Why Apple makes iPhones in China

This is an intersting read.

This Article Explains Why Apple Makes iPhones In China And Why The US Is Screwed

J

Same in the UK and northern Europe. Manufacturers, whether electronics, clothing, domestic appliances etc - close their operations at home and go where labour is cheaper. People lose their jobs and skills are lost. Marks and Spencer, which used to be the epitome of all things British, ruined many UK clothing manufacturers by taking their orders to Greece, Morocco, Korea, India and so on. Many call centres supporting UK insurance, banks and telecoms, are based in India where staff are trained not just in the business but to talk about the weather and news in the country they deal with! The consumer ends up having no real choice, whether we care or not about the conditions in which the foods or services are generated. I've never heard of an ethically produced computer!

badshoehabit said:

Same in the UK and northern Europe. Manufacturers, whether electronics, clothing, domestic appliances etc - close their operations at home and go where labour is cheaper.

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Ah, but the article is arguing against this logic. It argues that even though cost is a major factor, there are many other reasons why corporations like Apple produce goods in China. Instead of just wages, western corporations also have to compete against a more flexible market where there's a glut of engineers.

It's not just that labor per 1 item is cheaper, it's the exponential production growth quantities that makes it cheaper. China, Korea, and India have the largest exponential productions in the world. Someone can sugarcoat anything into a different argument to favor Apple, but don't kid yourself, when it comes down to it, cost of manufacturing is key. With that, exponential production is one aspect that is seen wherever production moves to. This is a simple example, made as simple as possible so you can understand: in the US, we can make fin quality stuff. In china, they too can make fine quality stuff. There are 2 key differences-

1- In the US(North America), if someone can make 1 item per hour, he would have 10 items in 10 hours. In China, a man can start with 1 item per hour, but have
20 items by the 10th hour. Exponential production.

2- US quality drops is when demand outpaces the levels of which a manufacturer can put a product in the hands of the consumer. In China, this is the
opposite. The have SO many workers in their production work force that the don't need to drop quality to increase production. This is something just about
everyone confuses with drop in quality because they believe they are working faster to produce more. Simply not true. They want to pay as little as possible to get the job done...Apple and thermal compound is one issue.

So, do I want Apple products to be made in the US? Of course I do! However, not when demand is through the roof, because, as the past has shown, quality will drop.

Seems like my Asian Politics and Economy course has finally paid off... >.>

Another Factor to Consider

1) The way to get ahead quickly in life is to go against conventional wisdom and succeed.

2) The way to get canned very quickly is to go against conventional wisdom and fail.

Right now, the conventional wisdom is that it makes good business sense to ship production from the US, UK and Euro-zone countries to Asia. Until that changes the majority of decisions are going to be made according to conventional thought. CEOs and other senior executives are people too (just like corporations--bad joke I know) and are well aware of the two maxims above, and are generally not into risk taking if the projected reward doesn't justify the risk.

I love Apple and im a huge fan of all of their products but this just sickens me -As much as i hate to rant
Then again, it would really hurt apple to have to produce goods in the U.S. so.... There is two sides to this story

So, in summary, it's about profit whether that be delivered in the form of time, materiel or labor. Nothing shocking there. Everyone wants the warm fuzzy of globalization until their job goes away and they go down a few pegs on the ladder. Maybe the government will save us?

XJ-linux said:

So, in summary, it's about profit whether that be delivered in the form of time, materiel or labor. Nothing shocking there. Everyone wants the warm fuzzy of globalization until their job goes away and they go down a few pegs on the ladder.

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Absolutely. It's the great contradiction of global capitalism: everyone wants cheap goods but doesn't want companies to use the cheapest (read that as "export production") methods possible to produce and deliver those goods.

If the same quality products like iPhone or iPad are made in US, not only the actual labor cost per item but also other factors such as a factory union, benefits for the workers, cost of the living where the factory is built (if ever in US), should be considered. Don't get me wrong, I am not insulting US workers are not good; I am saying the cost that Apple can spend to build the iPhone has to be lower than what the US workers would demand in order for Apple to sell those to us in the price range of $***.**.

I work for a manufacturing company and I am belonging to the management area. The current US federal minimum wage is $7.25. When we hire a factory worker by paying the federal minimum, we see 'that' kind of people. It is a factory work (run machines, assembly and etc.) that requires repetitive and continual same work over and over, day by day. The products we make and sell to the market have to be competitive as we have 40-50 competitors and cannot simply raise the wages from 7.25 to 10.25, or we will loose money and eventually we will need to shut the factory down.

What I am trying to say is that the benefit of iPhone that we enjoy and appreciate has to come with a reasonable price that most of us can afford. If iPhone was ever made in US by the US labor, and Apple pays premium to those workers, we would not have seen this beautiful product, readily available for everyone.

At some point, transportation costs from China and increases in salaries there will negate this argument. Sadly by then, we will have lost knowledgeable manufacturing people in the US capable of doing the work.

Maybe I'm alone, but I would pay a little more for a US built Apple product.

Again, the argument put forth here is independent of the rehashed cost-based argument. This article addresses the mobilization and flexibility of a workforce at a rate impossible in other countries. As such, it's not all about cost.

Some years back I worked in China installing equipment in a steel plant. While electrical cabinets were being positioned one of the aluminium door handles was broken. If that had happened in UK or Europe a new handle would have been bodged with a bit of scrap steel but in China the broken handle was taken away and inside 24 hours I was presented with a beautifully made copy which had been carved from a solid block of aluminium.

At that time the Chinese graduate engineers working on the project had a monthly salary which was less than my DAILY living allowance but they still did a better job.

AndyClift said:

Some years back I worked in China installing equipment in a steel plant. While electrical cabinets were being positioned one of the aluminium door handles was broken. If that had happened in UK or Europe a new handle would have been bodged with a bit of scrap steel but in China the broken handle was taken away and inside 24 hours I was presented with a beautifully made copy which had been carved from a solid block of aluminium.

At that time the Chinese graduate engineers working on the project had a monthly salary which was less than my DAILY living allowance but they still did a better job.

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They've grown to accept what is given, and don't know the difference. They are accustomed to it. Sad to say. Times are changing for China though. The people are more aware of what going on now more than ever...thanks to the internet.

j0nb0y32 said:

This is an intersting read.

This Article Explains Why Apple Makes iPhones In China And Why The US Is Screwed

J

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Well, it's certainly a long-winded way of trying to sugarcoat "Because money."

Discerptor said:

Well, it's certainly a long-winded way of trying to sugarcoat "Because money."

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x2. It's a description of why it costs less that avoids saying it costs less. Reminds me of the adage:
Good, Cheap, Fast; pick any two...
If you already get the "cheap", then you sacrifice little for the other two.

I'd also add that China isn't reinventing the wheel either. They are merely copying the early American manufacturing model when most American labor was uneducated, unorganized and somewhat migratory. I think this part of an article is a telling sign on why we can't compete and why we might not want to compete directly.

From a related article:

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=2&pagewanted=1

Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight. A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

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Are we really interested in going back to the days in the USA when about 100 years ago you lived on company property, in a dwelling built by the company, eating food sold to you by the company? Some families owed back the company store so much that they were at times working for free. If you died, and your wife and kids were unable to replace you as a worker, they were evicted from their housing within 24 hours. I'm not a big fan of Unions in some of their contemporary incarnations, but they did a heck of allot of good back in the day. That's partly why we are a safer workplace (no nets needed to stop jumpers at Ford) and party why we can't compete on cost. Where I last worked it was $30/hr at triple time -vs- a biscuit & tea for an immediate unplanned on call must show 3rd shift manufacturing run.

We got what we asked for.

j0nb0y32 said:

This is an intersting read.

This Article Explains Why Apple Makes iPhones In China And Why The US Is Screwed

J

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Great read. Thanks!