Over the past few months, there have been reports that Apple is doing a lot to diversify its production base. At the moment, over 85% of iPhones are assembled in China. However, China is becoming very tough, especially with the recent issues in Foxconn’s largest factory. A few days ago, there were reports that Apple is by far the most China-dependent brand. Although Apple is an American company, it can not do its business in the U.S. because of high labour costs. Apple is by far the most dependent global tech company on China. The degree of dependence is so high that it may never completely leave the Chinese market. At least, the company will remain in China for the next 20 years.
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Data show that the company directly employs 14,000 employees in China. Also, most of the 1.5 million staff in its global supply chain are in China. Apple’s partners such as Foxconn have made top efforts to boost the production of Apple products in Vietnam and India. Nevertheless, there are claims that Vietnam is still very far from being truly competitive.
Apple can’t move out of China
An ex-Microsoft executive claims that Apple can not replicate its workings in Chinese factories elsewhere. This will be difficult because the company will either have to use new infrastructure or may not have enough for production. At present, Apple completes most of its purchases in China. This is why an iPhone is almost 100% Chinese. Thus, to move to Vietnam, the company will need a lot of shipments of parts into Vietnam. This may not be conducive for the company.
The executive’s experience comes from what happened when Microsoft moved its manufacturing center to Vietnam after it acquired Nokia in 2013. In addition, when Apple CEO Cook visited Luxshare Precision in 2017, some workers directly asked whether they wanted to relocate, but they got a negative answer.