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Apple Not Able to Open Stores in India Without Selling 30% Locally Sourced Goods
- kbenson 10y agoThe title seems like the setup for a joke. Are we sure 30% of code from apps in the app store wasn't produced by outsourced programmers in India?
- justinlardinois 10y agoYou don't buy App Store apps from the Apple store, you buy hardware, so that's not relevant. Though if Indian programmers had contributed to the software that comes preinstalled on the products sold there, I wonder what would happen. Does "locally sourced" only apply to physical manufacturing?
- kbenson 10y ago> You don't buy App Store apps from the Apple store, you buy hardware, so that's not relevant. Totally right. I wasn't thinking about this correctly. > Though if Indian programmers had contributed to the software that comes preinstalled on the products sold there, I wonder what would happen. Does "locally sourced" only apply to physical manufacturing? A very good question. How much should the software count towards what something is compared to the hardware, and how much would Apple value iOS compared to the hardware design of a new iPhone. I imagine traditionally it would be quite a bit more, but Apple also invested in a foundry and produces their own chips, so that definitely increases the hardware side valuation.
- justinlardinois 10y ago> Apple was expected to receive an exemption from the rule, earning a recommendation from country's Department of Industrial Policy and Promotion, but the ministry of finance has decided Apple's products do not fall into the cutting-edge technology category. A source told Reuters Apple did not provide enough material to justify the exemption. So did Apple just submit a crappy application? Or is the ministry not following the spirit of the law? I won't pretend for a moment that I know anything about Indian law though, so I have no idea who's to blame here.
- fleitz 10y agoIndia is heavily invested in protectionism, that's the primary issue, the exemption is in place because it was clear no one was going to make smart phones there.
- 9mit3t2m9h9a 10y agoWell, given Micromax exists and has manufacturing (and HQ) in India, now Indian government can say that smartphones are not cutting-edge high-tech per se.
- umanwizard 10y agoJust like Apple in China, I'm betting all Micromax does in India is assemble phones from high-tech subparts that were made in Korea, Taiwan, and the United States. Not sure whether this is relevant because I'm not sure exactly what counts towards the "30%" figure.
- sandGorgon 10y agoOnePlus manufactures in India. http://wap.business-standard.com/article/companies/oneplus-partners-foxconn-to-start-manufacturing-in-india-116031401012_1.html http://wap.business-standard.com/article/companies/oneplus-p...
- choward 10y agoI'm going with bribery. Some Indian officials just made a good chunk of change.
- Zelmor 10y agoThey could sell local apples, maybe?
- wrong_variable 10y agoBefore people get out their pitchforks. These laws in India are a direct result of 200 years of British 'free' trade. Imagine the amount of damage something like NAFTA has done to the american working class - multiply that with 200 years. While america was in its infancy - before it industrialized - it too used protectionism as a way to allow its local industries to grow, how is it bad if India is trying to do the same thing ? The indian unemployment/underemployment problem will laugh at the face of the European/American moaning about jobs. Just to give you an interesting statistic - 85% of student loans in India is under water ( compared to 50% in america ). There was this interesting story of engineers in India accepting jobs as pions ( gaurds/watchmen ) for a miserable 200 dollars salary a month. Could you imagine yourself in that position ? So I do not fault the govt for these laws or else there will be serious civilian unrest. Indian markets, products and the economy in general is really bad and unsophisticated. There is no way they can compete with american, European and Chinese companies. Of'course some bureaucrats within the Indian Govt uses this as a way to extract wealth from foreign companies who want to set up shop in India. But that is a corruption problem rather than an argument against the law. Even simple law in India is hard to enforce due to corruption, the reward greatly outweighs the risk. Hopefully things will improve in India.
- arey_abhishek 10y agoI'll add that America is the most protectionist country according to Credit Suisse: http://www.businessinsider.in/The-country-that-imposes-the-most-restrictions-on-trade-might-surprise-you/articleshow/49170319.cms http://www.businessinsider.in/The-country-that-imposes-the-m... (Couldn't find link to original report) Worked out well for America. Protectionist laws are a legitimate tool for social and economic progress.
- velodrome 10y agoThis is the original Credit Suisse report: The End of Globalization or a more Multipolar World? https://doc.research-and-analytics.csfb.com/docView?document_id=x657558&serialid=CKNMlWfHjw7rZyk%2BUGmvnQWrpsyCCwGev4oQ/ngdrE8%3D https://doc.research-and-analytics.csfb.com/docView?document...
- ikeboy 10y agoWhat's 30%? 30% of sales by unit, sales by price, items for sale, floor space? Or something else?
- pcurve 10y agoAt least 30 per cent of the value of procurement of manufactured/processed products shall be sourced from Indian small industries. So for high margin product like iphone, they're going to base it on cost of good or (materials). There's probably some fudging room.
- ikeboy 10y agoFor each product? You can't sell any product unless 30% of it was made in India?
- pcurve 10y agooh no definitely not. For company product aggregate. http://www.franchisetimes.com/May-2015/How-Indias-investment-laws-affect-franchisors/ http://www.franchisetimes.com/May-2015/How-Indias-investment... 'All multi-brand retail operations with FDI must be locally sourced with at least 30 percent of the value of manufactured/processed products from Indian “small industries,” which have a total investment in plant and machinery not exceeding U.S. $1 million. ' Quite a tall order still.
- ikeboy 10y agoBut then how can you know how much will sell ahead of time? Suppose I have exactly two products, one fully sourced from India, one sourced elsewhere. The legality depends on whether the first sells more than a 7:3 ratio over the second, which can't be determined before actually selling.
- pcurve 10y agoYou're right and I don't know the details. But I assume you'd have to provide plausible sales projection data to the authority, and then have periodic audits.
- jerryhuang100 10y agothis is the same as the 35% tariff suggested by donald trump for all nafta products, just in another form and many steps back from global trades. does that mean apple can finally open its own produce market by selling locally sourced apples, apple pies, apple cider? or it's even better that apple could just place some automatic packaging factories next to its warehouses in india and by volume i believe it's more than 75% of apple's main product.
- derekp7 10y agoFor computer goods, what does 30% sourced refer to -- just the physical hardware? What about the software that goes into it? And what weight is given to software -- the development time / cost, or are there other metrics?
- Endy 10y agoI'm totally in support of this policy. Controlling companies and making sure they understand clearly that they exist only at the pleasure and the whim of the government is the only way to bring our world back from the corporatist brink.
- Aaronontheweb 10y ago> Controlling companies and making sure they understand clearly that they exist only at the pleasure and the whim of the government Worked out well for the Soviet Bloc
- stcredzero 10y agoSo much fervor for the rights of a government created legal fiction?
- geodel 10y agoIrrespective of Apple being able open stores, one has to remember India is really tiny market for Apple widgets. There is no comparison to China in term of market size. Apple shipped around 1.7 million phone in India in 2015. This may look lot but going ahead I think they are going sell quite less than that as there is no 2 year upgrade cycle.
- eru 10y agoThey will sell less upgrades, but there's oodles of Indians still without the status symbol that a nice iPhone is. (They just aren't rich enough yet to afford one.)
- inopinatus 10y agoEven a tiny sliver of 1.3 billion people may be worth pursuing once other markets are saturated. There may be no comparison in terms of sales volume sales, but some might call that a growth opportunity, not a tiny market. Also note that these are new rules being tested, so what goes for Apple might also go for Amazon et al.
- RealGeek 10y agoApple sales are weak in India because iPhone is overpriced in India, prices of Apple products in India are a lot higher than US. In 2015, over 100 million smartphones were sold in India. Apple sells iPhone 6s 16 GB for $920 in India[1], while you can buy comparable Android smartphones from manufacturers like Xiaomi and OnePlus for $300 to $400 Sweet-spot price for Indian middle class is $300 to $400 and they typically upgrade in 1 to 2 years. [1] http://www.apple.com/in/iphone/compare/ http://www.apple.com/in/iphone/compare/
- saalweachter 10y agoFor anyone not reading the article, note this is about Apple stores and not Apple products. As the article says, Apple products are currently and will continue to be sold through third party distributors (eg, the Indian equivalent of Best Buy). It is a little bit weirder a sort of protectionism than most of us think about, and a little bit harder for me to care about personally.
- rahulsidhu 10y agoSeeing a lot of neo-liberal economics dogma here in the comments, and so would like to recommend this excellent book: https://www.amazon.co.uk/How-Asia-Works-Success-Failure/dp/1846682436 https://www.amazon.co.uk/How-Asia-Works-Success-Failure/dp/1.... It has an excellent account of how manufacturing (supported by heavy protectionism from the state) was a crucial component of the Asian miracle in nearly all countries. IMO India really needs to go through a round of manufacturing expansion, preferably in the high-tech sectors.
- eru 10y agoYou mean paleo-liberal economics dogma? Just about all mainstream economists ever agree on free trade. (Though in this case, they are just banning Apple Stores, apparently, not Apple products. So it doesn't really matter too much.)
- gkanai 10y agoThis does not make sense based on my own experience of launching phones in India with Intex, Spice and a few other Indian manufacturers. 'Indian' smartphones are all made in Shenzhen. There is no smartphone manufacturing in India. So how can Intex and Spice sell their phones in India if their phones are made in China like the iPhone is?
- RealGeek 10y agoVendors like Spice and Intex are Indian companies. Companies can sell imported products in India, they just have to pay import duty on it. India have FDI restrictions in retail sector to prevent big box retailers like Walmart from destroying local retailers. Most of the popular brands including Apple already sell in India, but they have to partner with a Indian retailer to do so.
- anentropic 10y agoGreat! good on you India
- Cozumel 10y agoI'd wager India are holding out for a 1 billion dollar bribe like the Chinese got! http://www.reuters.com/article/us-apple-china-idUSKCN0Y404W http://www.reuters.com/article/us-apple-china-idUSKCN0Y404W
- known 10y agoI'm not surprised... http://www.dailymail.co.uk/news/article-2325502/Map-shows-worlds-racist-countries-answers-surprise-you.html http://www.dailymail.co.uk/news/article-2325502/Map-shows-wo...