of
> components,

During the 80s you could walk around Akihabara in Tokyo or maybe even
Ximending in Taipei and see the same thing. In the 90s it was Yongsan in
Seoul.

There is no special geographic, resource or economic reason why it has to be
in China. And we know this because it was previously in other places. Shenzhen
is simply the latest stop for global manufacturing.

Foxconn, the symbol of Chinese manufacturing, after all, is Taiwanese.

It's not like the change happened over night, or even that it's entirely
completed today. Japan still makes some of the highest-end precision optical
components on the planet, video games and robotics. South Korea still
dominates in memory and display technologies. Hell, the U.S. still designs
some of the best consumer electronics anywhere.

Someday, people will speak in awe of the tech ecosystem in <insert city in
some other country> and talk about the grand 'ol days in Shenzhen...which will
be known mostly for drones and pinball machines or something. It may take a
decade, but it will happen.

~~~
sonnyblarney
Yes, I agree with all of that.

But that kind of change is very rare. China has done more economic growth in
30 years than any nation in history.

I don't see India or Vietnam moving that quickly in any direction.

Vietnam does not have the scale or institutions, India has all sorts of
problems.

China declared Shenzhen to be a global city for this and they 'made it
happen'. I'm not sure if there are going to be other candidates.

But in the end, it's diffusive and I agree with you, maybe some countries are
able to carve out niches.

Maybe India beats China to chip fabs or something, due to their competitive
position in adjacent things like software, and their relationship with
American companies on that front, and the fact it may not take 'a national
directive' to do it.

------
akshayB
Most likely they will move to some country around China so its still easy for
them to move stuff and raw materials around. They can also move the production
to India a place where they always struggled to sell the phone.

------
starman100
Maybe, just maybe, tariffs aren't such a bad idea. Yes, we realize it's really
just a "tax on everything" but by making it a little less cost-effective to
move manufacturing to China, we may bring more jobs and money back into the
United States.

~~~
ulfw
Why would I as a non-American want to buy a US made iPhone over a China made
iPhone?

~~~
nottorp
And don't say quality, the Chinese will manufacture exactly what you pay them
to manufacture. It's not their fault that 90% of their customers pay them to
make cheap shit.

~~~
ulfw
If anything I'd trust (for now) the quality more with the Chinese as they've
been building iPhones for 10 years, have experience, have their quality
control improved year by year etc. No newcomer won't be as good from day 1

------
Apocryphon
What potential countries might be the locations that it gets moved to?

~~~
igravious
India has import tariffs (is it correct to call them tariffs?) on stuff like
that. It is a huge yet growing economy. If you you relocate your production
there you avoid the tariffs. Bet you dollars to donuts if or when they move
it'll be to the Indian subcontinent.

"Apple's India Move Is Risky, But Better Than Facing Trump's Trade War"

[https://www.forbes.com/sites/davidvolodzko/2019/01/17/will-a...](https://www.forbes.com/sites/davidvolodzko/2019/01/17/will-
apple-become-the-trade-wars-next-victim/#3ac0e4873617)

~~~
wtmt
Import tariffs are a big reason why Apple’s market share in India is abysmally
low. The products cost a lot more while affordability and income are also
relatively lower (on average) compared to other countries.

iPhone assembly in India started a few years ago, with Wistron and more
recently, Foxconn, setting up facilities. So far these two assemble only the
older models, and the volumes may not be very high. But they will accelerate
the pace since Apple cannot have local stores, due to regulations, unless it
sources at least 30% locally. It’s been trying to negotiate better terms with
the government, but hasn’t seen much success since many other smartphone
makers have facilities here (the government once said it would not provide
preferential treatment to anyone).

Next year (2020) or 2021 may be the year when flagship iPhones are assembled
in India, even if volumes are lower.

~~~
igravious
Interesting info, thanks. Never heard of Wistron before. The 30% rule seems
like a reasonable bar in order to foster local growth, do you think? High
import tariffs I'm not so sure about. Some might argue it's protectionist but
I think there's nothing wrong with protecting parts of your economy that are
weak. See: “How Rich Countries Got Rich and Why Poor Countries Stay Poor” by
Erik S Reinert

[https://www.amazon.com/How-Rich-Countries-Poor-
Stay/dp/18452...](https://www.amazon.com/How-Rich-Countries-Poor-
Stay/dp/1845298748)

As India becomes wealthier and if Apple can move production of all of their
models there relatively soon that should set them up nicely to capture a
larger chunk of that market.

~~~
wtmt
The 30% local sourcing rule is just one aspect to encourage local
manufacturing, employment and capacity building for companies that want to
start their own "single brand" stores. I personally don't think that will help
a lot, though it does add pressure on some companies like Apple, now that it
has realized after a long time that India's market ought to be tapped after
the slowdown in China and near saturation elsewhere (Apple did not focus on
India for a very, very long time, and the country barely got any attention —
Apple's services are also extremely poor in India. Apple Maps is far, far
behind Google Maps, and Siri doesn't recognize Indian accents well).

India should have encouraged manufacturing and assembly of semiconductors and
electronics a long time ago, but successive governments didn't do much about
it with urgency. The infrastructure for this is quite weak (especially in
comparison to China and Taiwan). Add to this issues with electricity (there
are periodic power cuts in most cities) and other infrastructure issues, it's
more difficult for companies to get things done. That's where companies like
Foxconn, which have had a presence in India to assemble computers and other
accessories, have an advantage in ramping up.

After crude oil imports, the import of electronic goods stands second (or
sometimes third, after gold) in terms of foreign exchange outgo and the
current account deficit. This is a huge problem for the government. In the
last two decades, India has achieved a lot, mainly through the private sector,
on mobile phone usage penetration, and India has the lowest (or one of the
lowest) cellular plan pricing in the world. But it still lags on other related
fronts, like great devices to take full advantage of the network and the
Internet while remaining secure. High import tariffs on these products make
them inaccessible to most people, and they have to make do with cheaper and
inferior products. So I personally don't support high tariffs on products that
can accelerate the way people connect and what they can achieve.

~~~
igravious
Thanks for taking the time to share that.

------
wtmt
Production capacity may move out of China, but it would most likely be
assembled by the same (Chinese/Taiwanese) companies who are doing it now in
China, like Foxconn and others. That’s the only way this can move forward at a
quicker pace. Some of these companies have facilities and people in other
countries.

------
temprelrel
The cynical person in me can't wait for IPhones to start costing $2k instead
of 'just' $1k.

------
User23
Looks like taxes can alter behavior after all. The "tariffs don't work" lie is
now observably false.

That it took Donald Trump to get companies to make their supply lines less
fragile is pretty depressing. Never rely on a single source for anything if
you don't have to.

~~~
sonnyblarney
'Don't work' to do what? Damage trade?

Nobody is going to claim that a 25% tariff won't destroy a trading
relationship, of course it will. That's a monster tariff. It's big enough and
wide enough it will have substantial effects if it's held.

The issue is who actually wins, who loses, what are the after-effects etc..

All things considered, China will be the bigger loser here, but America
doesn't stand much to gain, other than some overall strategic leverage.

iPhone's won't be any cheaper, and Apple likely won't be making more money
over this, rather, they'll possibly have a more resilient supply chain, and
America will maintain more power in the ensuing balance.

If anything 'the rest' of SE Asia is probably the winner in all of this. Which
is fine.

Edit: I should add, if 25% tariffs are maintained, all of America will soon
start to see that hit them personally; there will be a material lift in
consumer prices that will be noticeable even at the consumer level. I don't
think it will be a 1970's OPEC shock, but we'll see it. It takes a long time
to realign supply chains, and even then a lot of it is not very amenable to
shifting away from China. It will be interesting to see what happens when this
goes from an 'abstraction' to materially popping into people's lives.

It's already hitting my business hard as we're scrambling to figure out what
to do, and this reality will soon trickle into the lives of regular people.

I actually do support some kind of trade re-negotiation with China, and the
25% tactic is in some ways a nice manoeuvre, the problem is, it might have to
be a bluff because it's going to hit the economy very hard.

~~~
rohit2412
> All things considered, China will be the bigger loser here, but America
> doesn't stand much to gain, other than some overall strategic leverage.

That is what it has been about. Geopolitical dominance and leverage. Your
statement is like "by preparing for Olympics America doesn't stand to gain
much, except a few medals, global recognition of sporting prowess, and a
healthy cultural of staying fit".

~~~
sonnyblarney
"Geopolitical dominance and leverage."

???

So America will be paying through the nose in hard dollars for a trade war
with China ...

... so they can get what exactly what (?) from 'Geopolitical Dominance'?

Where does the money come from exactly in some extra 'Geopolitical Dominance'?

Cars? Better trade terms? Cheaper goods? Better IP?

Your argument is upside down:

 _The whole point of 'strategic dominance' is to be able to create value for
citizens_.

Making citizens pay a 25% tariff for the hope of some future intangible return
is basically ridiculous.

 _The best outcome for America_ in this situation is a _good trade deal with
China_.

If neither the US or China blinks on this, it will be very damaging for both
countries, net.

There's nothing to be gained by either the US or China with a permanent trade
war, it defies reason.

------
camdenlock
While I’m loath to credit Trump for intentionally bettering the world... uh...

Has he done just that by starting this economic war with China? I mean, the
less power China has, the better for humanity as a whole.

i.e. if one would choose to be born in China, I’d be curious as hell to know
why. It’s pretty far down on my list of preferred places to live due to its
government’s nakedly anti-human approach to... well, pretty much everything.

------
sonnyblarney
This might be the most damaging of all announcements made thus far.

Companies have known they probably have relied a little bit too much on 'one
country' thus far, and that there could be ramifications, and this 'mini trade
war' is basically the red flag which caused them to 'do something'.

Apple is a monster, representing alone a good chunk of the trade.

But it isn't this specific move, it's the knock-on effects and the permanency
of it the changes that will be the real damage.

Apple is an industry leader, and this will cause everyone to think about their
situation in the same way.

Even if the 'trade war' ended today with happy smiles, companies will still
look into this, because all of this could happen again, and it's probably the
right thing to do anyhow in their eyes.

Once a portion of manufacturing leaves, it's never coming back, and as other
sources become more reliant and competitive and other companies see leaders
planting their flags elsewhere, there will be follow-on and the genie will not
be put back in the bottle.

I think this year is a major change point for China and the world, as the
1990's were fast but quiet, the 2000's it came to everyone's attention, the
2010's concerns started to rise outside the border, jingoism, 'head of state
for life' and enough critical mass of concerned voices lead by Mr. Big in the
Presidency (rational acting or not, it's made a mark).

Combined with a natural slowdown which would have occurred regardless.

This is a new chapter.

~~~
igravious
> Apple is a monster, representing alone a good chunk of the trade.
    
    
       Country  | Company | 1Q19 Vol | 1Q19 Share | 1Q18 Vol | 1Q18 Share | YoY Change
       –––––––––+–––––––––+––––––––––+––––––––––––+––––––––––+––––––––––––+–––––––––––
       1. Korea | Samsung | 71.9m    | 23.1%      | 78.2m    | 23.5%      |  -8.1%
       2. China | Huawei  | 59.1     | 19.0%      | 39.3     | 11.8%      |  50.3%
       3. USA   | Apple   | 36.4     | 11.7%      | 52.2     | 15.7%      | -30.2%
       4. China | Xiaomi  | 25.0     |  8.0%      | 27.8     |  8.4%      | -10.2%
       5. China | vivo    | 23.2     |  7.5%      | 18.7     |  5.6%      |  24.0%
       5. China | OPPO    | 23.1     |  7.4%      | 24.6     |  7.4%      |  -6.0%
                | Others  | 72.1     | 23.2%      | 91.9     | 27.6%      | -21.5%
    

Apple is 12% of the smartphone market and falling, they're no monster. They're
huge by market cap but not by handset volume. I'm not denying that they're a
significant player but let's keep things in perspective. If anything, Samsung
is the monster.

> Apple is an industry leader, and this will cause everyone to think about
> their situation in the same way.

I don't think they are. Arguably Samsung is on the hardware front. Google is
on the software front.

> I think this year is a major change point for China and the world, as the
> 1990's were fast but quiet, the 2000's it came to everyone's attention, the
> 2010's concerns started to rise outside the border […] Combined with a
> natural slowdown which would have occurred regardless.

Although the economy is slowing slightly most agree it is still growing in the
6% range. Given that most economists believe that China has more or less the
largest economy in the world in PPP terms even taking into account that their
regions definitely tend to over-inflate key numbers. We can see by metrics
like electricity production and consumption that the economy is probably the
largest in the world at least according to the CIA Factbook anyhow.

[https://www.cia.gov/library/publications/the-world-
factbook/...](https://www.cia.gov/library/publications/the-world-
factbook/fields/252rank.html)

> This is a new chapter.

I agree. People keep underestimating China.

# Last year China built ~6,000kms of high-speed rail, actually _increasing_
the rate of build out in the face of an economic trade war. To put that in
perspective that's more kms than Spain has _ever_ built and Spain has the
second longest high-speed rail network on the planet.

# Global patent applications leader starting from 1980 (a proxy for
innovation) …

    
    
      🇯🇵 Japan: (1980 – 2006) (26 Years)
      🇺🇸 United States: (2006 – 2011) (5 Years)
      🇨🇳 China: (2011 – Present) (8 Years) [Currently double the USA]
    

# In 2013 China became the third country ever to soft-land on the moon.

# “China is the world's leading country in electricity production from
renewable energy sources, with over double the generation of the second-
ranking country, the United States.” according to Wikipedia

# Has the largest electric vehicle market in absolute terms and is on track to
be 50% of the global market by 2025

~~~
sonnyblarney
1) 'Unit sales' data is not super important next to sales, and especially
profit. Some of those manufacturers make $1 per unit, whereas Apple may make
$50 per unit in profit.

Apple is 50% of smartphone wholesale revenues globally (and about $200B in
sales for all products).

Given that Apple's margins significantly better than other makers, their
'profit dominance' is even greater, they're likely well over 60% of global
smartphone profits.

That's huge.

2) All of that aside, Apple is a _monster_ company globally. Everyone pays
attention to what they do. This announcement alone will make a big wave in
business, and others will follow their lead.

The world's most admired company with major manufacturing in China - has just
indicated 'they want to move 30% out' \- this is a big deal.

3) "Although the (China) economy is slowing slightly most agree it is still
growing in the 6% range."

No, it's growing at 6% in the imaginary fabricated CPC range. Now, it's more
likely a little over 3% in reality. [1]

If you want to know how 'we' (outsiders) try to figure out how much China is
actually growing, I recommend FT Podcast (Alphaville) on 'What China Wants'
[2] basically, they go into forensic detail about how the financial industry
tries to directly measure China growth, because nobody buys the CPC data. The
only thing that "everyone agrees" (even China) is that their published numbers
are made up.

But it's moot: the era of 'mega growth' is gone, and China is slowing down,
this nobody doubts, and this situation is going to be significant pressure on
Xi outside of everything else.

4) Most people are generally aware that China is 'big' and does things on
scale.

They're building rail - super.

They're landing on the moon - almost irrelevant.

Patent Applications - good, but has to be contextualized for all sorts of
things.

But again -> it's besides the point:

Apple is a massive company signalling a move away from China. Many others will
follow.

It doesn't matter what happens between Trump and Xi, this pattern is now
established.

The manufacturing that leaves is never coming back.

America probably does not gain, but the rest of Asia probably will.

China will keep on doing what China does, as you say.

[1]
[https://www.forbes.com/sites/kenrapoza/2019/04/26/morningsta...](https://www.forbes.com/sites/kenrapoza/2019/04/26/morningstar-
chinas-growth-will-shrink-to-3-25/#6fe1a97e37cd)

[2] March 21 Financial Times 'Alphaville' Podcast 'What China Wants'

~~~
theikedo
Your point on 1) is ridiculous.

For every unit sold, there is a person behind it that bought that phone over
iPhone. Just because a small percentage of people decide to buy an overpriced
iPhone doesn’t equate to market dominance.

~~~
sonnyblarney
Commenters on HN often lack basic economic sensibility, the comments related
to material business issues, particularly finance and economics are odd.

My point #1, is the opposite of ridiculous, it's the point.

Companies dominate by making money, that's what they care about.

Do you not grasp that Samsung, Huawei, end everyone else would instantly trade
their position for Apple's?

Do you not think that Apple's 50x greater profits doesn't give them enormous
leverage?

That Apple is selling into a competitive market, and still yields profits and
margins massively greater than others is pretty amazing, it doesn't happen in
other industries.

Apple is clearly the dominant power in mobile, and their next rival is not a
handset maker, it's Google.

As to my original point: Apple is a huge, powerful and important company, and
others will take note of what they do. They are a 'leader' in every sense of
the term, it would be 'ridiculous' to deny that.

When America's most profitable and admired company that manufactures stuff in
China decides to leave - it's a shockwave.

