Posted on 09/05/2020 7:22:34 AM PDT by SeekAndFind
Take a look at the back of the box from which you unpacked your iPhone and you'll see this: "Designed by Apple in California Assembled in China."
Reading this tagline might trigger a vision in your mind of Jonathan Ive, Apple's legendary chief design officer, dropping the drawings and technical specs for the next-generation iPhone into a (highly secure) shared folder that its low-cost suppliers in China can access as they manufacture and assemble the product by the millions.
But as Apple CEO Tim Cook recently pointed out, this picture wouldn't tell the entire story of how an iPhone actually gets made today, or why Apple prefers to make them in China. At the Fortune Global Forum in Guangzhou in early December (my firm, McKinsey & Company, was the Knowledge Partner), I listened to Cook as he explained why Apple continues to favor China as its central base for manufacturing iPhones:
The number one reason why we like to be in China is the people. China has extraordinary skills. And the part that's the most unknown is there's almost two million application developers in China that write apps for the iOS App Store. These are some of the most innovative mobile apps in the world, and the entrepreneurs that run them are some of the most inspiring and entrepreneurial in the world. Those are sold not only here but exported around the world.
Highly skilled software developers developing apps for the App Store are one reason Apple likes to be in China. But the depth of highly skilled labor in the manufacturing space is why Apple makes its iPhones there:
China has moved into very advanced manufacturing, so you find in China the intersection of craftsman kind of skill, and sophisticated robotics and the computer science world. That intersection, which is very rare to find anywhere, that kind of skill, is very important to our business because of the precision and quality level that we like. The thing that most people focus on if they're a foreigner coming to China is the size of the market, and obviously it's the biggest market in the world in so many areas. But for us, the number one attraction is the quality of the people.
Citing an example of the type of a highly skilled supplier Apple works closely with, Cook talked at length about recently visiting one company that it has collaborated with for several years:
I visited ICT--they manufacture, among other things, the AirPods for us. When you think about AirPods as a user, you might think it couldn't be that hard because it's really small. The AirPods have several hundred components in them, and the level of precision embedded into the audio quality--without getting into really nerdy engineering--it's really hard. And it requires a level of skill that's extremely high.
And the idea that Apple simply hands over the design to a company like ICT, which just manufacturers according to spec, is simply untrue, says Cook:
It's not designed and sent over--that sounds like there's no interaction. The truth is, the process engineering and process development associated with our products require innovation in and of itself. Not only the product but the way that it's made, because we want to make things in the scale of hundreds of millions, and we want the quality level of zero defects. That's always what we strive for, and the way that you get there, particularly when you're pushing the envelope in the type of materials that you have, and the precision that your specifications are forcing, requires a kind of hand-in-glove partnership. You don't do it by throwing it over the chasm. It would never work. I can't imagine how that would be.
Addressing the designed-in-California, made-in-low-cost-China impression that many people have--an impression reinforced by the tagline that is printed on every box containing a new iPhone--Cook had this to say:
There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is.
And China has an abundance of skilled labor unseen elsewhere, says Cook:
The products we do require really advanced tooling, and the precision that you have to have, the tooling and working with the materials that we do are state of the art. And the tooling skill is very deep here. In the U.S., you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China, you could fill multiple football fields.
Cook credits China's vast supply of highly skilled vocational talent:
The vocational expertise is very very deep here, and I give the education system a lot of credit for continuing to push on that even when others were de-emphasizing vocational. Now I think many countries in the world have woke up and said this is a key thing and we've got to correct that. China called that right from the beginning.
This article also appeared on LinkedIn.
Watch the entire interview with Tim Cook at the Fortune Global Forum:
First of all, there’s no such thing as a Samsung "iPad", SkyDancer. There’re Samsung tablets. The Apple iPad can be had in a 10.1” WIFI for $329. The Samsung is also available in a 10.1 inch WIFI, similar specs, much slower processor, but it’s $429 MFSR. For that price on Apple you get a cellular enabled iPad. “Lesser price”? Doesn’t look like it.
Samsung has what appears to be a lot of different models but what are actually the same models one for each of the many carriers, and both Apple and Samsung also offer smaller versions for around $279. They also offer larger tablets. Still the pricing is competitive between Apple and Samsung. They are both high-end makers.
As for the phones? Apple iPhones might not be as expensive as you seem to think.
Samsung phones with 64GB or more of internal RAM are competitive in MSRP:
(All prices quoted for carrier free, unlocked devices, Manufacturer’s Suggested Retail List. MSRP pricing found on Apple.com and Samsung.com).
So much for your claims of lesser pricing.
The processors on the Samsung phones are half the benchmarked speed of the processors on the Apple phones. In fact, the last two generation Apple designed and made A processors used in the later iPhones and iPads benchmark test faster than many modern laptop and desktop Intel processors.
Again, there hasn’t been mass forced labor in China for about 25 to 30 years. That occurred during the reign of Mao, when the communists emptied the farming villages of young people to populate the factory cities to build their military equipment, then reversed when they had to force people into the fields from the factory cities to till, plant and harvest when there was no one to plant and farm. Typical failure of a “planned” economy that has no idea how to run an economy. Stop living in the past.
The workers in China today are employed and hired for wages and apply for jobs like those in the west. They are educated and skilled, paid good wages for the economic conditions in China. Factory workers earn the equivalent of a low-middle income wage which enables them to rent or buy an apartment in the nearby city. They can, if they choose, rent a space in the factory dormitory, and eat meals in a factory cafeteria, and some do, because they are sending a portion of their wages home to support an extended family.
In 2013, a group of about 250 workers at a non-FoxConn plant went on strike and went up to the roof and faux threatened to jump, demonstrating because they were not being given enough opportunity for overtime! They wanted more than the 20 hours per week and 60 hours per month they could take under the current contract they were working under. They were not under an Apple contract that restricted overtime even more, but paid better. I believe they were making HP computer cases at that plant. An agreement was reached with management that allowed more overtime on a rotating basis. When have you heard of workers striking for more overtime, especially when overtime just pays regular hourly rates???
Maybe the slave labor in China makes shoes, shirts and dollar store junk but iPhones, etc are made by skilled workers. We shouldn’t think that this article is a complete lie.
Apple did have to comply with the law in China by transferring all Chinese iCloud accounts to servers under the control of the Chinese government. . . and to keeping the encryption key to those files inside the borders of China. So the key is kept at Apple’s China headquarters, still controlled by Apple.
You do realize that Apple’s assembly lines in those Chinese factories are among the highest-paid workers in the country - highly-desirable (despite the over-blown suicides from the quality and work requirements). Apple has its own set of standards, not just for the workers salary, but working conditions as well. FAR from “slave labor”.
Because your BS detector has a bias setting that you left turned on...
But here’s a way of looking at it: show me where we have the combination here in the US.
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