> for every dollar you spend on an iPhone, about two pennies go to the factories in China that assembled it. The vast majority of that revenue comes right back to the United States
If you're in the US and you buy an iPhone, the money does not sit in a foreign "tax-exempt" bank account.
Only a small fraction of the parts in an iPhone come from America -- the majority come from Taiwan, Japan, China and 3 other countries. So yes, China probably gets more of the entire manufacturing cost of the iPhone than the US does. But not by much. The US, of course, should be able to book that sweet sweet margin of profit that Apple enjoys. (Or should the Bermuda tax haven Apple presumably employs book the profit?)
> You can go to virtually any corner of the Earth, walk in to a shop and find that roughly 50%-80% things in there are made in China.
My iPhone was made in China, yet the bulk of the purchase price goes to pay Apple (US) shareholders and employees - very little goes to Foxxconn (China) shareholders and employees.
I was wrong. They estimated only about $8 of the $240 manufacturing cost of an iPhone goes to China.
Edit x2: I remember why I misremembered the number. I had taken a worst case scenario and assumed that the entire unidentified $21 went to China. It then adds up to $30.
I was curious to compare Apple's revenues from China with the payments it sends to China for manufacturing.
Revenues (official data): ~$50B/year, down from $80B/year a year ago.
Costs attributed to China are very hard to measure. A lot of the official "manufacturing cost" of the iPhone doesn't actually stay in China (as chips, screens, etc. are all manufactured outside of China, and simply assembled there: https://www.bloomberg.com/opinion/articles/2019-06-12/apple-...). According to one source (https://theconversation.com/we-estimate-china-only-makes-8-4...), about ~$8-9/phone stays in China. Also, Apple makes ~200M iPhones a year (not all of them in China, but let's ignore that).
Assuming my numbers are not too far off, Apple contributes ~200M x $10, or just ~$2B to the Chinese economy by manufacturing the iPhones there.
It seems that if China restricts (or even merely discourages) people from buying Apple products, it will hurt Apple a lot more than Apple could ever hurt China.
Of course, China cannot do anything to Apple without US retaliating. But as the trade conflict escalates, this threat loses its power as there are fewer things to retaliate with.
>The well-choreographed customs routine is part of a hidden bounty of perks, tax breaks and subsidies in China that supports the world’s biggest iPhone factory, according to confidential government records reviewed by The New York Times, as well as more than 100 interviews with factory workers, logistics handlers, truck drivers, tax specialists and current and former Apple executives. The package of sweeteners and incentives, worth billions of dollars, is central to the production of the iPhone...
So, Apple's high profits depend on a whole lot of government subsidies in China. And then Apple takes that cash and protects it from US tax rates by storing it in Ireland. And now, some interesting questions are raised about the legality of that tax scheme.
Maybe the US doesn't need more businesses like Apple.
Not really. Pretty much every iPhone sold everywhere is manufactured in China, and they all use chips from Taiwan.
There is no Apple without China. Hundreds of thousands of Chinese nationals, working in Chinese-jurisdiction factories, produce Apple's products. Without the full consent and cooperation of the Chinese government, there are no Apple products. Full stop.
I'm not unaware that iPhones are physically constructed in China. If we had tariffs on Chinese phones only a small portion of the tariff would fall on the overall cost of an iPhone.
Yeah, I've had friends who buy iphones in the US and take it back home to china for relatives, because it's cheaper abroad..... How does that work, exactly? Is it because of some sort of luxury tax in China?
> but unwilling to brunt the cost that companies will then pass on to those same customer
HUGE "citation needed" here. Apple did a study years ago (when Obama was President) and the cost to manufacture iPhones in the US was well under 10% of the total cost, by their own calculations.
The cost of labor in China has only gotten worse since then (hence the move to Vietnam in the OP).
Not necessarily - it would likely just be passed along to the consumer, so that iPhones in America would cost double what they do in China. There are more consumers in China than in America, so if Apple's forced to choose between manufacturing in America and getting taxed for every unit they sell in China vs. manufacturing in China and getting taxed for every unit they sell in America, they'd pick the latter. American iPhone buyers tend to be relatively price-insensitive anyway.
> “Designed by Apple in California. Assembled in China”.
More accurately: "Designed by Apple in California. Components from Taiwan, South Korea, Japan, USA and China. Assembled in China."
If you count the value added in China, only $8.50 of the cost of iPhone comes from China. Chinese import components to assemble iPhone.
Slapping $160 tariff to iPhone assembled in China is indirect tariff to the US allies in the region and even to the US itself. Foxconn can move their iPhone assembly to Vietnam but it takes time.
You are right but at least a large part of their revenue will come from US made iphones which means money in the US economy instead of China, similar tariffs for others who innovate in the US but manufacture elsewhere can be implemented as well since international commerce can be regulates by the fed gov. It would also set precedent for future outsourcing attempts, reduce the likelihood of wars and supply chain chaos.
If you're in the US and you buy an iPhone, the money does not sit in a foreign "tax-exempt" bank account.
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