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Foxconn Expands Operations in India, Vietnam Amid Trade Tensions

217 points by ryansmccoy 8y ago

ktta 8y ago
$213.5 million - Indian Unit - for “long-term investment” $16.5 million - Vietnamese Unit - "for operations and sales" Easy to see where the major investment is. I see this is as a clear intent to start putting roots in the Indian market, especially since regulations for international phone imports in India are sometimes prohibitive. Though this move isn't to manufacture iPhones right now, they might be making a strategic move to be appealing to Apple, to produce more phones (a future cheap - XR like version maybe?) in India. That would be in addition to the production already in place in India for some iPhones. Apple still has the brand awareness in India. The iconic Apple logo's power has yet to die. I'm not sure if they expect to sell high end iPhones about $1000+ in volume, because they will fail. One because that isn't cheap even for American blood. And the concept of monthly payments for a phone (price exceeding most two wheelers' prices -- a popular mode of transport) won't sit well with people there, especially devoid of all the carrier incentives in the states. This is also following rumors from a bit ago - https://www.reuters.com/article/us-apple-india-exclusive/exclusive-foxconn-to-begin-assembling-top-end-apple-iphones-in-india-in-2019-source-idUSKCN1OQ0M6 https://www.reuters.com/article/us-apple-india-exclusive/exc...
- latchkey 8y ago
  China and Vietnam don't really get along. I see that as more of the factor than anything else. People in Vietnam love iPhones and Apple... the logo is everywhere. China is investing heavily in Sihanoukville, Cambodia because it is a major seaport that isn't Vietnam and because the Cambodian's were more happy enough to get some much needed income. I am also guessing the Chinese have a lot of saved up USD they'd like to spend and Cambodia is based on USD. I wouldn't be surprised if we see more news from there over time. It is a great way for them to bypass the tariffs.
- chvid 8y ago
  I thought Apple's new facilities in India had something to do with India's import restrictions: "More iPhones made in India may also help Apple to hit a requirement of 30% locally-made products in order to get government clearance to open Apple Stores in the country." https://9to5mac.com/2018/12/27/iphones-made-in-india/ https://9to5mac.com/2018/12/27/iphones-made-in-india/
  - ktta 8y ago
    Exactly, which was my point.
  - thisisit 8y ago
    Single brand retail chain ownership was restricted in India. A foreign entity could only own up to 51% in a single brand retail chain. That has changed last year in Jan 2018. So, the article claiming the issue was 30% locally made products in 2016 doesn't seem right.
- mtgx 8y ago
  Apple and "cheap" are like oil and water - they don't mix. The last time Apple offered a "cheap" phone (read: still expensive for India" it cost like 500 USD in India.
  - ktta 8y ago
    I might be doing some arm-chair psychological claims right now, but, here's my opinion. The phones being expensive is what makes them appealing. Apple is the undisputed king of branding. They're selling a lifestyle. Everyone wants a taste of the high life, and while the cheap version of the iPhone might not be 500 USD, it needs to get close to the prevailing flagships in India with little tariff overhead. iPhones incur an insane markup in India right now, so they'll want to reduce that, atleast close to the price in the US.
    - benj111 8y ago
      "The phones being expensive is what makes them appealing" Well yes, they're a status symbol, no need for the arm chair. People may rationalise how it does y better than the competition, but there very few people where the better y is worth the extra $xx. I'm reminded of this: https://en.m.wikipedia.org/wiki/I_Am_Rich https://en.m.wikipedia.org/wiki/I_Am_Rich Edit: I'll admit its hard to tease out utility differences here. This isn't a rolex situation where the cheaper alternative is 'better'. Although I could cite the gold iPhones as purer examples. The fact remains, a mid range android phone gets you 95% of what you want a smartphone to have. The iphone proposition is nice to have, not need to have.
      - ktta 8y ago
        > but there very few people where the better y is worth the extra $xx. You did bring up Rolex, but it isn't that simple. Phones have much more variety and depth of utility than watches. While a watch's quality of function will not really vary between a $15 digital one and a $1000+ one, phones' functionality will. That's part of what makes expensive phones worth it, because they have good software and quality to go along with design. > The iphone proposition is nice to have, not need to have. That assumes phones are purely utilitarian.
- onlyrealcuzzo 8y ago
  India's top 5% can afford a $1000 phone somewhat easily. India's top 5% is about 65 million people. That's a lot of potential volume. Will the iPhone be main stream in India? No, of course not. But India could still be a bigger market than California, especially if India's GDP continues to rise at ~6% per year.
  - ktta 8y ago
    That same top 5% who want the $1000 iPhone, already have the $1000 iPhone. They don't care about the additional cost due to tariffs, hence not a point in this conversation.
    - onlyrealcuzzo 8y ago
      You are right to some extent. Some portion of that market that wants an iPhone is already getting one, sure. But some portion of that market isn't as well. I can afford a $10k iPhone, but there's no way I'd buy one at that price. Price matters to almost everyone beside the top 0.1%.
      - muro 8y ago
        Don't people travel? Why not by it abroad if the price is so much higher locally?
        rootusrootus 8y ago
        Some do. One of our developers came to the U.S. for a visit and went home with four brand new iPhones.
- sonnyblarney 8y ago
  The investments are effectively commensurate with population size, so not that far of equity by one measure.
crdrost 8y ago
At least the Vietnam deal has been in process since early December [1] when the Vietnamese government leaked it to the press. What I am somewhat confused about, that maybe someone with more experience in the import/export situation can enlighten me on, is whether the Wisconsin plant was also some sort of move in this direction or not. What are the advantages of trying to avoid a trade war by opening up facilities in some neutral third country, as opposed to what they already have, which is facilities in both "belligerent" countries? Is it that you're trying to route Chinese-made products through some minor step in India or Vietnam in order to say "no these really came from India/Vietnam, the tariff doesn't apply" and maintain capacity? Or is the idea that they're ramping up enough capacity in India/Vietnam/US that they no longer have to depend on Chinese policy in general? Or something else? [1] https://www.reuters.com/article/us-foxconn-iphone-vietnam/apple-assembler-foxconn-considering-iphone-factory-in-vietnam-state-media-idUSKBN1O3128 https://www.reuters.com/article/us-foxconn-iphone-vietnam/ap...
- ktta 8y ago
  I don't have any insider knowledge, but: AFAIK the Wisconsin plant isn't going to happen. Even with the outrageous incentives, it will be more expensive than China. Because it isn't simple 'price of math of man hours in China <= price of man hours in America + savings in tariffs". Set aside for a second the loss in margins due to absence of substantial ecosystem of parts and other manufacturing companies. The worker situation and protection in US would be a lot greater, which means 'less' productivity. So that man hour equation is a lot more complicated. That is unless a large scale automation of testing/validation effort kicks in. Again the technicians for those machines will be double or triple digit more expensive in the US (the rate at which income growth with skill rises in US is much higher - like most developed countries). That deal, in the first place, was made possible because of multitude of reasons: 1. Foxconn saving their butt in case a horrible trade war happens between US and China, where the rumours were floating since way back before the tariffs actually came in effect last year (ref: Youtube video of Trump saying China, China, China) 2. According to Point 1, if China-US trade wars do hurt their business, fish for US tax incentives for minimal damage. Insurance. 3. The local Wisconsin representatives trying to win over voter base saying they will win jobs. These are the guys that screwed up. Just look at the scale of those incentives. But we can see today, a trade war won't happen, atleast at the scale that will warrant an immediate start of manufacturing at the Wisconsin plant. This is because Trump and Xi know trade wars kill GDP, and GDP, with all its flaws is still the media's image of the long term economic growth. > Is it that you're trying to route Chinese-made products through some minor step in India or Vietnam in order to say "no these really came from India/Vietnam, the tariff doesn't apply" and maintain capacity? Possibly. India doesn't have the ecosystem for manufacturing many parts. So it might be the final step of assembly. Because the tariffs will be for phones, not for parts of phones. Though Indian government isn't stupid (I hope) enough to get the short end of that stick.
bluedino 8y ago
Good for Apple's future in India - getting those manufacturing jobs over there is the first step to boosting incomes, eventually to the point of being able to sell more iPhones there.
thiago_fm 8y ago
It is very hard to move that manufacturing process and supply chain out of China without making it more pricey. China got everything they need. It will take decades to those other countries fulfil what China is offering _Today_
- josu 8y ago
  From today's NYT article: But when Apple began making the $3,000 computer in Austin, Tex., it struggled to find enough screws... In China, Apple relied on factories that can produce vast quantities of custom screws on short notice. In Texas, where they say everything is bigger, it turned out the screw suppliers were not. After creating months of delay, Apple ended up ordering the screws from China. Eventually, Apple found a supplier in Texas that could produce 28,000 custom screws, although they weren’t the exact screws needed nor in the right quantity, according to the NYT. And they were delivered over 22 trips, often in a Lexus driven by the maker’s owner. https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html https://www.nytimes.com/2019/01/28/technology/iphones-apple-...
  - larrik 8y ago
    When everyone moves their manufacturing to China, you can't be surprised that the industry here doesn't stay open in case they come back.
  - thiago_fm 8y ago
    They can do that, but they will spend a lot of money and will make their shitty phones even more pricey.
  - mads 8y ago
    Not the enterprise way, I know, but if they really really wanted those screws couldn't they just have gotten on an airplane and hand carried them back to the manufacturing site? Probably could fit into a standard luggage container.
    - josu 8y ago
deleted 8y ago
[deleted]
openloop 8y ago
You can blame Trump for this one too.
potatofarmer45 8y ago
It's true at this current time, China is the best ecosystem to manufacture electronics. Moving anywhere will incur a higher cost but this higher cost is temporary. This is econ 101. Moving now is pricier in the short run, but the investment, particularly in India, means that there will be a new ecosystem being built that will eventually provide the same costs and availability as manufactured in China without having to deal with the forced tech transfers, censorship, nationalistic boycotts, and a country that is increasingly hostile to democratic values and international norms.
- asymmetric 8y ago
  > without having to deal with [...] a country that is increasingly hostile to democratic values and international norms. I’m not sure this is considered a minus in Foxconn’s (and most capitalist’s) book
- rohansingh 8y ago
  Unfortunately I don't think it's that straightforward, specifically for moving development to India. One of the major issues for manufacturing in India is the availability of reliable electricity. Even though India now has a net surplus of electric generation, there are systemic problems with the electric grid. Some of them are due to poor infrastructure, others due to theft or corruption. But the takeaway is that a factory in India just can't run for 24 hours a day the way it can in China. This is not likely to change in the foreseeable future, even with sustained international investment. There are a ton of constituencies in India that make fixing these kinds of issues much more complicated than in China. So while a company like Foxconn may be able to setup a factory and use their considerable resources to make it work, I don't think we're likely to see the kind of ecosystem pop up that you see in Shenzhen.
  - potatofarmer45 8y ago
    I recall talking to an old hand at Li & Fung (they're the largest contract manufacturing company in the world) and he talks of the old days where Shenzhen was literally a village with no factories, no paved roads, and no electricity. When they wanted to manufacture textiles back then, they literally had to build a factory from the ground up. It's true India has a lot of issues. But the good thing about investments like these is that it creates an opportunity for everyone involved to potentially make a change for the better. This could be the start of a new series of investment in manufacturing and the potential could batter enough heads together to fix issues like electricity reliability especially if every has a vested interest in making it work out. I'm not saying it will definitely happen, but these are the sort of gamechangers that could disrupt the status quo for the better.
thisisit 8y ago
The investment in Indian unit has been long time coming. India has a strict policy on imported phones. Xiaomi, which is nearly the market leader in India has been doing it for a long time: https://www.indiatoday.in/technology/news/story/xiaomi-now-has-6-smartphone-manufacturing-plants-in-india-will-also-make-pcbas-locally-1207974-2018-04-09 https://www.indiatoday.in/technology/news/story/xiaomi-now-h... Apple had lobbied hard against these rules but given that "Made in India" platform had be one of the bedrock policies of Prime Minister Modi, this was going to be an uphill battle. That said, I might be pessimistic but I don't see this changing Apple's fortunes in India.
dmode 8y ago
$216mn in India and $16mn Vietnam seems really small investments in the grand scheme of things. I doubt this indicates any material change in strategy other than introducing some manufacturing in India
- wang_li 8y ago
  Considering that a typical office worker in a large city in Vietnam makes about $300/mo, that's like a $100 million investment in the US. Personally, I'm happy to see such things happening as they should never have been so centralized in a single country in the first place. This kind of investment will also help grow the economies of India and Vietnam.
  - doanguyen 8y ago
    Compare to multi $B by some giant tech companies invested to VN recently, $16M seems to be a tiny investment to me. [1] https://english.vietnamnet.vn/fms/special-reports/174543/2017-update-on-foreign-mega-investment-projects-in-vietnam.html https://english.vietnamnet.vn/fms/special-reports/174543/201...
    - wang_li 8y ago
      That's quite a nice list. It makes me happy to see it as I have several close friends in Vietnam.
  - adventured 8y ago
    US imports from Vietnam should hit a new record for 2018 when all the data is released. Roughly $50 billion worth of imports vs $46.4 billion for 2017. That's equal to about 20% of their economy in size. I would expect that trade to continue to expand indefinitely. Over the coming decade Vietnam should be able to use the same approach China did, with regards to US imports pouring dollars into the country, to rapidly build itself up. Their GDP per capita has been soaring, from $543 in 2004 to $2,500 this year (up ~20% in the last three years). Probably 12 to 15 years out they'll have an economy the size of Turkey or Taiwan.
gpm 8y ago
You have to think that competition between countries is good for Apple here. If all the tech is in China, there is no competition to have the most favorable regulatory/taxation scheme. If there are two competitions, both have an incentive to lure more manufacturing towards themselves.
withhighprod 8y ago
Great now iPhone will be assembled by the “untouchable” with even lower wages and there will be absolutely no human rights/democracy issue
bofadeez 8y ago
shows how weak china's position is as a global competitor. a tariff on goods made in china will obviously cause manufacturers to move out of china. why wouldn't they do that? the tariffs are actually very very very effective.
vba 8y ago
Anecdotal, but I have a friend who manages a Thai manufacturering business/factory (hard drives, optical mice, etc). He said a couple of US companies moved their production out of China to them because of this trade war spat, which presumably he’s happy about. Now he’s asked me if I know any other US manufacturers who he could manufacture for (guessing because I work in tech (though software) & live in the states) Would love to help him, but don’t really know how. Makes me realize I haven’t networked enough.
julius_set 8y ago
A subjective point but: Chinese manufacturing work ethic > Indian manufacturing work ethic. This will be disastrous short term.
- pnw_hazor 8y ago
  Work ethic, really? How does being more susceptible to exploitation play into that? Indian workers can go on strike and vote in elections. Not so in Red China.
- grey-sunshine 8y ago
  I get it, you want some reliable subservient workers analogous to workers from America of a particular race in the 1800 who have no rights unlike yourself.
grey-sunshine 8y ago
That is what you get for being a communist shithole. India might be a socialist country but it is still a democracy.
entity345 8y ago
It should be noted that Foxconn is a Chinese company in the larger sense of the term (i.e. not PRC but ROC) and its founder's family is from Shanxi and moved to follow the Nationalists (and so unsurprisingly he supports the KMT). This is a business decision to expand and diversify but that also widens the Chinese sphere of influence. Its existing factory(ies) in India are very much used by China mainland smartphone companies, which dominate the Indian market, for example...
porpoisely 8y ago
A perfect example of a non-news turned into news just to sell ads. Trade tensions have nothing to do with foxconn or anyone's expansion in vietnam/ASEAN or india. Multinational corporations have been moving to vietnam and india for at least a decade now. Even chinese companies are moving to vietnam and india as they look to exploit wage differences between china and vietnam/asean/india. From 2008 ( can't believe 2008 was 11 years ago ) ... https://money.cnn.com/2008/08/13/smallbusiness/the_new_china.fsb/index.htm https://money.cnn.com/2008/08/13/smallbusiness/the_new_china...
mengibar10 8y ago
If Trump's policy on putting tariff gets the support of the politicians elected after him, I guess tariffs will only follow wherever the production shifts to. This is not about only China (for now), this is about breaking the back of competition. Isn't it?

217 points by ryansmccoy 8y ago

ktta 8y ago

$213.5 million - Indian Unit - for “long-term investment” $16.5 million - Vietnamese Unit - "for operations and sales" Easy to see where the major investment is. I see this is as a clear intent to start putting roots in the Indian market, especially since regulations for international phone imports in India are sometimes prohibitive. Though this move isn't to manufacture iPhones right now, they might be making a strategic move to be appealing to Apple, to produce more phones (a future cheap - XR like version maybe?) in India. That would be in addition to the production already in place in India for some iPhones. Apple still has the brand awareness in India. The iconic Apple logo's power has yet to die. I'm not sure if they expect to sell high end iPhones about $1000+ in volume, because they will fail. One because that isn't cheap even for American blood. And the concept of monthly payments for a phone (price exceeding most two wheelers' prices -- a popular mode of transport) won't sit well with people there, especially devoid of all the carrier incentives in the states. This is also following rumors from a bit ago - https://www.reuters.com/article/us-apple-india-exclusive/exclusive-foxconn-to-begin-assembling-top-end-apple-iphones-in-india-in-2019-source-idUSKCN1OQ0M6 https://www.reuters.com/article/us-apple-india-exclusive/exc...

latchkey 8y ago
China and Vietnam don't really get along. I see that as more of the factor than anything else. People in Vietnam love iPhones and Apple... the logo is everywhere. China is investing heavily in Sihanoukville, Cambodia because it is a major seaport that isn't Vietnam and because the Cambodian's were more happy enough to get some much needed income. I am also guessing the Chinese have a lot of saved up USD they'd like to spend and Cambodia is based on USD. I wouldn't be surprised if we see more news from there over time. It is a great way for them to bypass the tariffs.
chvid 8y ago
I thought Apple's new facilities in India had something to do with India's import restrictions: "More iPhones made in India may also help Apple to hit a requirement of 30% locally-made products in order to get government clearance to open Apple Stores in the country." https://9to5mac.com/2018/12/27/iphones-made-in-india/ https://9to5mac.com/2018/12/27/iphones-made-in-india/
- ktta 8y ago
  Exactly, which was my point.
- thisisit 8y ago
  Single brand retail chain ownership was restricted in India. A foreign entity could only own up to 51% in a single brand retail chain. That has changed last year in Jan 2018. So, the article claiming the issue was 30% locally made products in 2016 doesn't seem right.
mtgx 8y ago
Apple and "cheap" are like oil and water - they don't mix. The last time Apple offered a "cheap" phone (read: still expensive for India" it cost like 500 USD in India.
- ktta 8y ago
  I might be doing some arm-chair psychological claims right now, but, here's my opinion. The phones being expensive is what makes them appealing. Apple is the undisputed king of branding. They're selling a lifestyle. Everyone wants a taste of the high life, and while the cheap version of the iPhone might not be 500 USD, it needs to get close to the prevailing flagships in India with little tariff overhead. iPhones incur an insane markup in India right now, so they'll want to reduce that, atleast close to the price in the US.
  - benj111 8y ago
    "The phones being expensive is what makes them appealing" Well yes, they're a status symbol, no need for the arm chair. People may rationalise how it does y better than the competition, but there very few people where the better y is worth the extra $xx. I'm reminded of this: https://en.m.wikipedia.org/wiki/I_Am_Rich https://en.m.wikipedia.org/wiki/I_Am_Rich Edit: I'll admit its hard to tease out utility differences here. This isn't a rolex situation where the cheaper alternative is 'better'. Although I could cite the gold iPhones as purer examples. The fact remains, a mid range android phone gets you 95% of what you want a smartphone to have. The iphone proposition is nice to have, not need to have.
    - ktta 8y ago
      > but there very few people where the better y is worth the extra $xx. You did bring up Rolex, but it isn't that simple. Phones have much more variety and depth of utility than watches. While a watch's quality of function will not really vary between a $15 digital one and a $1000+ one, phones' functionality will. That's part of what makes expensive phones worth it, because they have good software and quality to go along with design. > The iphone proposition is nice to have, not need to have. That assumes phones are purely utilitarian.
onlyrealcuzzo 8y ago
India's top 5% can afford a $1000 phone somewhat easily. India's top 5% is about 65 million people. That's a lot of potential volume. Will the iPhone be main stream in India? No, of course not. But India could still be a bigger market than California, especially if India's GDP continues to rise at ~6% per year.
- ktta 8y ago
  That same top 5% who want the $1000 iPhone, already have the $1000 iPhone. They don't care about the additional cost due to tariffs, hence not a point in this conversation.
  - onlyrealcuzzo 8y ago
    You are right to some extent. Some portion of that market that wants an iPhone is already getting one, sure. But some portion of that market isn't as well. I can afford a $10k iPhone, but there's no way I'd buy one at that price. Price matters to almost everyone beside the top 0.1%.
    - muro 8y ago
      Don't people travel? Why not by it abroad if the price is so much higher locally?
      - rootusrootus 8y ago
        Some do. One of our developers came to the U.S. for a visit and went home with four brand new iPhones.
sonnyblarney 8y ago
The investments are effectively commensurate with population size, so not that far of equity by one measure.

crdrost 8y ago

At least the Vietnam deal has been in process since early December [1] when the Vietnamese government leaked it to the press. What I am somewhat confused about, that maybe someone with more experience in the import/export situation can enlighten me on, is whether the Wisconsin plant was also some sort of move in this direction or not. What are the advantages of trying to avoid a trade war by opening up facilities in some neutral third country, as opposed to what they already have, which is facilities in both "belligerent" countries? Is it that you're trying to route Chinese-made products through some minor step in India or Vietnam in order to say "no these really came from India/Vietnam, the tariff doesn't apply" and maintain capacity? Or is the idea that they're ramping up enough capacity in India/Vietnam/US that they no longer have to depend on Chinese policy in general? Or something else? [1] https://www.reuters.com/article/us-foxconn-iphone-vietnam/apple-assembler-foxconn-considering-iphone-factory-in-vietnam-state-media-idUSKBN1O3128 https://www.reuters.com/article/us-foxconn-iphone-vietnam/ap...

ktta 8y ago
I don't have any insider knowledge, but: AFAIK the Wisconsin plant isn't going to happen. Even with the outrageous incentives, it will be more expensive than China. Because it isn't simple 'price of math of man hours in China <= price of man hours in America + savings in tariffs". Set aside for a second the loss in margins due to absence of substantial ecosystem of parts and other manufacturing companies. The worker situation and protection in US would be a lot greater, which means 'less' productivity. So that man hour equation is a lot more complicated. That is unless a large scale automation of testing/validation effort kicks in. Again the technicians for those machines will be double or triple digit more expensive in the US (the rate at which income growth with skill rises in US is much higher - like most developed countries). That deal, in the first place, was made possible because of multitude of reasons: 1. Foxconn saving their butt in case a horrible trade war happens between US and China, where the rumours were floating since way back before the tariffs actually came in effect last year (ref: Youtube video of Trump saying China, China, China) 2. According to Point 1, if China-US trade wars do hurt their business, fish for US tax incentives for minimal damage. Insurance. 3. The local Wisconsin representatives trying to win over voter base saying they will win jobs. These are the guys that screwed up. Just look at the scale of those incentives. But we can see today, a trade war won't happen, atleast at the scale that will warrant an immediate start of manufacturing at the Wisconsin plant. This is because Trump and Xi know trade wars kill GDP, and GDP, with all its flaws is still the media's image of the long term economic growth. > Is it that you're trying to route Chinese-made products through some minor step in India or Vietnam in order to say "no these really came from India/Vietnam, the tariff doesn't apply" and maintain capacity? Possibly. India doesn't have the ecosystem for manufacturing many parts. So it might be the final step of assembly. Because the tariffs will be for phones, not for parts of phones. Though Indian government isn't stupid (I hope) enough to get the short end of that stick.

bluedino 8y ago

Good for Apple's future in India - getting those manufacturing jobs over there is the first step to boosting incomes, eventually to the point of being able to sell more iPhones there.

thiago_fm 8y ago

It is very hard to move that manufacturing process and supply chain out of China without making it more pricey. China got everything they need. It will take decades to those other countries fulfil what China is offering _Today_

josu 8y ago
From today's NYT article: But when Apple began making the $3,000 computer in Austin, Tex., it struggled to find enough screws... In China, Apple relied on factories that can produce vast quantities of custom screws on short notice. In Texas, where they say everything is bigger, it turned out the screw suppliers were not. After creating months of delay, Apple ended up ordering the screws from China. Eventually, Apple found a supplier in Texas that could produce 28,000 custom screws, although they weren’t the exact screws needed nor in the right quantity, according to the NYT. And they were delivered over 22 trips, often in a Lexus driven by the maker’s owner. https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html https://www.nytimes.com/2019/01/28/technology/iphones-apple-...
- larrik 8y ago
  When everyone moves their manufacturing to China, you can't be surprised that the industry here doesn't stay open in case they come back.
- thiago_fm 8y ago
  They can do that, but they will spend a lot of money and will make their shitty phones even more pricey.
- mads 8y ago
  Not the enterprise way, I know, but if they really really wanted those screws couldn't they just have gotten on an airplane and hand carried them back to the manufacturing site? Probably could fit into a standard luggage container.
  - josu 8y ago

deleted 8y ago

[deleted]

openloop 8y ago

You can blame Trump for this one too.

potatofarmer45 8y ago

It's true at this current time, China is the best ecosystem to manufacture electronics. Moving anywhere will incur a higher cost but this higher cost is temporary. This is econ 101. Moving now is pricier in the short run, but the investment, particularly in India, means that there will be a new ecosystem being built that will eventually provide the same costs and availability as manufactured in China without having to deal with the forced tech transfers, censorship, nationalistic boycotts, and a country that is increasingly hostile to democratic values and international norms.

asymmetric 8y ago
> without having to deal with [...] a country that is increasingly hostile to democratic values and international norms. I’m not sure this is considered a minus in Foxconn’s (and most capitalist’s) book
rohansingh 8y ago
Unfortunately I don't think it's that straightforward, specifically for moving development to India. One of the major issues for manufacturing in India is the availability of reliable electricity. Even though India now has a net surplus of electric generation, there are systemic problems with the electric grid. Some of them are due to poor infrastructure, others due to theft or corruption. But the takeaway is that a factory in India just can't run for 24 hours a day the way it can in China. This is not likely to change in the foreseeable future, even with sustained international investment. There are a ton of constituencies in India that make fixing these kinds of issues much more complicated than in China. So while a company like Foxconn may be able to setup a factory and use their considerable resources to make it work, I don't think we're likely to see the kind of ecosystem pop up that you see in Shenzhen.
- potatofarmer45 8y ago
  I recall talking to an old hand at Li & Fung (they're the largest contract manufacturing company in the world) and he talks of the old days where Shenzhen was literally a village with no factories, no paved roads, and no electricity. When they wanted to manufacture textiles back then, they literally had to build a factory from the ground up. It's true India has a lot of issues. But the good thing about investments like these is that it creates an opportunity for everyone involved to potentially make a change for the better. This could be the start of a new series of investment in manufacturing and the potential could batter enough heads together to fix issues like electricity reliability especially if every has a vested interest in making it work out. I'm not saying it will definitely happen, but these are the sort of gamechangers that could disrupt the status quo for the better.

thisisit 8y ago

The investment in Indian unit has been long time coming. India has a strict policy on imported phones. Xiaomi, which is nearly the market leader in India has been doing it for a long time: https://www.indiatoday.in/technology/news/story/xiaomi-now-has-6-smartphone-manufacturing-plants-in-india-will-also-make-pcbas-locally-1207974-2018-04-09 https://www.indiatoday.in/technology/news/story/xiaomi-now-h... Apple had lobbied hard against these rules but given that "Made in India" platform had be one of the bedrock policies of Prime Minister Modi, this was going to be an uphill battle. That said, I might be pessimistic but I don't see this changing Apple's fortunes in India.

dmode 8y ago

$216mn in India and $16mn Vietnam seems really small investments in the grand scheme of things. I doubt this indicates any material change in strategy other than introducing some manufacturing in India

wang_li 8y ago
Considering that a typical office worker in a large city in Vietnam makes about $300/mo, that's like a $100 million investment in the US. Personally, I'm happy to see such things happening as they should never have been so centralized in a single country in the first place. This kind of investment will also help grow the economies of India and Vietnam.
- doanguyen 8y ago
  Compare to multi $B by some giant tech companies invested to VN recently, $16M seems to be a tiny investment to me. [1] https://english.vietnamnet.vn/fms/special-reports/174543/2017-update-on-foreign-mega-investment-projects-in-vietnam.html https://english.vietnamnet.vn/fms/special-reports/174543/201...
  - wang_li 8y ago
    That's quite a nice list. It makes me happy to see it as I have several close friends in Vietnam.
- adventured 8y ago
  US imports from Vietnam should hit a new record for 2018 when all the data is released. Roughly $50 billion worth of imports vs $46.4 billion for 2017. That's equal to about 20% of their economy in size. I would expect that trade to continue to expand indefinitely. Over the coming decade Vietnam should be able to use the same approach China did, with regards to US imports pouring dollars into the country, to rapidly build itself up. Their GDP per capita has been soaring, from $543 in 2004 to $2,500 this year (up ~20% in the last three years). Probably 12 to 15 years out they'll have an economy the size of Turkey or Taiwan.

gpm 8y ago

You have to think that competition between countries is good for Apple here. If all the tech is in China, there is no competition to have the most favorable regulatory/taxation scheme. If there are two competitions, both have an incentive to lure more manufacturing towards themselves.

withhighprod 8y ago

Great now iPhone will be assembled by the “untouchable” with even lower wages and there will be absolutely no human rights/democracy issue

bofadeez 8y ago

shows how weak china's position is as a global competitor. a tariff on goods made in china will obviously cause manufacturers to move out of china. why wouldn't they do that? the tariffs are actually very very very effective.

vba 8y ago

Anecdotal, but I have a friend who manages a Thai manufacturering business/factory (hard drives, optical mice, etc). He said a couple of US companies moved their production out of China to them because of this trade war spat, which presumably he’s happy about. Now he’s asked me if I know any other US manufacturers who he could manufacture for (guessing because I work in tech (though software) & live in the states) Would love to help him, but don’t really know how. Makes me realize I haven’t networked enough.

julius_set 8y ago

A subjective point but: Chinese manufacturing work ethic > Indian manufacturing work ethic. This will be disastrous short term.

pnw_hazor 8y ago
Work ethic, really? How does being more susceptible to exploitation play into that? Indian workers can go on strike and vote in elections. Not so in Red China.
grey-sunshine 8y ago
I get it, you want some reliable subservient workers analogous to workers from America of a particular race in the 1800 who have no rights unlike yourself.

grey-sunshine 8y ago

That is what you get for being a communist shithole. India might be a socialist country but it is still a democracy.

entity345 8y ago

It should be noted that Foxconn is a Chinese company in the larger sense of the term (i.e. not PRC but ROC) and its founder's family is from Shanxi and moved to follow the Nationalists (and so unsurprisingly he supports the KMT). This is a business decision to expand and diversify but that also widens the Chinese sphere of influence. Its existing factory(ies) in India are very much used by China mainland smartphone companies, which dominate the Indian market, for example...

porpoisely 8y ago

A perfect example of a non-news turned into news just to sell ads. Trade tensions have nothing to do with foxconn or anyone's expansion in vietnam/ASEAN or india. Multinational corporations have been moving to vietnam and india for at least a decade now. Even chinese companies are moving to vietnam and india as they look to exploit wage differences between china and vietnam/asean/india. From 2008 ( can't believe 2008 was 11 years ago ) ... https://money.cnn.com/2008/08/13/smallbusiness/the_new_china.fsb/index.htm https://money.cnn.com/2008/08/13/smallbusiness/the_new_china...

mengibar10 8y ago

If Trump's policy on putting tariff gets the support of the politicians elected after him, I guess tariffs will only follow wherever the production shifts to. This is not about only China (for now), this is about breaking the back of competition. Isn't it?