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China has to play fairly carefully with Apple. On the one hand it's an American company that puts microphones and cameras into the cafes, offices, and bedrooms

China has to play fairly carefully with Apple. On the one hand it's an American company that puts microphones and cameras into the cafes, offices, and bedrooms of many of their citizenry; but on the other hand, with decreasing competitiveness due to rising wages there isn't anything specifically _stopping_ Apple or other American tech companies from moving manufacturing out of China. Foxconn alone employs about 4.3 million people, and while it would be very difficult to move operations to Tiawan, Singapore, Japan, or even the United States; it would also provide a number of benefits since any new hosting country would very incentivized to make the move happen.

jbob2000 11y ago
Manufacturing is slowly moving to be "on demand". That is, a consumer purchases something, then it is built and shipped to them. It doesn't make sense any more for a company to predict market volume and then produce goods to match the prediction, especially since technology turns over so fast. With that in mind, I could see Apple having simple components being produced in a number of different countries, then shipped out to wherever their products are in demand. Then the components are assembled by robots locally and the final product is picked up or shipped down the street to the consumer. I remember reading that this is where the auto industry is heading. They want to produce interchangeable car parts which get assembled at the dealership when a person purchases the car. So to your point, China is already done. Instead of huge factories producing consumer ready goods, Apple just needs a handful of smaller factories making much simpler intermediary components. It's much easier to setup and move these smaller factories around, rather than these huge factory cities managing a massive production line.
- eulji 11y ago
  I predict that technology is not going to move that fast as it used to (moore's law etc). Instead we will go back to the age of "durable" / "longer lasting goods". A good software will make a difference between scoring a sale or not. Same with services. Besides most of the companies are trying to move the manufacturing to Vietnam, Indonesia, India, Africa etc or automatizing as much as possible.
  - gherkin0 11y ago
    > Instead we will go back to the age of "durable" / "longer lasting goods". I think it's more likely that, goods will become more flimsy, cheaply made, and disposable. If true progress no longer provides motivation to buy new things, manufacturers will invent new ones.
- nsgi 11y ago
  How does that fit with the advent of same-day delivery? Presumably the goods can't be assembled that quickly.
  - huac 11y ago
    factories could be distributed around the world. you'd have to weigh the increased costs of sourcing resources, but would benefit from lack of worker unionization or mobility.
makecheck 11y ago
And Apple has one of the best chances to make real change here because they can afford to spend a hell of a lot of money without their short-term business being hurt. They could, for instance, speculatively set up entire facilities in new areas, hire staff, and experiment with parallel development of the same products to measure how well the new bring-up is going.
- codeisawesome 11y ago
  Why will they do it? Corporate entities like Apple exist to make profits. Change is not on the agenda. It's not healthy to be that hopeful when you're setting yourself up for disappointment.
  - makecheck 11y ago
    Profits don’t just show up one day and stay fixed. There is always risk, and always opportunity. This type of move could address both. One risk is that the company’s ability to manufacture may be seriously affected by the actions of a single government. If their current factories were suddenly impacted by a policy decision, future profits would definitely be hurt. By spending money now (that, incidentally, their competitors might not be able to), Apple can lower that risk; and, they would also be acting on their own terms instead of having to react to someone else. There is also the investment side. By spending money now, they could end up with even more capacity that will enable them to develop more products for more people and increase overall profit in the future. If they don’t spend that kind of money, their competitors could catch up. The time to invest is before you have a problem.
    - codeisawesome 11y ago
      I agree that this sounds like something they'd get their gold plated behinds up off the ground for. But let's point that out loud & clear and then when it happens discuss the change it wrought: just a suggestion.
Steko 11y ago
I think you've got it backwards, it's Apple that needs China's market and China basicallly has them over a barrel on these secondary products. What China has to be careful of is eventually the US/EU decide to get tough on Chinese protectionism and impose significant barriers to goods manufactured in China. And that would also be bad for Apple again since they make their stuff in China.
- DannyBee 11y ago
  "it's Apple that needs China's market". I always hear this, but given the experience of most american companies in china, it seems little stretched.
  - jonknee 11y ago
    Apple isn't most American companies.
    - soperj 11y ago
      Yeah, most American companies don't collude to screw their workers.
      - kittiepryde 11y ago
        Are you sure?
      - philovivero 11y ago
        I'm with kittypryde. I'll take a cite on that. Last I heard, Google, Facebook, Yahoo, Adobe, and a huge slew of smaller tech companies (if you want to stay in the same industry as Apple) had all colluded together to suppress wages. I have a hard time believing anyone who claims this was an exception to a rule. It seems far more likely to believe it is the rule.
        soperj 11y ago
        Together with Apple. Who was the one forcing the issue?
draw_down 11y ago
I dunno. Cook recently said in an interview their manufacturing is in China not due to cost but because the supply chain is simply stronger there, and they can do things there that they can't elsewhere. Of course they could make a bold move like make a big outlay to get their supply chain operating in another country/region, that strikes me as something they could do. But it would be a really big deal.
- MBCook 11y ago
  I imagine that would be an incredibly huge investment to try to get even a small percentage of the supply chain in another country.
- dilemma 11y ago
  >Of course they could make a bold move like make a big outlay to get their supply chain operating in another country/region, that strikes me as something they could do. But it would be a really big deal. The supply chain is made up of thousands of companies who in turn rely on thousands of others. You can't recreate this top down, it has to be through organic growth.
pessimizer 11y ago
> there isn't anything specifically _stopping_ Apple or other American tech companies from moving manufacturing out of China. But it's about as credible as the Saudi's dumping all of their US treasuries. Apple enjoys a very high margin at a very high price point. Any move would be margin-killing, not price-raising. They're not manufacturing in China to be charitable.
mtgx 11y ago
Unfortunately, the Chinese government has only gotten bolder since the U.S. government has publicly become an enemy of encryption itself. The damage would be far greater if the U.S. actually passed a law mandating backdoors, but even just talking about it and making a "scandal" out of it, has probably encouraged Chinese government to be more aggressive about it in its own country. Remember when the U.S. government at least pretended to care about things like privacy and human rights internationally. Now it seems to be more like "Wait, China did it? Why can't we do it then?!". Case in point, in a recent encryption hearing, law enforcement argued that if Apple showed its source code to the Chinese government (it didn't), then it should also show it to the US gov!
- icebraining 11y ago
  Remember when the U.S. government at least pretended to care about things like privacy and human rights internationally. No. When was that?
educar 11y ago
You make it sound like Apple can easily move out of China. Think again. Apple's profits are largely due to the cheap labor market (just like many other companies)
- masklinn 11y ago
  Their point is that chinese costs are rising fast. OTOH they're probably underestimating the difficulty of moving outside China, not because of the supply chain.
- toomuchtodo 11y ago
  > Apple's profits are largely due to the cheap labor market (just like many other companies) Foxconn is replacing millions of workers in China with robotics. Couldn't Apple acquire these same robotics, perform their own manufacturing in the US (remember, substantial tax breaks in the US for equipment purchases!), and then lease out any spare capacity. Seems its all coming back to US shores. As a US citizen, I don't mind.
  - soperj 11y ago
    Not really since all the components that actually make the phone are also made in China.
    - kryptiskt 11y ago
      Not so, the chips and display are made in Korea, Taiwan or Japan.
    - soperj 11y ago
      Won't let me reply to you, but really if you're making it in the US, Japan, Korea, Taiwan are the same thing as China.
      - maaku 11y ago
        >., Japan, Korea, Taiwan are the same thing as China. Hahahaha nope.
blackguardx 11y ago
Foxconn is Taiwanese and has many factories around the world already.
jdietrich 11y ago
Nobody else has anywhere near the capacity. Foxconn are the third largest tech company in the world, not a tinpot little outsourcing shop. Apple already use other EMS companies for reasons of cost and capacity, but they are all Chinese companies or rely on predominantly Chinese labour. Foxconn's nearest foreign competitor (Flextronics) is just a fifth of the size of Foxconn and sources most of its labour from China. China has tremendous technical expertise and vast amounts of relatively cheap labour, which is a formidable combination. Singapore, Japan and Chinese Taipei have the expertise, but they don't have enough cheap labour. Thailand and Indonesia have plenty of cheap labour, but they don't have the expertise. China also has superb logistics, which reduces cost and improves lead times. For the foreseeable future, China is simply unavoidable. Within just a few years, their position as the dominant manufacturing nation will be secondary to their position as the dominant consumer market.
- 3pt14159 11y ago
  China's cheap labor is not everything it used to be. Nearly 7x more expensive over the past two decades and expertise is everywhere. Sure it would be painful, but it isn't like China doesn't stand to also lose here as well.

jbob2000 11y ago

Manufacturing is slowly moving to be "on demand". That is, a consumer purchases something, then it is built and shipped to them. It doesn't make sense any more for a company to predict market volume and then produce goods to match the prediction, especially since technology turns over so fast. With that in mind, I could see Apple having simple components being produced in a number of different countries, then shipped out to wherever their products are in demand. Then the components are assembled by robots locally and the final product is picked up or shipped down the street to the consumer. I remember reading that this is where the auto industry is heading. They want to produce interchangeable car parts which get assembled at the dealership when a person purchases the car. So to your point, China is already done. Instead of huge factories producing consumer ready goods, Apple just needs a handful of smaller factories making much simpler intermediary components. It's much easier to setup and move these smaller factories around, rather than these huge factory cities managing a massive production line.

eulji 11y ago
I predict that technology is not going to move that fast as it used to (moore's law etc). Instead we will go back to the age of "durable" / "longer lasting goods". A good software will make a difference between scoring a sale or not. Same with services. Besides most of the companies are trying to move the manufacturing to Vietnam, Indonesia, India, Africa etc or automatizing as much as possible.
- gherkin0 11y ago
  > Instead we will go back to the age of "durable" / "longer lasting goods". I think it's more likely that, goods will become more flimsy, cheaply made, and disposable. If true progress no longer provides motivation to buy new things, manufacturers will invent new ones.
nsgi 11y ago
How does that fit with the advent of same-day delivery? Presumably the goods can't be assembled that quickly.
- huac 11y ago
  factories could be distributed around the world. you'd have to weigh the increased costs of sourcing resources, but would benefit from lack of worker unionization or mobility.

makecheck 11y ago

And Apple has one of the best chances to make real change here because they can afford to spend a hell of a lot of money without their short-term business being hurt. They could, for instance, speculatively set up entire facilities in new areas, hire staff, and experiment with parallel development of the same products to measure how well the new bring-up is going.

codeisawesome 11y ago
Why will they do it? Corporate entities like Apple exist to make profits. Change is not on the agenda. It's not healthy to be that hopeful when you're setting yourself up for disappointment.
- makecheck 11y ago
  Profits don’t just show up one day and stay fixed. There is always risk, and always opportunity. This type of move could address both. One risk is that the company’s ability to manufacture may be seriously affected by the actions of a single government. If their current factories were suddenly impacted by a policy decision, future profits would definitely be hurt. By spending money now (that, incidentally, their competitors might not be able to), Apple can lower that risk; and, they would also be acting on their own terms instead of having to react to someone else. There is also the investment side. By spending money now, they could end up with even more capacity that will enable them to develop more products for more people and increase overall profit in the future. If they don’t spend that kind of money, their competitors could catch up. The time to invest is before you have a problem.
  - codeisawesome 11y ago
    I agree that this sounds like something they'd get their gold plated behinds up off the ground for. But let's point that out loud & clear and then when it happens discuss the change it wrought: just a suggestion.

Steko 11y ago

I think you've got it backwards, it's Apple that needs China's market and China basicallly has them over a barrel on these secondary products. What China has to be careful of is eventually the US/EU decide to get tough on Chinese protectionism and impose significant barriers to goods manufactured in China. And that would also be bad for Apple again since they make their stuff in China.

DannyBee 11y ago
"it's Apple that needs China's market". I always hear this, but given the experience of most american companies in china, it seems little stretched.
- jonknee 11y ago
  Apple isn't most American companies.
  - soperj 11y ago
    Yeah, most American companies don't collude to screw their workers.
    - kittiepryde 11y ago
      Are you sure?
    - philovivero 11y ago
      I'm with kittypryde. I'll take a cite on that. Last I heard, Google, Facebook, Yahoo, Adobe, and a huge slew of smaller tech companies (if you want to stay in the same industry as Apple) had all colluded together to suppress wages. I have a hard time believing anyone who claims this was an exception to a rule. It seems far more likely to believe it is the rule.
      - soperj 11y ago
        Together with Apple. Who was the one forcing the issue?

draw_down 11y ago

I dunno. Cook recently said in an interview their manufacturing is in China not due to cost but because the supply chain is simply stronger there, and they can do things there that they can't elsewhere. Of course they could make a bold move like make a big outlay to get their supply chain operating in another country/region, that strikes me as something they could do. But it would be a really big deal.

MBCook 11y ago
I imagine that would be an incredibly huge investment to try to get even a small percentage of the supply chain in another country.
dilemma 11y ago
>Of course they could make a bold move like make a big outlay to get their supply chain operating in another country/region, that strikes me as something they could do. But it would be a really big deal. The supply chain is made up of thousands of companies who in turn rely on thousands of others. You can't recreate this top down, it has to be through organic growth.

pessimizer 11y ago

> there isn't anything specifically _stopping_ Apple or other American tech companies from moving manufacturing out of China. But it's about as credible as the Saudi's dumping all of their US treasuries. Apple enjoys a very high margin at a very high price point. Any move would be margin-killing, not price-raising. They're not manufacturing in China to be charitable.

mtgx 11y ago

Unfortunately, the Chinese government has only gotten bolder since the U.S. government has publicly become an enemy of encryption itself. The damage would be far greater if the U.S. actually passed a law mandating backdoors, but even just talking about it and making a "scandal" out of it, has probably encouraged Chinese government to be more aggressive about it in its own country. Remember when the U.S. government at least pretended to care about things like privacy and human rights internationally. Now it seems to be more like "Wait, China did it? Why can't we do it then?!". Case in point, in a recent encryption hearing, law enforcement argued that if Apple showed its source code to the Chinese government (it didn't), then it should also show it to the US gov!

icebraining 11y ago
Remember when the U.S. government at least pretended to care about things like privacy and human rights internationally. No. When was that?

educar 11y ago

You make it sound like Apple can easily move out of China. Think again. Apple's profits are largely due to the cheap labor market (just like many other companies)

masklinn 11y ago
Their point is that chinese costs are rising fast. OTOH they're probably underestimating the difficulty of moving outside China, not because of the supply chain.
toomuchtodo 11y ago
> Apple's profits are largely due to the cheap labor market (just like many other companies) Foxconn is replacing millions of workers in China with robotics. Couldn't Apple acquire these same robotics, perform their own manufacturing in the US (remember, substantial tax breaks in the US for equipment purchases!), and then lease out any spare capacity. Seems its all coming back to US shores. As a US citizen, I don't mind.
- soperj 11y ago
  Not really since all the components that actually make the phone are also made in China.
  - kryptiskt 11y ago
    Not so, the chips and display are made in Korea, Taiwan or Japan.
  - soperj 11y ago
    Won't let me reply to you, but really if you're making it in the US, Japan, Korea, Taiwan are the same thing as China.
    - maaku 11y ago
      >., Japan, Korea, Taiwan are the same thing as China. Hahahaha nope.

blackguardx 11y ago

Foxconn is Taiwanese and has many factories around the world already.

jdietrich 11y ago

Nobody else has anywhere near the capacity. Foxconn are the third largest tech company in the world, not a tinpot little outsourcing shop. Apple already use other EMS companies for reasons of cost and capacity, but they are all Chinese companies or rely on predominantly Chinese labour. Foxconn's nearest foreign competitor (Flextronics) is just a fifth of the size of Foxconn and sources most of its labour from China. China has tremendous technical expertise and vast amounts of relatively cheap labour, which is a formidable combination. Singapore, Japan and Chinese Taipei have the expertise, but they don't have enough cheap labour. Thailand and Indonesia have plenty of cheap labour, but they don't have the expertise. China also has superb logistics, which reduces cost and improves lead times. For the foreseeable future, China is simply unavoidable. Within just a few years, their position as the dominant manufacturing nation will be secondary to their position as the dominant consumer market.

3pt14159 11y ago
China's cheap labor is not everything it used to be. Nearly 7x more expensive over the past two decades and expertise is everywhere. Sure it would be painful, but it isn't like China doesn't stand to also lose here as well.