> Apple is literally the group implementing the change, it's accurate to say "Apple is cracking down".
I think it would be more accurate to say that the CCP is cracking down, and Apple is one target of that push.
I don't think it's completely accurate to say that Apple can "choose" these things. There's no "choosing" with the CCP, and there's no "choosing" to manufacture outside of China, at this point [1]. This isn't an Apple problem, it's a worldwide supply chain problem, that all tech companies are stuck in [2].
They're choosing to continue business in China. They're choosing to continue to manufacture in China. Like everyone else, they're choosing to leave China, with manufacturing being pushed to India, Taiwan, Vietnam, and S.Korea. But, in the short term, there's exactly one choice, for both, for them and the rest of the tech sector, that keeps the bills paid. This is a systemic problem, not an Apple problem. It's good to see the world is, finally, waking up to this, beginning the transition, and I think the beginnings of the transition should be celebrated.
> Apples compliance in China applies to Chinese customers only.
Effectively everything Apple sells is made in China. Apple is nothing without China. They are, unfortunately, required to do literally anything the CCP demands of them, push comes to shove, to continue existing as we know them.
Losing the Chinese market would be sudden-er death for Apple. China is Apple's largest market, and will be the vast majority of their revenue growth for the next 15-30 quarters.
More importantly, losing the Chinese market means losing ~100% of all of their manufacturing. (Anyone know how many iPhones are being made in India these days?)
> I'm not convinced that the multinationals have nowhere else to go.
Samsung is making most of their phones outside of China. It's clear you can push most multinational manufacturing back out of China. There are several dozen countries to redistribute that manufacturing to. I've probably read 50 or 60 articles in the past year that touch on the varied types of companies moving out of China, from bicycles to bathroom fixtures to clothing to tires.
The far bigger Apple issue, is that they don't want to lose the consumer side of the Chinese market. It's trivial for the Chinese authorities to snap their fingers and make Apple persona non grata in China. It wouldn't even take very long, a short duration of total disruption would be enough to wipe out Apple's market share. They'd never get it back, there are plenty of good domestic alternatives.
For a company the size of Apple, losing half their position in China could mean losing half a trillion dollars in revenue over the next ~20 years. Beyond the hardware, China's extremely large consumer market is no doubt perceived to be very important for Apple's services shift over time.
> Today. But maybe not tomorrow. India, Vietnam, Brazil, and a dozen other countries are more than willing to take on that production. Heck, most of Apple's contractors in China (think Foxconn) already have manufacturing in other countries.
That isn't an easy thing to do and it certainly wouldn't give Tim Cook any leverage. It would take them probably a decade to fully move their pipeline out of China and even if they did it, it would be very capital intensive so even if it was cheaper it would take quite some time to recoup those costs (and I'm not really convinced it would be cheaper overall but that's a separate exercise).
> Apple, a China laggard, has finally decided to pull the string and move itself and all its related supply chain out of China.
Apple got shaken down by the Chinese government right before Covid. If they didn't finally pull the plug after that, I would have to question whether anybody was awake at the helm.
> One of the reasons Jobs cited as being an important factor for locating in China is the availability of skilled labor
Highly skilled forced labor?
Let's not kid ourselves - it's all about cost cutting. They're trying to diversify and move to another low wage country, India.
Not - I'm not saying that China or India lacks skilled labor, or highly paid experts. But that's not why companies like Apple are there. They're there for cheap labor, and close to non-existent labor protections. But China is starting to change, so Apple is looking for new places.
> Yes, Apple should do something about this issue, and yes it's horrible to imagine them profiting off this with their "nice guy" image, but keep in mind that if they did this and increased the cost of the iPhone, other companies wouldn't, and it would put Apple at a huge disadvantage.
It's like saying that Google and Facebook should continue to disregard privacy, because their huge margins relay on that?
> if Apple PR ever says the /wrong/ then then Foxconn would immediately find their factories closed and Apple wouldn't have their latest iPhone available come October - and Christmas.
Is that something China could realistically do without irreparably harming themselves in the process though? It’s not just Apple’s supply chain that goes through China, it’s everybody’s. And once China demonstrates they are willing to do that, everybody is going to see a China-based supply chain as a gigantic business risk and look elsewhere. Apple can weather that kind of setback, but it would be an existential threat for most businesses and they would need to be proactive. Apple would go elsewhere and lay down the infrastructure, then everybody else would follow in their footsteps.
As far as I can see, China can throw their weight around to a certain extent but their hands are tied when it comes to stronger action because "Apple’s PR saying the wrong thing" is nowhere near as harmful to them as companies diversifying their supply chains en masse.
> The CCP isn't going to compromise on its core authoritarian and nationalist values over a piddling concern about the unemployment caused by one Western company leaving. Apple's not that important,
Well yes Apple alone isn’t large enough to cause a major problem for the CCP but it does set a precedent for every other western company operating in China. It could very well spiral into an exodus of manufacturing from China
They are forced to by their hardware business model. Almost every entry point to the Apple ecosystem is through hardware and nobody can meet QC and scale of Chinese factories. Too much of a risk to block China and risk supply chain disruptions.
> 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.
> Samsung was making Apple's A's in Austin, Texas some time ago, but Apple ditched Samsung's US manufacturing in favor of their China/Taiwan-first offshore outsourcing strategy.
Apple runs an Asia-first strategy these days, they are divesting from China at top speed (whether that's due to sanction threats, the risk of operating in dictatorships, raising wages in China or a combination of that is up for debate). It doesn't make much sense for Apple economically and logistically to use US-made products as they have to be shipped across the ocean to the assembly plants.
Considering China's Biggest Export are Consumer Electronics and its adjacent industry, Apple has been the biggest help to that in the past 15 years. Not just on its products, but also the whole Supply Chain from Display to NAND. I warned about BOE and YMTC in 2016 on SemiWiki before both names enter into mainstream media. And it seems only Financial Times [1] ( or arguably Patrick McGee ) is getting it. Almost every comments on HN hate Qualcomm, during the Apple vs Qualcomm trial, the company that sided with Apple most was interestingly ( or not ) Huawei.
So no, there are still no signs they are tough on Apple. If anything Apple are helping Chinese companies to set up base outside of China to continue their operation. Actively funding and directing resources. This trend has only recently stopped some what after India demanded more local company to be used inside supply chains.
Again, if anything Tim Cook is very much Pro China.
> That's because it doesn't want its executives in China to be disappeared, or denied an exit visa, or simply arrested arbitrarily.
Well, to be fair, there are also other more practical factors at play !
1. The sheer size of the market. Population of China is bigger than that of the US and the EU combined.
2. Although Apple are working on establishing manufacturing elsewhere, a large portion of their manufacturing still happens in China.
I suspect, if you were in Apple's shoes, loosing (1), (2) or both is a far worse position to be in than one or two executives "disappearing".
Executives "disappearing" is of course bad, but they are ultimately replaceable. Loosing the Chinese market or having constraints put on your manufacturing at short notice is a significantly bigger problem.
Its the same reason Microsoft famously had no choice but to show the Chinese the Windows source code.
I'm not defending China. I'm just saying, if you want to have business operations in a country (China or otherwise), you play by their rules. Being a large multi-national will only ultimately give you so much leeway with the authorities.
> You cannot do business in China without doing what they tell you.
Of course, I get that. But it's always companies like Apple that make so much noise about social justice who don't stick to their guns when China's involved.
> many companies that outsource to China have very strict QA
I do not doubt this for a second.
OTOH, recently we've even seen quality on Apple's Mac products deteriorate noticeably. Assuming Apple is extremely good at this strict QA, I wonder if some sort of China manufacturing sea-change has occurred.
At least for now. It's important to note that the Chinese government has a very strong campaign against American phones (and it's working), as backlash against the US for banning Huawei.
This is also why Apple is even less likely to do anything to further upset the CCP, not to mention they manufacture the bulk of their products there. But if Apple loses enough market share and/or moves enough production out of China, then they might change their tune as well.
> China is also no longer cheap. Wages have skyrocketed, with the average factory worker making $6 per hour on average in 2020, up from less than a dollar in 2006. The average wage of a Chinese factory worker will very soon surpass the U.S. federal minimum wage. For comparison, the average rate for a Mexican factory worker has stayed stagnant at $2 per hour.
I think it would be more accurate to say that the CCP is cracking down, and Apple is one target of that push.
I don't think it's completely accurate to say that Apple can "choose" these things. There's no "choosing" with the CCP, and there's no "choosing" to manufacture outside of China, at this point [1]. This isn't an Apple problem, it's a worldwide supply chain problem, that all tech companies are stuck in [2].
They're choosing to continue business in China. They're choosing to continue to manufacture in China. Like everyone else, they're choosing to leave China, with manufacturing being pushed to India, Taiwan, Vietnam, and S.Korea. But, in the short term, there's exactly one choice, for both, for them and the rest of the tech sector, that keeps the bills paid. This is a systemic problem, not an Apple problem. It's good to see the world is, finally, waking up to this, beginning the transition, and I think the beginnings of the transition should be celebrated.
1. https://www.cnn.com/2022/07/28/tech/apple-china-manufacturin...
2. https://www.forbes.com/sites/timbajarin/2022/08/30/shifting-...
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