iPhone made in China is no better than the cotton from Xinjiang.
Earlier the reports are workers in the China iPhone factory had a protest and brutal conflict with the local police. Reasons varied from unbearable working condition, the zero-covid policy, and being deceived about the compensation. After the local police oppressed the campaign, the government assigned headcounts to local villages, demanding them to fill in the factory slots. No wonder Apple loves China so much.
Apple and many westerners never understand the risk and the ethics implication of doing business in China. Apple has utilized the cheap labor at a level where can never be possible in the civilized world, as well as making great profit out of the upper class of China, who directly benefits from the oppression system of CCP or part of the party themselves. It turns out that in spite of all values that Apple promotes, it actually cares about nothing but the profit and its comfortable zone in China.
And I will not be surprised Apple will cease the plan in India as soon as China steps back from the zero-covid policy, as if all the blood has not been spilled.
>Apple and many westerners never understand the risk and the ethics implication of doing business in China.
May be for many westerners, but not Apple. They knew exactly what they are doing.
>It turns out that in spite of all values that Apple promotes, it actually cares about nothing but the profit and its comfortable zone in China.
Which is the worst part of it all. Their insane hypocrisy.
Now that Apple is only moving assembly out of China, but they are continuing their help and bring BOE ( Display ) , YMTC ( NAND ) and CXMT ( DRAM ) into their Supply Chain. Even long time partner for Battery like LG Chem are getting less order in flavour or another Chinese Partner.
But Yes, again Apple wins the headline and PR because they are finally moving out of China. And even if this isn't even confirmed, or in the work. Vast majority of public will think everything is working in that direction or as if they have been done already.
Wouldn't India be similarly volatile? To an extent, it is possible to compare any country to the phenomenon that is China.
Isn't the current government run by a wannabe strongman (sorry, but I cannot bring myself to use the word "strong" in earnest next to that kind of politician) the type of administrator who has shown recently to do all kinds of random moves for the sake of posturing/self-imposed grandieur?
It's at the point where corporations have to be abusive to compete. This is what happens when government doesn't require minimum humane treatment and fairness for workers, based on having a good life, not just scraping by or sacrificing themselves to the machine for their family.
> May be for many westerners, but not Apple. They knew exactly what they are doing.
Yeah right, the idea that richest company ever didnt do a proper due dilligence and Tim personally didnt have whole + and - list with detailed financial and PR projections of each choice etc. is pretty naïve. I bet stuff thats happening was pretty high on cons list.
Everybody who wants to knows how things actually look like in China on the ground knows it easily these days, no mysteries. Suicides, oppression, child labor. Yet they couldnt care less and the only reason to move away is disruption of supply.
Ladies and gentlement there you have it, true morals of yet another big corporation, not worse but certainly not better.
But anytime I said something similar here on HN I get downvoted to hell, people for some ridiculous reason create tight emotional bond with a plastic gadgets in their pocket and go to great lengths to defend it regardless of facts.
And the last item - the idea that same amoral money-driven corporation on the other hand truly, properly cares about privacy beyond moves that look good from PR perspective is dangerously naïve too. There is simply no safe commercial phone, and Apple would have to open source all software and hardware to prove otherwise, so its just not happening.
> Suicides, oppression, child labor. Yet they couldnt care less and the only reason to move away is disruption of supply. ... Ladies and gentlement there you have it, true morals of yet another big corporation, not worse but certainly not better.
Do you have a link to reports on Apple utilizing child labor, from which your conclusion is derived? How much of their labor in China is based on children?
From what I've read in the past, they became extremely vigilant in particular about eliminating child labor from their supply chains a long time ago.
If you had read something about Apple being "extremely vigilant" about eliminating child labor, it was a press release from Apple. It was a bald-faced lie, but it apparently worked, because you're unfortunately perpetuating it (even if unintentionally so).
In reality, Apple has only started to address child labor in the past two years, and that was after being exposed for their continued egregious use of child labor and unwavering support of labor abuses.
That benefit overlooks a lot of human cost involved. And if you're being real, you'd know the major beneficiary is Apple. The American companies aren't quite the saviors that folks might think they are.
You'll be unable to paint an alternative scenario for bypassing the process of gradual wage increases because it would never work in reality.
What was China going to do, warp straight to having an economy with $60,000 GDP per capita? If things actually worked that way, countries as diverse as Romania, Indonesia, India, Vietnam, Pakistan, Mexico - they'd all do it too. It doesn't work that way. You have to move up, gradually, through a very long and grinding road of progress and persistence.
Subtract the companies that provide the jobs for developing nations, and you have nothing. And you can't give a single other example throughout modern industrial history for an alternative path, because there can't be one. The capital investment has to come from outside, it has to be incentivized (otherwise why bother), and or you have to very slowly build it up from development internally + foreign trade (and that internal development will be accomplished by corporations just the same, just as it also was in China by domestic companies that behave just like Apple or worse).
Name a country that has skipped from poor and developing to affluent and developed without going through it (specifically without relying overwhelmingly on natural resources like oil, those are extreme outliers).
People forget this is actually what Singapore did. Before being a biotech and tech powerhouse, they were an assembly factory for western companies. Then they slowly expanded from that to airport, tech, airline, etc.
They have a geographic advantage too, but no one had to make Singapore a central shipping hub, it could have been anywhere else.
This is how you do it. There’s no other way. Eastern Europe is an interesting work in progress at the same thing. But the Ukraine war has really put a spanner in the works.
That's all well and good, but today's mega corps are leeches. And the world is more connected and less isolated. Things are very different from the 1950s to the 1980s to now.
Funnily, it is generally true given that net resource transfers to the global south have been negative for most countries... with the big exception being China[1], so China has benefited off global trade deals like these, but their income inequality isn't exactly something to look up to either (but despite that, they manage to beat the US on this stat). The other poor countries are mostly falling behind in a relative sense, and have been since the 80s, so we should certainly be thinking about disincentivising borderline slave labour because right now it isn't worth it for those countries, they simply aren't benefiting off doing it.
But also, we are moving (slowly) in the direction you'd likely prefer: Norway and Germany are now doing supply chain due diligence[2]. Hopefully we continue moving in that direction so we can push the floor up and perverse human rights violations become more of a thing of the past.
I wish sometimes folks could see past their paychecks, privilege, and holier-than-thou attitude. That's too much to ask. I mean, better chances at holding Apple accountable than dealing with its notorious fanbois.
When you insult someone in your argument, their instinct will be to clam up and double down to defend themselves even if intellectually they’d agree with you. If you truly wish to enact change in another’s point of view, allow them the emotional safe space to explore and turn around their views. Be honest and show you’re willing to work with them against the problem. Otherwise you end up with a frustrating shouting match where the other party disagrees with you more.
Agree. Though, when you see words like "abstract obscurantist nonsense", you know those kind of folks like it straight and wouldn't want it any other way.
That said, in the second-half of that comment (which might come off as argumentum ad hominem), I was speaking in generalities, and not about one particular person.
I don't have a paycheck, I'm living off capital gains, thank you. Your argument is a great example of throwing a pile of words (via your link) at a question and missing entirely, because the question is, "Does foreign investment in manufacturing make workers of a country better off?" and the answer is, "Yes, vastly."
But thank you for pointing out that Communist governance is awful, we're in agreement there.
Tell me you didn't read the link, and we can both go off on our merry ways? If you did, I want to know precisely which part about 'human cost' is hard for you to understand. Set aside the 'oh you poor lot, without american money you're toast' attitude for a second (it isn't charity!), and then try to reason about it all (including the profits going back into the american coffers).
You're not actually computing the answer to whether foreign investment made the Chinese vastly better off. The answer is, it did. You can even absorb an entire Wikipedia section into the question without considering the counterfactual of what unemployment or lower-wage factor employment or agrarian employment practices were like, and the answer is yes, it did.
> then try to reason about it all (including the profits going back into the american coffers).
Apple's profits come from their customers giving them money, not the Chinese employees, who took profits as well.
> You're not actually computing the answer to whether foreign investment made the Chinese vastly better off.
That could have happened without humans being treated like cattle. I don't think that's hard to compute? If it is, no amount of 'what else could the american capitalists do if not leverage lower wage structures to their advantage' justifies that, I am sorry.
> Apple's profits come from their customers giving them money, not the Chinese employees, who took profits as well.
Employees took the profits? The profits trickled down from one mega corp to another; the line workers had to pay for it with their health. Answering "why wouldn't Apple build iPhones in the US" makes the capitalist designs plenty clear (which isn't a bad thing, and there are all kinds of ways to make money, but after a reaching a certain scale and seemingly bottomless capacity to generate revenue, it should start to matter just how it is made, as well).
You aren't addressing whether they'd be better off or worse off, with one less option for employment. A handful of complaints and controversies as linked doesn't actually provide the information necessary to draw the conclusion you claim.
Wouldn't you expect workers to be better off in treatment when the end customer has high margins, as Apple did, compared to low margins, as the next best employer would have?
> Employees took the profits?
Yes, that's why they got jobs -- the money.
And they took more at other companies, too, because having Apple do manufacturing in China also drives up wages at competing employers.
I get your point that one can't have their cake and eat it too, but the scale at which Apple operates (and its sustained strong performance) makes it super hard to justify any form of exploitation. In MBA terms, regardless of the positive influence of ginormous captial, ESG matters for ginormous companies even more.
This argument didn't survive the 2010s, the elephant graph argument has since been thoroughly trashed as the rentier-class propaganda it always was.
China is not some meek recipient of Western wealth but instead a canny operator to the benefit of their upper classes and rulers, outsmarting the rest of the world for not the first time in human history. The West is the tail, not the dog here; foreign investment was there for the taking in a shortsighted race to the bottom.
And to be even realer, Apple doing manufacturing in [country that isn't China] would have benefited the common factory worker in [country that isn't China] by driving up wages without also benefiting the totalitarian government of China.
Wonderful news indeed, but it’s not out of any ethical concerns, but because XI Jinping’s draconian zero-Covid policy and incessant lockdowns have made the Chinese supply-chain unreliable, something Apple like all businesses hate (remember, Tim Cook became head of Apple because of his supply-chain management chops).
Still, good to see the totalitarian tyrant Xi wrecking China just as his inspiration Mao did back in the day. Even if there is a new Deng to fix the damage after him, the world will not naively give China the same opportunities again.
> good to see the totalitarian tyrant Xi wrecking China just as his inspiration Mao did back in the day
This affects real people who just found themselves on this situation and have no power to change it. Gleefully calling the situation “good” is callous and insensitive.
I didn't read the parent as approving of totalitarianism or the damage that arises from it. Unfortunately the memories of Western elites seem to be very short when it comes to Chinese atrocities. The silver lining to the very dark cloud of current events is that it's increasingly hard for them to ignore how evil the Chinese system and its rulers are.
I was alive before we handed all our manufacturing capacity over to China and we got along just fine. I was alive while it was happening, too, and I remember it being sold to the public as the first step toward an inevitable transition to liberal democracy in China. All those lies are now completely unmasked. China lied, the MNCs lied, Western governments lied. Never forget all the lies we were told. Never forgive either.
> I was alive before we handed all our manufacturing capacity over to China and we got along just fine. I was alive while it was happening, too, and I remember it being sold to the public as the first step toward an inevitable transition to liberal democracy in China. All those lies are now completely unmasked.
I don’t think it was lies.
It was before my time, but the kitchen debate between Nixon and Kruschev was very ideological and I think the belief that market reforms would liberalize China, was genuine.
Some of the arguments used by Nixon haven’t stood the test of time:
Khrushchev: We have steel workers and peasants who can afford to spend $14,000 for a house. Your American houses are built to last only 20 years so builders could sell new houses at the end. We build firmly. We build for our children and grandchildren.
Nixon: American houses last for more than 20 years, but, even so, after twenty years, many Americans want a new house or a new kitchen. Their kitchen is obsolete by that time....The American system is designed to take advantage of new inventions and new techniques.
Planned obsolescence of course, introducing a raft of
global problems.
If communism failed (and I believe it unambiguously has), Americans were blind to the limits of a market system:
Nixon: … Diversity, the right to choose, the fact that we have 1,000 builders building 1,000 different houses is the most important thing. We don’t have one decision made at the top by one government official. This is the difference.
It turns out that a central party or dictators can allow a market system, while maintaining an iron grip on powers.
Countries and their citizens will go through turmoil and strife regardless of how people halfway around the world react to it. Using this to show the inefficiencies of CCP management is just commentary on how China's dictatorship system hardly works when your entire cabinet/advisory board is full of yesmen.
Who are these people? The one and a half billion Chinese are powerless to rise up? No government can subjugate a billion people. Their state is powerful but it only works because the citizenry are decently happy with their lives getting better over the last decades
> Their state is powerful but it only works because the citizenry are decently happy with their lives getting better over the last decades
China has had a billion for more than 40 years now; the only signficant challenge to the CCP's dictatorship was at Tiananmen in 1989. Communism has developed fairly sophisticated tools to help retain control; all the way up from textbooks in schools to violence as needed.
I know. But if you look at the standard of living for the average Chinese over the last 40 years it is no surprise that there hasn’t been any major upheaval. Especially coming off of Mao’s deranged dark ages-level rule.
It’s really been more of a technocracy for most of that time. Deng for example was no Mao or Xi
> China is also no longer cheap. Wages have skyrocketed, with the average factory worker making $6 per hour on average in 2020, up from less than a dollar in 2006. The average wage of a Chinese factory worker will very soon surpass the U.S. federal minimum wage. For comparison, the average rate for a Mexican factory worker has stayed stagnant at $2 per hour.
> I think if you'll ask the suppressed people of Xinjiang, you'll find that they disagree.
Are you suggesting that China's slaves would prefer that the global economy continuing exploiting them?
> How is Apple responsible for the Chinese Zero-COVID policy, and the actions of the Chinese police?
They are enriching the entity that designed the policies and directs the police.
> Have you read Apple's extensive policies on Supply Chain standards and ethics?
Yes. Have you read the extensive laws against murder? Does murder still happen?
> China is also no longer cheap. Wages have skyrocketed, with the average factory worker making $6 per hour on average in 2020, up from less than a dollar in 2006. The average wage of a Chinese factory worker will very soon surpass the U.S. federal minimum wage.
No, it won't. Chinese labor law is a joke. Nobody in these factories are actually working 44 hours.
I don't know where people get the idea people are semi-enslaved in factories.. Having lived in China, in my second hand experience Chinese worker protection laws are quite strict. Somewhere between US and Europe. It's not really easy to fire people and people regularly sue their employers and win. The legal system is generally very heavily biased towards the little guy
I just feel really bad for these people. They probably left some country side life making peanuts to go make some real money for a while at a factory and like send their kids to college or whatever - and now westerners are like "no, you shouldn't do that. go back to your bucolic life of poverty. And btw we hate your government". Cool
From the initial reports it sounds like Foxxcon really royally screwed up and was not prepared logistically for a lockdown.
Another big part of this whole fiasco seems to have been conspiracy-theory style rumors and just a general freakout of the workers (which is kinda understandable given how policies are opaque and feel arbitrary)
"This young factory worker heard that the army was going to come in and take control so as to enforce a type of giant "living with Covid" experiment which involved allowing everyone in that part of Zhengzhou city to get sick."
In my experience.. even talking to educated middle class people.. these kinds of things are super common - even with all the social media controls. People believe all sorts of insane things b/c their sister's husband's cousin is in the army and told them blah blah. If in the US a double digit percentage of people believe that 9/11 was inside job - in the developing world the numbers are way scarier. It sounds like there was mass panic (again, kinda understandable given the mushroom management that's so common in Asia)
Born and raised in China, I stopped reading this after the first paragraph.
Laws are meaningless if they are never enforced or are simply ignored. Which happens all the time in China.
It is not easy to fire people. Sure, in normal situations. But when appropriate, government is going to ignore all these and do whatever necessary, and maybe even threaten to put you or your family in jail. Want to go to court? Good luck, the judges are going to stand with the government.
Another example: the constitution says that Chinese people have the freedom to speak, publish and demonstrate etc. Tell me how that has worked out.
The OP made a good point that applies to all poor countries I've lived in: those jobs are the only (even the best) way out for most people to get out of poverty, which they do to help their families/children/themselves.
Maybe you were raised in a family that did not need to go through such hard labor, but that doesn't mean your right in your view of your own world ;)
P.S. I was also born and raised in a poor country.
So I grew up in China and I can agree that the law is applied selectively. If you are a foreign corporation and have not paid the right bribes or in good books of the ccp official in your area in charge woe behold if you violate any labor rights. On the other hand if you're friends with the right people you can basically operate a slave camp.
That being said I do agree that our attitude of "lets shut down here cuz it doesnt work for us" does more harm than good. It's not like this will solve corruption. If anything, this will give Chinese people more reason to hate on USA and India, thus further cementing their governments power.
The point that “those jobs are the only (even the best) way out for most people to get out of poverty" stands. But the point that China has strict labor laws is laughable. The laws are indeed strict but seldom enforced.
This is true of most strict rules elsewhere: they're there but seldom enforced. Take speed limits, they're strict, but good luck enforcing them. All we do is we monitor from time to time and give tickets. Yet we could enforce this to the manufacturers, right? Why can a car go beyond the speed limit if it's strictly prohibited?
We cannot compare working conditions as is, but they're easy to compare when you take time into account: how where our labor laws a couple of generations ago? Not that different than poor countries today.
If the government is out to get you, then yeah you're screwed.
If it's you against a company - then you typically have more protections than I think the typical western reader would expect.
I personally know people that had issues firing others at their company as well as people that got compensation when fired. Sure there are loopholes and people still get screwed a lot, but on the whole companies are generally apprehensive to fire employees and it's not totally the wild west
In the current situation, it very much sounds like it's people vs. Foxconn and that in the end people got their compensation.
You can argue that the situation was instigated by government policies, but that's sorta besides the point
I'd say you are not seeing the world as it is. In the past, a job is for life, no one gets fired, and their children will take their position in the same factory, you get housing and everything. Now, if you are in state-owned enterprise and companies, you have a job for life unless you don't want it any more. In private sector, especially small companies, you may get screwed over. No, government will not try to fire you, you are nobody to them. You can go to labour court for these things, and normally you will get compensated for illegal termination. I am also only speaking in general, not cases.
> in my second hand experience Chinese worker protection laws are quite strict.
And yes, it's very strict. Lawful working hours are 40 hours per week. Lawfully firing a employee requires higher compensation than US.
Do you really believe above is enforced in China? Next time when you visiting China, ask them if familiar with this quote: laws in China are strictly legislated, commonly broke, selectively enforced. In fact, 996 is a norm and a company that does not require 996 will advertise that when recruiting. Layoff compensation for many people is ZERO because they don't even have social insurance or contracts signed. 100 Chinese Yuan per day, you get it when working and get nothing when leaving. (That's not the case for Foxconn though. I believe everyone working in Foxconn at least has a contract.)
> I just feel really bad for these people. They probably left some country side life making peanuts to go make some real money for a while at a factory and like send their kids to college or whatever - and now westerners are like "no, you shouldn't do that. go back to your bucolic life of poverty. And btw we hate your government". Cool
Thanks, I appreciate that. I (the OP) am that kid though. And I believe getting involved in labor-intensive industries can be a better thing than what it is nowadays in China.
I agree with the rest of your post. Like I mentioned, reasons of the protest are varied.
I mean I lived a sheltered life in the city and my friends were city folks, but I often hear people had issues firing bad employees. And on the flip side people new their rights and knew they couldn't just be left off on a random day.
Companies seemed always cautious with firing. Yeah there was tons of sneaky stuff and people not getting their contracts and lots of grey area stuff - maybe the enforcement wasn't great. But my point is that they actually have some mechanisms in place that do function when it's you vs a company (not you vs the government). So it's not fair to characterize the whole place as lawless
In this case from the news it seemed to have worked out exactly as it should legally. Foxconn messed up (or tried to get sneaky with paying people), they got slapped on the wrist by the government, everyone got paid
I hope their legal systems keep improving (it was way worse a decade or two ago) and less companies get away with screwing their employees. I'm skeptical other developing nations like India are on some other higher level with their legal systems.
I think your original post is extremely sensationalist - comparing factory work to pseudoslave labor in cotton fields - especially given you're from a background that benefitted from this (I assume your parents worked when the system was much worse)
The court system in India is notorious for delays and backlogs, to the extent that some companies don't invest there due to the difficulty of enforcing contracts.
This is what Westerners, who are used to rule of law, do not understand about authoritarian countries. Selective enforcement of laws is the preferred way to punish transgressors.
In Chechnya, the Kadyrovite kingdom, there is a crossroads with a traffic light that is always red. It never turns green. People routinely drive through that traffic light on red, because it can't be done otherwise.
Why is the traffic light even there? The side road connects to a Kadyrovite palace. If there is any accident with any vehicle coming from that palace, the normal driver on the main road is automatically at fault - because he disrespected a red light.
That's loads of bullshit. People don't really understand the 40 hours per week thing. You CAN work overtime, as long as you get overtime pay, and you should have 2 days off, if you work on those off days, you should get double pay. It is very common practice in factories, where you expect to work overtime to earn more money.
In office job it is very different, you hardly get compensation for overtime, but if you go to court you definitely can get the money. The real reason is that those jobs are best paid, a few times more than other people, so people typically only sue their companies after they are fired. Yes, sometimes people worry about not finding another job, so they will accept what's been forced on them.
the labour law was mainly for factory workers, there overtime needs to be compensated. For office workers, it is not clearly defined, because typically you are evaluated by works done, not by time as factory workers.
Who can honestly say they did not ever flaunt worktime laws (where they exist)? IT people do 60-80 hours, in the liberal-democratic country where there is a strict limit of 48 hours/week (and the average being around 39h). People wear that as a misplaced badge of honour - and often complain behind closed doors.
I've been living in Asia for 11 or 12 years now. There is definitely a strange culture of over-working.
Young people who live at home with their parents sometimes work late because they don't want to go home to their parents.
Alot of other people work late because they want to get noticed for promotions etc.
Some of it's self-inflicted. The first company I worked for in Singapore, the 'suits' as they are called (glorified sales people) would take requests from clients and commit at 6pm to deliverying the fixes by morning, then requesting the developers stay and do the work while they go home.
So there are definitely, 100% scenarios where it's not the company itself directly demanding employees to doing insane hours. But it does happen, China requires non-overtime hours to be capped at 36 hours. People are often not compensated for any extra hours they do.
Yeah, I think it's a scenario where you can probably sue and you can probably win - but then (just like in the US) you're known as the person that sues their employer and it's a black mark.
I haven't heard of people getting lawsuits about 996 thrown out in China - but to be fair I also haven't heard of people suing over that either.
>I'd like to invite everyone here to follow for instance CLW
Unfortunately, I think we're well past the days where you can simply say, "The WHO says..." or "the CDC says..." or "<some random NGO> says..." and expect anyone to believe it's some source of truth.
As we speak, we're literally in the middle of multiple supposedly trustworthy institutions being exposed for bending the truth or creating a narrative for political reasons.
There's a cold war with China in progress. In my country we're dealing with issues related to political influence by the Chinese. Even so, I'm trying to be careful that what I read isn't merely anti-Chinese propaganda, because I don't pretend we're not guilty of that ourselves.
This reads oddly like propaganda and flies against any and all of the evidence that we regularly observe, including the protests against working conditions that we are observing now
>This reads oddly like propaganda and flies against any and all of the evidence that we regularly observe
What evidence are you observing that has convinced you it's one way or the other?
I can go on Twitter and see some variant of the first comment and the second in almost every thread. What are you reading that you consider the "ground truth" that you can so easily point out the propaganda?
As a Canadian, I'm sure my sources are similar to yours, and I'm not really sure what the truth is. I assume it's somewhere in the middle. One thing I do know is that both "sides" are churning out propaganda at an unprecedented pace.
Wow, "are against the government", that's really some typical CCP talk seen in their smear campaign.
From what I can see people just want a bit of freedom and get their promised compensation. I doubt any of the workers has interest in overthrowing the government.
I'm not sure where you're from but for a good majority of the world, protesting against the government and wanting to overthrow the government are two very different things. I am talking about the former.
The sorry state the west has devolved into in the last 2 years.
It is not the law or the occasional protection. It is when it is not working, the threat as experienced by local that is the issue. Not to mention the overall issue of human suppression. It is not helping by producing and buying china.
Anyway, I think they moved is not because of this though. More because the unstable situation. And the invasion of Taiwan is inevitable. I will do it if I am in power. Not because I want to but I have to. That is the problem.
And if that happened, what you do. Like German or EU on Russia oil.
How many lesson you have to learn before you call yourselves …
My take is that most people use this as an excuse, no one cares about labors, if you really care about them, I would shift more jobs, they make enough money and leave factory, have a small business. I have relatives working in factories, it is the best thing happen to them.
People are afraid to say 'fk China' blindly so they have to say it under disguise of some moral ground.
> And I will not be surprised Apple will cease the plan in India as soon as China steps back from the zero-covid policy, as if all the blood has not been spilled.
I doubt it. The disadvantages of being dependant on a single source are well-understood in 2022.
Not OP, but the way i read their comment is the problems only become apparent in the long term.
When you do a cost to benefit analysis on china it always sounds great.
Yeah, you have to deal with a couple minor PR blunders since you are hiring slave labor, 2-3 weeks ARO boat time kinda sucks but they are fair trade offs for World class manufacturing for half the cost, and obscene payment terms since the CCP is involved in the deal making (120 days Payment terms on each milestone for CapEx is normal in china).
Only do you realise that you are manufacturing in a entirely foreign regime and that regime can do whatever it wants do you realise it's a problem. You are at their whim from a import/ export tax, wars (trade, economic and real), etc.
But all the benefits are real and easy to quanitify. The negatives are ethical and imagined until they are not.
India has never been a democracy in the sense that the Westerners understood it. India is also a fucking land grabber. It has land grabbed every single of its neighbors once the British left town. You never hear it in the West because it doesn't fit the narrative the West has on India.
I might add that India acquired a new territory dispute with Nepal just a few several years ago by unilaterally publishing a new map incorporating what used to be part of Nepal territory (according to India's old map) into India's new map. The action triggered a counteract by the Nepalese government when it published its own map.
These newly acquired disputed territory is different than the old dispute of Kalapani. In that case India requested Nepal to grant India access to Kalapani to better monitor China's troop movement during the 1962 war with China because Kalapani is on a high ground. The problem is once India squatted on that land it never leave and is still squatting on Kalapani to this day.
This comparing Indian Democracy with CCP is public exhibition of Intellectual dishonesty. No, they are not even in the same ball park.
Is there corruption in India, absolutely.
Can you oppose the Indian government politically and still make hand over fist money, absolutely and in Indian South, East, North, West even in New Delhi itself.
Try getting a loan in China and being vocal critic of CCP. Indian democracy has different energy but when you consider transfer of power after election, it is a run fucking away success.
> Apple and many westerners never understand the risk and the ethics implication of doing business in X
For clothing, people can check the label. Most consumers simply don’t care enough when fast fashion is cheaper and more convenient than “ethical brands”
Sonetimes you go buy an ethical brabd, and then turbs out ut was from thevsame factoemry. Mahor brands like Nestle havecslavery in the supply chain, without chiba being involved
Plenty of people live on farms and grow animals, kill them and then eat them.
I haven't killed one myself, but I have been at pig butchering "parties" at my grandparents or uncles and saw how the sausage is made. Still tastes yummy.
I bet if you ask city people to either kill an animal or grab a shrink-wrapped package containing a vegetarian meat substitute, by far the majority would choose the latter.
But you're also comparing apples to oranges. I would take the shrink-wrapped thing to, just because I have neither the means nor the skill to slaughter (or store) an animal. Offer people to either get a crate of raw soy or kill an animal, then we are at a comparable level.
… For a meal or 2, and then they're just as likely to grab the knife after realizing how nasty those meat substitutes taste compared to the real thing.
> Most people wouldn't eat meat if they had to kill an animal either.
I remember clearly we did the fattening and killing of chickens at home when I was a child. I had to step on a broom stick that was on the chicken neck, and wait until the chicken died. Then the adults cooked it and we ate it.
There was nothing strange or shameful about it, chickens were not 'pets', and every household did the same.
I would say people will step down their high horses as soon as the hunger and need of protein can not be satisfied with supermarket meat.
Not slaughering your own food is a pretty recent thing and still how common in a large part of the world.
Seems like a comment from an innocent kid this one.
> Apple and many westerners never understand the risk and the ethics implication of doing business in China.
Apple industrial partners are all asians. Samsung and the like don't do any better regarding ethics. Not sure why the divide with the "ignorant west" is necessary in your argument.
Of course people at Apple understand the risk, and it is taken into account to generate as much profit as possible.
Just for completeness, the US has its own flavor of issues here in its prison system.
Just 23¢ to $1.15 is the typical hourly pay [1], and work is not always voluntary and up to the same employee protection/safety standards as true employment [2].
Labour sourced from the incarcerated creates problematic incentives in law enforcement.
Forced labour means profit for someone. That is far too close to slavery to avoid major value clash, so it will hide itself to present a respectable face. Corruption is inevitable. You'll end up with judges sentencing children for profit. Off to the new world in fetters. As the setting for a novel, I'm convinced.
And one that's usually not done by Apple or Samsung, but by contract-manufacturers like Foxconn. Both Apple and Samsung use Foxconn. The "iphone factories" aren't Apple-factories, they're Foxconn factories which currently produce iphones but will produce Samsung galaxy phones if iphone production moves.
It's a "companies use Chinese as-close-to-slave-labor-as-you-can-get-without-being-called-out-labor" thing, not a "naive Western company finds out how things work in China" thing.
It appears I worded my argument wrongly. I am not comparing asian countries. I am only stating that the ones directly in charge of forced labor in this case are asian companies (Foxcon to start with). And that the ones giving orders are interchangeably asian or "westerner" companies (Samsung and Apple being two examples).
My point was that when it comes to profit and exploitation of workers, dividing in between "nice asians" and "mean westerners" is completely wrong.
I think you should read up more in Asia if you think slave labor is unique to China, you can start with Thai fishing industry.
Btw not that it would be case with Apple, these are Taiwanese companies with factories in China, so maybe instead blaming China blame the Taiwan, but I understand it's not trendy.
Oh and let's not forget "democratic" Vietnam with communist gov censoring internet and imprisoning people for opinions, where did I see that? And don't get me started on biggest "democracy" where you still have caste system which is mutually exclusive with democracy. Lived in China and visited all these for extended periods and it's very naive to think Vietnam or India are some step ups conscience wise.
There is a general lawlessness in India the 'biggest democracy' but aside from that large swathes of area in India is under a law that gives the state the power to imprison or kill anyone with impunity. No due process, no question asked. Anyone can be jailed or be killed by the state if the state deemed the person a security threat for whatever reason. The law is called AFSPA (Armed Force Special Power Act) and is imposed in Kashmir and the northeast. It is a brutal law that no civilized country should have.
China's recorded history goes back more than 3000 years. Granted, it was only unified 2200 years ago.
I don't know if any possible interpretation of Chinese history that puts China's formation a mere 500 or 1000 years ago. The Qin dynasty (3rd Century BC) is really the absolute latest point at which you could say China came into existence.
It's more like the British harkening back to Chaucer's England.
The problem with the Rome analogy is that China has had much greater continuity than Europe. China is what Europe would have been, if the Roman Empire had been reconstituted each time it collapsed.
Imagine if there were still one political entity ruling the entire Mediterranean basin and Western Europe, calling itself "Rome," speaking a Romance language, and in which every educated person was still capable of reading the Latin classics (with some difficulty).
Because it’s a propaganda term meant to imply China is uncivilized without directly saying it. Like calling America a democracy. We know it’s not but propaganda keeps that image “out there.”
Flamebait and/or unsubstantive comments like this will get you banned here. If you'd please review https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here, we'd appreciate it.
You can be "civilized" and an autocracy. Certain aspects of modern China makes the West look like a backwater. Hell, even Russia has less people in prison than the US and free heath care.
Also, that phrase just reeks of imperialism, racism and superiority - just a modern version of "savages who need our one true religion". OPs argument is about democracy, not level of development and culture.
What aspect of China makes the West look like a 'backwater'? I literally cannot think of a single thing. That doesn't mean China has no positive aspects. The West is also not monolithic.
I’d argue that most of the numbers you’ll find apply to the US, not to the west. The US is pretty much known everywhere for having third world shortcomings on specific areas.
The United States ranks as one of the worst countries in the world for human trafficking
Despite a common and widespread misconception, human trafficking is not just a problem outside the US. It also happens here, within United States borders, and in every state.
Less people incarcerated is good, how the prisoners are treated is another issue entirely and of course China can and should be heavily criticized for that.
But penal labor for literally cents/day or private prisons as a source of profit or the death penalty are something that the US, above all, should be able to improve on, before lecturing other countries over human rights.
Let's talk about
“Guantanamo Bay is a site of unparalleled notoriety, defined by the systematic use of torture, and other cruel, inhuman or degrading treatment against hundreds of men brought to the site and deprived of their most fundamental rights.”
This is a statement from "The Office of the High Commissioner for Human Rights of the United Nations".
What have the consequences been? Nothing. Literally nothing has changed!
People have been detained there for years, most of them without any charges, denied of the right to a due process, only because they were Muslims.
39 of those men are still kept captive there as of today, 20 years later, 27 of them have never been charged with any crime, the others have been cleared for transfer years ago, but are still there.
Imagine if China did something like that what the US would be saying about it.
That's the moral short circuit: if it's wrong it must be wrong for everybody, especially for those claiming to hold in high regards human rights, not only if China or Russia do it.
Some source to backup this number? Are they actually in prison?
IMO the fact that we should be skeptic about China official stats means that we should also refrain from throwing random numbers at the wall hoping it will make China look bad.
BTW, two wrongs don't make a right, it's not about what they do wrong, it's about what we do better, like for example, is Guantanamo acceptable in a western democracy?
We do plenty of uncivilised things in the democratic world. Casting China as uncivilised empowers the CCP to point at our prejudices and argue that their way is better and any Chinese who support democracy are self-hating traitors.
> I will not be surprised Apple will cease the plan in India as soon as China steps back from the zero-covid policy,
Companies are not stupid to invest billions just to get manufacturing for few months.
If someone is making assembly plans they will be willing to use it for atleast 4-5 years
> Apple and many westerners never understand the risk and the ethics implication of doing business in China.
That was a a great apology for colonial industrialism and how US companies exploit workers in other countries and just move on when they also decimate their culture.
They know the risks. They do not care. They are on to the next "risk" where there will make another few billion.
Truth is, there is no way to profitably produce any durable consumer products without dealing with someone who treats workers like trash, simply because everyone else is also doing this. Of course, we have a choice of them being Commies (China), or not being Commies (India), but that's about it.
Only way to fundamentally fix it will be to introduce a new Iron Curtain where we will "not trade with anyone we don't control", and that might work after a few frustrating years of high inflation and shortages, but will be too politically costly to try.
Calling China Commies is misplaced, its a self proclaimed communist state in the same way that North Korea is a self proclaimed democratic state. I think (not sure) China is mostly seen as "state-capitalist" by experts, which means a capitalist market with heavy state control & influence.
To label China as communist is similar to labeling the US as a company: it's a misrepresentation of the truth and says more about the labeler than about the country itself.
> Truth is, there is no way to profitably produce any durable consumer products without dealing with someone who treats workers like trash, simply because everyone else is also doing this
In some cases that's true, but in the case of Apple - the one with higher cost "luxury" products, double digit percent profit margins, tens of billions of cash and trillion dollar market cap - it doesn't really make sense as an excuse.
Apple has grown to this size because they had a much better margin than its competitors in the first place. If they built everything in America they would have disappeared long ago.
Maybe but as long as there is a trade war between the US and China, China seems to be a bad place to make iphones. Apples contractors need to find another place to due business so they dont take a hit to their bottom lines.
>iPhone made in China is no better than the cotton from Xinjiang.
High quality hardware and cotton that lifts peasants out of poverty through heavy state coordination with proceeds reinvested to move up value chain. No better = equally good.
Ethics get in the way of maximizing profits. We could have ethical treatment of workers with affordable phones while the rich stay rich, but we're afraid of that
Wrong. The protest is about compensation, the workers were promised to have 10k once they get pass the probation period, 3 months. They were let go before the 3 month probation finished, and they demand the payment. You don't just go around developing world and criticize people not eating organic food or anything. It is not right. I wish Chinese workers get paid the same amount as their western counterparts, the fact is that factories moved there because of they can pay less. Is it a bad thing? No, apparently we need dollars to import anything, so they are making less money in western standards, but at least they are making some money. Has fairtrade coffee made African countries as rich as Europe? it will never happen, forget about ethics, if you are taking away the financial base where people can make a living, you are taking away everything.
Wait, are you saying because China isn't rich, workers shouldn't have rights? I'm legitimately asking, because when you boil down your argument, that's what it sounds like.
Workers have rights. They have the rights to choose to work or not, they have the rights to feel happy about their salary and compensation or not. Things develop naturally. People want factory to move out of China not because they care about worker's right? If they care about the right, they would ask Apple to pay more instead of moving out of the country. Did I say workers shouldn't have rights? You cannot boil down my argument to a sentence does not make sense. Developing countries need to make tradeoffs. Work extra time so their next generation can live better. These things are not given, it is not like you are a great social activist and your country suddenly can improve economically as well. The world is under financial colonization, developing world is at the bottom because their influence is weak.
No, developing world DOES NOT have a choice, that's a fact. Unless you are sending money every day to developing world, taking their jobs away is basically murdering people. Maybe too much for soft westerns who didn't understand why people risking their lives and their kids' on a boat to Europe.
Flying geese companies move there exactly because Chinese workers can be abused nearly at will given that the focus of the government is (was) development at all costs
Flying geese will always abuse their workers, that's what Apple is. Same with let's say Foxconn
> Apple’s longer-term goal is to ship 40% to 45% of iPhones from India, compared with a single-digit percentage currently, according to Ming-chi Kuo, an analyst at TF International Securities who follows the supply chain. Suppliers say Vietnam is expected to shoulder more of the manufacturing for other Apple products such as AirPods, smartwatches and laptops.
I'm surprised it's so low. I know that they already have very established processes in China, and their contractors have probably invested a lot in tooling for those factories, but it seems interesting that they would still prefer to move less that 50% of their capacity there.
India, being a democracy, means that governments have to give in to demands of voter groups. The two largest voter groups are farmers and low wage labor. This has ensured that acquiring land for large scale projects or changing labor laws carries massive political risk.
Changes to India’s farm laws now seem next to impossible. I doubt India will have a more popular government than it has today. Yet, it had to cave in and withdraw a farm law reform bill.
If even this government couldn’t pull it off, there’s little chance future governments will do any better.
How much land do you think Apple needs to move its entire supply chain to India?
A few thousand acres?
Yeah, you can find non-agricultural land of that size all over India. 40% of India is non agricultural land.
Land acquisition related issues for establishing industries is a popular tool by politicians playing their politics. It has no bearing on reality or actual troubles faced by farmers.
Propaganda. The government of my state is led by a party that came into existence less than a decade ago. Every election has literally hundreds of candidates from hundreds of parties competing. I can and have criticized the government on online and offline mediums
Sure, there is pushback from government supporters, but that doesn’t mean there is no democracy. As it is practiced, democracy is thriving in India.
Just as a side note, BBC is never keen on India, simple googling would tell you the weird biases they had against India, they don’t even hide it or be subtle about it, my theory is, it’s an established bias in organization for generations since Independence of India and it passed on.
Please read more Economist or Reuters for actual factoids or practical opinions on India that are close to reality (I know South of earth news sources are all biased to west unless it’s loaded with triggering emotional stories of victims, I could list some good ones)
> they would still prefer to move less that 50% of their capacity there
It is not Apple saying this. So, this is some Analyst doing a linear regression. So we can't read too much into this. It could be possible that India starts manufacturing 80% of iPhones. Or It could be less than the claimed 45% too.
Also, if there's no reason for Foxconn to dismantle existing manufacturing facilities all at once.
> Vietnam’s manufacturing was growing quickly but was short of workers. The country has just under 100 million people, less than a 10th of China’s population.
> India has a population nearly the size of China’s but not the same level of governmental coordination. Apple has found it hard to navigate India because each state is run differently and regional governments saddle the company with obligations before letting it build products there.
India has 5% manufacturing capabilities of China and will be at least 2x expensive and slow. India also has strong labor laws and local politicians still need votes
It seems fair to assume that actual output and manufacturing capability are closely correlated (there's a limit to how much unused capacity can get built). Here's the manufacturing output by country (data from World Bank):
You’re complaining that india doesn’t have the manufacturing capability by pointing to the fact that stuff is not manufactured in India, in a thread that talks about manufacturing moving to India.
You realistically don’t have a way to measure capability.
First, I'm not complaining about anything. I do not give a fuck about whether India manufactures stuff or not. But there was a question about a number, I provided an answer for how it could be derived. You're welcome!
I disagree with your objection. Actual current output is a great proxy for actual current manufacturing capability, assuming even a tiny bit of rationality. If the two are not linked like you imply - and in fact India already has as much capacity as China - then somebody built 10x more factories than they needed, and lost unimaginable amounts of money doing so. Is that what you're suggesting happened?
Now, the claim is not that the factories, supply chains, trained workforce, etc could not eventually scale to the same size in India as in China. But somebody actually needs to do that work. Until it is done, the capability possibly does not in exist.
I feel like a rough measure would be to see the proportion of anything that is not clothing that has “Made in India” written on it in one’s home, compared to “Made in China”.
India might have been on a steady path of liberalization since the 90s, but it is still fundamentally a big-government country. There is a ridiculous amount of red tape every business has to go through to operate from and in India, and when it comes to tech regulation it tends to be just as trigger-happy to impose abrupt disruptive orders on businesses as the EU, if not more. India gets all this investment because it gets fancied as the next best alternative to China (in cheap labor), not because it is convenient or conducive to foreign players. India's ease of doing business is rather horrible in today's standards.
India has a lot of bureaucracy and protectionism. I also don't think they have any equivalent to China's special economic zones (free market economies where the usual rules don't apply) such as Shenzhen (Chinese Silicon Valley)
Huh I thought I looked this up earlier, but I guess I was mistaken. Are these zones similar to China's? I see lots of tiny zones on that list that are focused on manufacturing just one product rather than huge cities that make everything.
They are not even remotely comparable to China's. There are some SEZ's that made up of just a couple of buildings. And they aren't limited to manufacturing, it's common for multinational companies to run their R&D out of them.
Source: Worked in a Bangalore SEZ for a large Chinese telecom company.
I have serious reservations about India also ... but even if what you say is true (about production cost), isn't it very telling that companies are willing to move to higher production cost enviroments?
It's the price of relative independence and potentially less human rights issues.
It's simple isn't it: want less of a sh!t world, pay a price which doesn't exclude these externalities.
Why put all your eggs in one basket? If they can afford to diversify their risk to local markets by having multiple sources they can play sourcing regions off each other. By being so dependent on China apple exposes itself to extortion. That works everywhere, China isn’t uniquely malevolent despite views to the contrary. Given the opportunity to expropriate a foreigner almost any country will leverage that opportunity.
Going all-in on any individual location has risks. At Apple's scale, even 25% in four countries means enormous efficiencies of scale in each, but if one country has a coup or goes to war with the US, it's not as disastrous.
India's timing on "Make in India" couldn't have been more fortuitous. The Modi government started hyping Make in India in 2019, if memory serves. Nothing came off it for a while until things started moving in 2021. And now, by 2022, India seems poised to take over some manufacturing from China.
Make in India was hyped most in 2015-2016. It was always considered a failure. Recently government introduced PLI and DLI schemes which helped get some manufacturing rolling.
Dozens released after protest at India plant of Apple supplier Foxconn
Police in India have released dozens of those detained for blocking a key highway in a protest against food poisoning at a Foxconn (2317.TW) unit, the country's second instance of unrest at an Apple Inc (AAPL.O) supplier factory in a year.
...
In December last year, thousands of contract workers at a factory owned by Apple supplier Wistron Corp (3231.TW) destroyed equipment and vehicles over the alleged non-payment of wages, causing damages estimated at $60 million.
India has tricky labour laws, bureaucracy, land issues and labour unions to deal with when manufacturing at scale. But, it isn't unsolvable problem. Samsung, Xiaomi, Hyundai etc. manufacture millions of phones, tvs, cars etc. in India and are quite successful being #1 or #2. That Wistron issue seems more like coordination issue between different contractors when starting up new plant and there was no repeat of that issue.
wish the biden administration would give manufacturers a tax break to manufacture in south america. It would enrich our neighbors to the south and possibly put a dent in drug trafficking and illegal immigration.
Making asia rich doesnt help us nearly as much as making south america rich.
That seems to me like their import tax is working.
I wish more countries had import taxes of this sort, they tend to push the nation to be a bit more diversified in their economy since they provide air cover for small local concerns.
> That seems to me like their import tax is working.
Kind of. And you can see it worked for India; they started making iPhones there because of the import tax and over time are exporting iPhones from India.
But there's a lot of products that aren't big enough to justify production in multiple locations, and Brazil tends to get those very late, if at all, because the import tax makes the prices way too high. Maybe video games aren't important, but Brazil has a wildly different experience with them than the rest of the world, because of the import tax.
Also, I think only the really populous countries can manage this style of tax. With smaller countries it's easier to accept the loss of sales and avoid the expense of local production.
For things they don’t produce sure. But my hope is that they would wind up having better economies since their Local economy might be a bit shielded from international trade
That wont work in any democracy, how will this be justified to the US people. It was difficult enough to fund semiconductor manufacturing in US(CHIPS bill).
iphones were used to be built in Shenzhen, it is now no longer economically viable to do so anymore as labor costs in Shenzhen is much higher, so they moved the factory to Zhenzhou. to chase more profit, they will always consider cheaper alternatives.
It is actually good for the Chinese economy as such cheap labor jobs are not going to sustain further growth required to compete on a more skilled level globally.
Looks like the Chinese android phone that has the most traction are BBK models, not Huawei.
> But we must keep in mind BBK has multiple players in the game. Two of their brands make it to the top list in market share data. Oppo and Vivo each hold 10%, equating to a total of 20%.
Huawei designs its own ARM based chips and modems that BBK and Xiaomi do not.
Unrelated: India and SEA are where a good majority of these BBK phones are sold. And BBK tapped into the PPI scheme of India to start manufacturing in India > 3 years ago. Most phones sold in India are made in India.
> India and SEA are where a good majority of these BBK phones are sold.
Those BBK phones have a huge presence in China, you can pretty much find their shops in every mall and every major street. I'd be surprised if the majority are sold outside of China. They are in general shitty phones trying to rip off people who are not into tech, I mean you can easily get like 1-2 generation older hardware when compared with Xiaomi while paying the same prices. back in around 2015, they were called "factory girl's phone", meaning their target group is those young females working as labors in factories. They normally don't care what is the spec of the new phone, they just want the phone with the most popular selfie features their friends have, that created a lot of profit room for phone makers and BBK took that market.
Three hundred thousand workers work at a factory in China to make iPhones? I didn't realise how massive the production line is, considering they have a 23% market share, and the rest is all Android lead by Samsung. I am always surprised that Apple (or other Western tech giants) never considered building backup factories. Did they never think about geopolitics or natural disasters and panamics?
Apart from that iPhone will be cheaper in India because it cuts down all import duties, and who knows what other tax/land benefits the government of India/State government will provide them so that massive employment will be created. So it might help India in the long run, provided Indian governments give proper support to build these factories, especially in bureaucratic policies.
I’ve been in and around manufacturing for the better part of a decade. I’ve run a small factory myself and have friends and family working at all levels of some of the largest factories in Europe.
At the scale these things work out there’s no way to really “have a backup” not in the true sense that backup means. If you build a factory you use a factory - otherwise you’re wasting masses of money.
What you should do is diversify and leave the option to quickly (relative terms here, still many months) ramp up production in other factories should one have an issue.
Which is what most companies do. Manufacture rewards scale though so the diversification comes with its own set of problems (usually in logistics and stock management).
So they do think about it for sure but due to the physical nature of things it’s not a case of “have a backup and decide to start going one day at a new location.”
That is a thoughtful reply. Working in IT spoiled me, and I like having a backup or failover server or data centre but for Apple factory. But, it makes sense now, knowing the scale of this Apple iPhone factory, it is next to impossible to build the backup factory. Thanks!
Consider that each new iPhone and iPhone size required retooling entire portions of the manufacturing line. And by retooling I mean physical tools - the shoots that deliver the right sized screw to the individuals assembling that part, soldering techniques changing and requiring different equipment, spot weld equipment etc.
Building a “backup factory” would also require that massive investment every year to revamp the assembly line, and never get used.
Then there’s the thousands of components that go into an iPhone, and their deliver schedules perfected down to 30 minute windows - you’d have to recreate that, and just ship, what, nothing? To the backup factory?
You don't build a backup factory to sit there unutilized.
You build four large factories instead of one mega factory and run all four. Similar number of machines, similar investment to update them - each is big enough for efficiencies of scale - but if one gets shut down by the local government or has a massive fire or there's a coup you've still got 3/4 of your production going.
There are aspects of this[1] book that I really enjoyed. I have no hardware/factory experience either but I had taken some operations research courses in college. In general, holding onto inventory more than you need is a waste of time, space, cost and introduces other complexities as well - like a defect identified even a little bit later in the process could lead to huge waste if you’re holding on to too much. But of course not having any sort of reserve also leads to issues.
During the pandemic one of the only car companies that didn’t have major disruption was Toyota and they were the pioneers of this model of operating but they also understood the need to keep reserves of critical components.
In the case of Apple, they do have a backup plan - the lower end models were already being manufactured outside China and they could scale that up while they scramble to fix the Pro lines.
>At the scale these things work out there’s no way to really “have a backup” not in the true sense that backup means. If you build a factory you use a factory
Not really true at all... I mean, if you want to scale, just build another line?
I worked on Capex at Tesla and there was explicit talks of backup factory's. Elon was always talking about WW3 during covid and how we need to massively scale up our operations, have backup factorys in every region or we will not make it.
When we had issues scaling our GA3 line in fremont, we cut the conveyors off the line, built a tent in the parking lot and build a new line in a month. (Granted, 14 hour days every single day) but it's generally easier to build a new line with the lessons learned than try and fix the old one.
Appreciate the input. I would say that another line at the same location isn’t a back up, that’s scaling and you can choose to run that line or not. It’s not uncommon to run a second or third line at lesser capacity than the primary line (the Nissan plant in Sunderland flex the secondary lines a lot for example).
Much of my manufacturing knowledge comes from automotive and it’s very very very rare to run a literal back up factory (as in an unused facility in a different location that’s good to go to replace another factory). They take so much man power to run, so much time to set up that it’s not economically viable to just have it on standby as a back up.
Even if you did there would be masses of business pressure to utilise the capacity.
That’s why I pointed to diversification instead, Nissan make the Qashqai in 3 locations, UK, Russia and Japan (from memory) which gives them a level of resilience but they aren’t back ups.
If Sunderland goes down then Russia and Japan plants can’t just step up and fill in.
Setting up a new factory for the DBX nearly killed Aston Martin (May still do arguably) and that was one being set up ti be used. Not sat idle waiting.
The factorys tesla is making can make all models in different regions, with nothing required to be shipped between the factorys.
I didn't mean back up as in they sit idle, but are able to produce every portion of the car. (Well.. technically fremont can't because it needs batterys from Reno, but thats besides the point)
The Berlin, Texas, Shanghai factorys are essentially 'back-up factorys'.
Apple is selling 250-300m iPhones per year. With seasonal variation, there are months where they need to churn out over a million iPHones every day. Such scales are hard for any human to internalize.
I wonder how much assembly fees per device is now. PRC got $8 per 3G. It's wild to to think the actual assembling of 300M units per year doesn't amount to much.
> I am always surprised that Apple (or other Western tech giants) never considered building backup factories. Did they never think about geopolitics or natural disasters and panamics?
They'll try to mitigate against issues with the supply chain but its very hard to eat the cost of having backup factories or using more expensive for something that might only happen every few decades or so (or longer)
Adding 5-10% to your product price or taking a hit of 5-10% on your profits for 10 years will likely mean you'll lose customers or shareholders to your competition long before there's another pandemic.
> ...never considered building backup factories...
How many $billion/year do you figure it'd cost, for Apple to build backup (idle) factories for iPhone production? To actually be usable, a backup factory can't be a mere umpteen-million-dollar huge empty building. You gotta spend umpteen more million to fully equip it, then maintain & upgrade that equipment to match the "live" factory. And hire and train a workforce, and keep their skills up. And then the same for some major chunks of your supply chain. Then...
> Did they never think about geopolitics or natural disasters and panamics?
Not being ironic, apparently those "global MBA" types never heard of that. Their world view is probably also on continent-level and a couple of countries where labour is cheaper
High import duties likely more than enough to incentivize local assembly. Whether India can translate ~10$ assembly per device into grabbing rest of supply chain and moving up value chain is another question. West somewhat proactively ceded manufacturing to PRC, PRC who dominants Apple's supplier list is not going to make the same mistake by ceding unrestricted to India, preferring instead to spread some capacity in ASEAN where they have more influence. IMO countries can only do so much to attract, especially when others are reluctant to relinquish.
>Apart from that iPhone will be cheaper in India because it cuts down all import duties,
Your components will still imported. Since India is only doing assembly. There might be Tax break for it, so iPhone assembled in India will still be cheaper. But Apple will still have to pay Import Tax. ( Just like they do with iPhone in China )
What I am even more puzzled by is the concentration of manufacturing of CPUs in Taiwan, which beyond the chinese threat, is also an active seismic zone.
What I would rather know is where the entire supply chain is. What countries contribute what percentage of the finished product? You can claim "made in X" if the final assembly is there, even if 90% of the value add is in the supply chain not located in X.
Apple have the budget and the interest to investigate their supply chain and provide a good answer to this. Outside sources probably don't :/
My uninformed speculation would be that the answer is something like 90% China for each hop along the chain, but those accumulate. 0.9^n becomes small with large enough n, so depending on the viewpoint it might be majority non-China…
> My uninformed speculation would be that the answer is something like 90% China for each hop along the chain, but those accumulate. 0.9^n becomes small with large enough n, so depending on the viewpoint it might be majority non-China…
If the cost allocated to China is 90% at each 'hop along the chain', then the total going to China across all hops is 90%, not 0.9^n. (This isn't like probability theory -- adding more links in the chain doesn't decrease the costs of earlier links.)
In any case, I have not found more recent estimates, but in 2018 one author estimated that only 3.5% of the manufacturing cost could be allocated to China. Their competitive advantage is in final assembly, but most of the pricey components are sourced elsewhere: https://theconversation.com/we-estimate-china-only-makes-8-4...
People love to give Jony Ive and Steve Jobs credit for the iPhone but no one gives Tim Cook credit for keep making the iPhone the most desirable product in the world in 2022.
A lot of people like to give Leonardo da Vinci credit for the Mona Lisa, but no one gives credit to Laurence des Cars (President of Louvre) for getting 10million people to visit to see it in 2022.
This comment make it seem like iPhone is suddenly desirable in 2022. iPhone has been leader since the beginning, it does take effort to stay at top but i wonder credit goes to Tim Cook for that.
It takes a massive amount of effort to stay at the top. Yes there’s inertia and lock-in and walled gardens that contribute to folks staying in the apple ecosystem. But that doesn’t mean it’s easy.
What Apple has learned is that they need to diversify their manufacturing risk. It’s not surprising they want to move some production to India. I have doubts they will completely move away from China though. Apple is a business, they don’t care about politics as long as it doesn’t hinder their production.
Apple invested too much in China. I doubt they can wean off the Chinese market and labors/suppliers. the news about Apple throttled AirDrop during Chinese protests is a tell.
What was unthinkable in 2020 is now thinkable in 2022. Can Russia just start a major land war in Europe, wiping out whole cities? Sounds crazy. Nnnope.
"Chinese President Xi Jinping has ordered the country’s military to develop the ability to take control of Taiwan by 2027, according to CIA official David Cohen."
Tim Cook is not an idiot. He knows that this would be a major event that would put his entire company in existential danger, and once the odds are above 1%, you are playing for keeps.
Remarkably, this is just one of the factors. Xi's behavior in general has become increasingly unpredictable, but also Apple is not immune to the "Hollywood strategy" - China learns what it needs to learn, borrows all the advanced technology, and tells the other side to please abscond when the time is right.
This has already happened for the US movie industry. Disney, after humiliating itself in front of the CCP for over a decade in order to make a buck, is now not welcome. China makes its own movies thank you very much.
The time for phones and Teslas is coming. Tim Cook knows this. Elon Musk - not so much. That guy is oblivious, busy being a one-man moderator switchboard on Twitter and chasing down Hunter Biden conspiracies, or something.
China started going downhill few years after Xi took power. Musk knew it and invested in China anyway. If he was 10% as smart as media portrayed him until recently, he would build factory in Vietnam, Thailand or Mexico.
I do not see a problem in building in China if you are going to sell in China. Just build enough to take care of China demand, give or take a few percent, so even if China goes to war, or kicks you out, or whatever ... the rest of the world does not suffer. That way China also knows they have only so little control on you.
I wonder what percentage of sales they predict for India. Based on population and wealth increases, I'd guess it's a reasonable figure even at the lower bounds, which probably factors into various decisions.
I wish we could fix whatever prevents this from happening at scale in Mexico, too (with some high value production in the US and potentially Canada as well, and maybe some other supplies coming from the elsewhere in the Americas.). I wonder if it is infrastructure, regulation, labor, or what.
I remember seeing a chart a while back that said the actual cost of manufacturing in China is roughly the same as in the US, one has much lower labor costs and the other much lower energy costs. At the time at least it was posited the benefit of China manufacturing was co-location of suppliers and shorter supply chains.
edit: [1] lists a BCG report from roughly when I was thinking and references a slightly earlier Bloomberg article [2].
Personally, I think China just has much better infrastructure, - in general - and specifically manufacturing, export and logistics. There's also momentum.
Chinese GDP/capita is larger than Mexico's now, and wages probably reflect that.
China is no longer as attractive to manufacturers as a low-wage platform. Its advantages are now more about the local supply chain, good infrastructure and local expertise.
Apple will make iphones in india with great working condition, reasonable zero-covid policy and great compensation. All the problem will be shifted away by moving the factory to India. (Smile)
That's the problem. It would be way more and people looking to get a bargain would haggle over that 10% (plus something) anyway.
Also, Apple gets a lot of its revenue outside the US. China is actually a really big market for them. It about rivals Europe. North + South America is about 40% of the revenue for Apple. A lot of that would be from the US; but not all of it. Let's call it 30%. Made in the US just doesn't have a whole lot of appeal outside of the US and Apple has the rest of the world to worry about as well.
I don't think so. Last year Indias share was 2-3% and in 2022 it is expected to be 5%. With new plants coming up and existing plants ramping up, i thing 10% can be reached within next year
Unemployment rates are like 4%, population density is like 115 people per square mile, and workforce participation is like 60%.
That's like ~2.8 per square mile you can employ. That's not even ~100,000 people in a 100 mile radius. No way you're going to attract 10% of them to work in your factory.
Somewhere like Detroit might be possible - ~4.5M people, 6.1% unemployment, ~62% participation = ~170k - a lot with previous manufacturing experience.
All that in a ~33 mile radius instead of ~100 mile radius...
I'm not sure why this comment is dead. I certainly would prefer that West Virginia get some economic activity besides destroying their mountains for coal better left in the ground.
I thought the same thing. The iPhone is already quite expensive. It shot up from an MSRP of around $500 to $1000+ in the last 5 years.
Clearly the market is willing to pay a large sum for the iPhone, and monthly payment schemes/subscription programs take away 99% of the sticker price shock (for better or for worse).
Considering people will by an iPhone almost no matter the price... why not manufacture some in the US, with minimum wage jobs and no worker exploitation, and charge $1500 a pop for 'made in the USA'?
For sure. I wonder if there's an optimization available for a company that centralizes manufacturing for each continent, minimizing the "ship" and "plane" part of shipping costs.
Imagine iPhone factories in West Virginia, Romania, and India, to start. I suppose the economics depend on how much you can spread out component manufacturing: I know TSMC is the only manufacturer even capable of making the top-of-the-line iPhone SoCs at this point, but I suspect batteries, motherboards, cameras, metal, and glass have a little more competition.
Someone said something along the line of "This alone is going to be a huge driver of India's economy going forward...". I honestly feel the opposite. This will make the country more poorer. Hey, I don't know anything about economics. But if mass production (in tech) happens always in those countries and the economy moves forward, then why, on average, those people's lifestyle is not comparable to the poorest man in the west?
China has raised a billion people into a comfortable standard of living by doing exactly this.
Taiwan, South Korea, and Vietnam all have developed at substantial rates via this method as well.
Maybe you're thinking of countries which are based around resource extraction? Because building a ton of factories and putting people to work making gadgets for other countries is pretty well proven.
If Apple want to exit China for geopolitical reason it should move to Vietnam. Western manufacturers have set up shops in India before and there were few successful stories and many have exit eventually. Ford for example exit India after not turning a profit for decades. When people point out India's problem it is the usual suspect like government red tapes, poor infrastructure, unreliable electric grid...etc. Some even blame India's problem on democracy, which is absurd. Germany is a democracy and is a manufacturing powerhouse. But the fundamental problem underlying all these is the average IQ of a nation. India's population average IQ is 82 and this is the fundamental reason why the workers productivity is so low. This is the elephant in the room that every manufacturer who want to set up shop in a foreign country should consider.
I could argue European's have very low IQs relative to access to resources/wealth - it would be equally stupid and racist but I would have better evidence than you to back it up just by looking at how much they get outcompeted by their Indian origin fellow citizens.
My point is that both ideas are absurd and racist - you claiming that a countries' situation is because of low IQ. You do realize that if you IQ tested people in Europe 100 years ago the results would be godawful right? Believing in genetic superiority/inferiority is extremely low IQ - how do you isolate the million other factors?
You can look it up yourself. I don't believe it either at one point and I did some digging and all the evidence points to a low IQ Indian population. There is of course very smart Indians but the distribution of the population as a whole is center around 82.
So exist communist China for communist Vietnam, right, that's really an improvement.
Only reason companies are moving from China is because of too high cost already while Vietnam, Indonesia or India are way poorer. Plus if you would read the article you would notice Vietnam is just too small with not enough labor to replace China.
Vietnam with 98 million population is too small? Vietnam is completely different than Indonesia and India. It is like smaller China before Xi took power.
> The country has just under 100 million people, less than a 10th of China’s population. It can handle 60,000-person manufacturing sites but not places such as Zhengzhou that reach into the hundreds of thousands, he said.
I disagree that country of 100 million people is not big enough for 300 thousand workers factory.
Earlier the reports are workers in the China iPhone factory had a protest and brutal conflict with the local police. Reasons varied from unbearable working condition, the zero-covid policy, and being deceived about the compensation. After the local police oppressed the campaign, the government assigned headcounts to local villages, demanding them to fill in the factory slots. No wonder Apple loves China so much.
Apple and many westerners never understand the risk and the ethics implication of doing business in China. Apple has utilized the cheap labor at a level where can never be possible in the civilized world, as well as making great profit out of the upper class of China, who directly benefits from the oppression system of CCP or part of the party themselves. It turns out that in spite of all values that Apple promotes, it actually cares about nothing but the profit and its comfortable zone in China.
And I will not be surprised Apple will cease the plan in India as soon as China steps back from the zero-covid policy, as if all the blood has not been spilled.