- Daily Zen
China’s constant clashes with the US could result in an economic breakup.
China has long enjoyed the top spot as the Apple manufacturing country. But now Apple is supposedly looking to move its manufacturing units outside of China. A report by The Wall Street Journal claims the Cupertino-based firm is looking at other Asian countries to be the next Apple manufacturing country. The iPhone-maker appears to be considering India and Vietnam as alternatives, as it already has manufacturing plants in these countries.
Analysts say that China has been the global manufacturing hub for Apple for a long time. Over 90% of its products including iPhones, iPads, and MacBook laptops, are manufactured in the country by outside contractors.
Experts believe that it is risky to continue relying on Beijing’s authoritarian government, which keeps clashing with the US on issues ranging from minorities to trade deals.
Apple manufacturing outside China is not without risks and has worldwide repercussions. The tech company is the biggest US firm by market value, briefly touching $3 trillion early this year. Its stock is one of the most coveted by amateur and professional investors. If it decides to change things, it could be seen as a sign for other companies in Western countries to pull up their socks and follow suit.
Regardless, if recent events are anything to go by, China’s designation as the Apple manufacturing country is poised for a shift. Despite the EU and America’s condemnation of Russia’s invasion of Ukraine, Beijing has refrained from siding with either party. Its silence has been interpreted as quiet support by many analysts.
Many global companies that rely on China for their manufacturing processes consider the country a geopolitical risk.
Apple CEO Tim Cook refused to comment on the rumors, and when asked about the company’s supply chain in general, mentioned that their “supply chain is truly global, and so the products are made everywhere.” Furthermore, he added, “We continue to look at optimizing.”
The iPad manufacturer has previously sought to remove China as the main Apple manufacturing country. Trade tensions and a strict Covid-19 policy has previously resulted in supply chain disruptions that can snowball into bigger problems in the future. Experts who are familiar with the matter believe that it will be a long and difficult process as the company relies on a huge network of suppliers and needs thousands of skilled laborers to get the job done.
China is well known for its deep network of suppliers and reliable infrastructure. Over the past two decades, these features have helped the Apple company in China mass-produce quality devices. Apple manufacturing in China is not just limited to products, it also accounts for nearly three million jobs. It is also much better to manufacture products in the country for companies looking to tap into the Chinese market. Apple manufacturing in China follows a well-oiled system of skilled workers, chains of suppliers, and superior infrastructure.
It will be difficult for any other country to match the quality and volume of labor of Apple manufacturing in China. Finding cheap and qualified labor that will be able to meet the huge demand for Apple products anywhere else will be difficult and time-consuming. Apple manufacturing outside China has been on the cards of the Cupertino-based firm for some time.
Apple partner Foxconn has already established iPhone manufacturing plants in India. If needed, Apple might have to shift iPhone manufacturing there and export it globally.
According to recent reports, most US companies haven’t made the decision to move out of China completely. However, many have stopped investing in new ventures until there is more clarity on how things will shape up. For American companies, shifting their manufacturers will be doubly expensive as back home, labor costs have gone up.
China’s so-called zero-Covid strategy has also raised alarm bells as it is difficult to gauge how it will impact supply chains in the future. Right now, most companies haven’t decided to move out, but they are seriously considering alternatives so that they are not left in the lurch when the time comes.