The West seems to have become too dependent on China, it's true, but here's something on which to ponder:
‘Make America Great again’ - 'America First' - ‘America jobs for American People’ said former President Trump.
Like most of his simplistic sound bites, that statement might chime well with his fan base, (70 million Americans voted for him), but it has all the intellectual depth of a Kleenex tissue.
Reducing America's dependence on China is not quite as simple as might be imagined. Take that quintessential American company Apple. Most people believe that Apple manufacture their own products, but they don’t make anything – they’re basically a design and marketing company, and a rather successful one too.
No wonder the Apple logo is an apple with a bit taken out of it. It's evocative of the 'Big Apple' but the bite taken out if it is rather larger that the logo suggests, and the country that took the bite in China.
China assembles most of Apple's iPhones in factories in Shenzen, China, (500,000 a day), though Foxconn maintains factories in countries across the world, including Thailand, Malaysia, the Czech Republic, South Korea, Singapore, and the Philippines.
Take a look at the back of an iPhone, iPad, or any Apple product and in minuscule text you’ll see: "Designed by Apple in California - Assembled in China" Many may wonder why Apple chose to outsource all of its production overseas, specifically to China. They might believe that Apple are just out to make tons of money and that’s the sole reason for the relocation, but that's a mistaken assumption.
So why can’t Apple’s gadgets be assembled in the USA? Or in general terms, why can’t most international consumer electronics and computer businesses in the Western World do their manufacturing work internally to create local jobs and boost their economy?
The reason is quite simple - iPhones aren’t manufactured in America because they can’t be - there’s not enough manpower to support the scale of manufacturing of Apple’s products. The factory in China where Apple products, specifically iPhones, undergo final assembly has approximately 230,000 workers. In the USA, there are only 83 cities that have populations as high this one factory’s number of employees. Hence, the number of possible workers in the US is just not enough to cover Apple’s needs.
In China, an estimated 25% of their workforce lives in company-owned dormitories located on the factory property. Many people live and work at the factory. Such jobs are in high demand in China, and they can hire as many people as they need overnight. The speed and efficiency of Chinese manufacturing surpasses anything the US is presently capable of.
In addition to the manpower that China offers, most of the raw materials used to make Apple products are also manufactured overseas rather than in America - a lot are within a short distance of the final assembly plant. Shipping those components to any US-based factories would mean higher costs and potentially, possible manufacturing delays. It would also cost more money to manufacture in America because workers are paid more. There are also expenses on worker benefits, health insurance, and higher taxes. Since companies want to generate revenue, added costs inevitably result in increased prices for goods. This would mean that American-manufactured Apple products would cost more, would become uncompetitive and unaffordable.
Apple’s decision to outsource its manufacturing to China is about who can build the greatest number of Apple products in the shortest time. China is able to remain flexible and immediately adaptable to the needs of Apple. In a report, an Apple executive also stated that the US no longer has the people with the skills that they need. One example is the release of the iPhone. There is a huge demand for it, and Apple knew it needed to come to market as fast as possible. Apple was aware that it wasn’t attainable in US manufacturing and would result in delays. With this, they sought out the service of Chinese factories, and were able to quickly get the iPhone to market.
This is because in China, manufacturers can ask a large number of engineers to work on the required manufacturing overnight. As they have an abundant supply of labour force, this allows them to finish a large capacity of workload quickly. The US simply cannot employ 250,000 workers overnight. This makes China a flexible and capable supplier.
Yes, Apple is reaping the financial rewards, but that’s because China has an abundance of hard-working people with the right skills, which America does not. They are willing to accept demanding jobs which are the norm to millions of Chinese, including workers who have technical skills.
The Chinese are also consumers of course. Greater China (which includes mainland China, Hong Kong, and Taiwan) is the third-largest market for Apple by revenue, behind the Americas and Europe.
As to "Designed by Apple in California", well yes Apple products are – but by an English designer.
Sir Jonathan Paul "Jony" Ive - Apple’s Chief Design Officer joined Apple in September 1992, where he remained for 27 years until his departure in November 2019. Sir Jony Ive's first design assignment was the iMAC’ G3’ desktop computer in 1998. It helped to pave the way for many other designs such as the Macbook laptop PC range, iPod, iPhone and iPad.
An ironic twist to the Covid pandemic (or as Trump calls it "The China Virus"), is that not only did they export the virus to us, they also supply the disposable blue mask that now litter the streets, and the LFT/PCR testing kits.
Why Apple is Manufacturing Products in China? Read to Know More!
Apple diversifies supply chain but keeps China at the center
David.
