The absolute dependence on China is something I'm surprised more companies haven't tried to combat. There's so many efforts to try and diversify to reduce risk, yet almost every hardware company remains at the whims of the Chinese government due to their dependency on Chinese manufacturers.
The idea that the Chinese government could present a material international threat to your business is really a relatively new one[1]. Immediately after PNTR in 2000 and before the installation of the current regime, it was a a more-or-less stable environment.
Today's uncertainty really only started to creep in around 2014[2], and in those 14 years the global supply chain concentrated so heavily in and around China that you need to overcome a lot of inertia to move elsewhere. Most attempts to do so until now have been either for low-value mfg - t-shirts or bicycles - or focused on relatively less complicated finishing and assembly stages.
1. What I mean here is that in earlier days, you were more likely to be concerned about access to the PRC market and making sure you had strong internal IP protections in place with your contract partners.
2. In addition to the politics, this is also around the time it became clear that the Chinese economy in general needed to change, because they were starting to lose out on low-margin products to lower-wage countries.
I think China underestimated the readiness of Western companies to move out. The notion has been that these big companies are locked into these big Chinese factories and can't leave.
But the reality is that these factories, often as the insistence of the Chinese government, are merely contract manufacturers. If another factory can be located somewhere else at a competitive price, moving production isn't as big a deal as if the company actually owned the factory.
As soon as someone else can actually compete, those companies would consider it. In my startup's case the same thing cost $20K made in US vs. $1K made in China, if a VC will foot the difference without taking equity I'd be happy to manufacture in USA.
No one else has workers that work for a pittance and have an average IQ of 100... and are willing to work very long hours. It will cost money and probably quality to move this anywhere else without paying a lot more for the same thing. Apple has put over a hundred billion into its pocket on the back of these works, now let's cut them loose and pay someone else the money you "saved" to do the same thing for more.
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.
Your $2B number is way off. While most chips are manufactured outside China, most chip packaging happens within. So, all the costs post mass chip production (into cut silicon dies), including chip packaging, testing, PCB manufacture, assembly, etc happens in China. You're off by at least 5X, $50/iPhone is the money paid to Chinese vendors, or at least $10B.
Considering the 3X labor buying power compated to the US, $10B/annum is directly supporting the livelihood of plenty in China. The indirect benefit of training a workforce in cutting edge high tech manufacturing, and R&D, is possibly much higher. So high in fact that Huawei, Xiaomi and Oppo combined probably outsell Apple and Samsung combined
But let's not forget how many people they lifted out of poverty with that $2B. It is being used to install infrastructure in china, education/health services have vastly improved compared to Apple who still likes to keep their money in bank, helped no American's life joyful.
> 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.
It did, and not so few times. There was a case in 2015 when some low level customs bureaucrat made Apple C-levels loose sleep for close to a month when he arrested the whole new model iphone shipment just before the holiday season on grounds of them either having a typo in the declaration, or something equally silly
>Of course, China cannot do anything to Apple without US retaliating.
Not really the main reason. Apple has an extremely good relationship with China, and has been helping them from NAND, Glass, Battery, Display, Plastic, to every other form of components up to speed and quality.
Yes Mr. Xi has a lot of enterprises reconsidering their options with respect to China. If I'm not mistaken the Chinese have a saying, "The measure of someone's irreplaceability is the divet that is left in the bucket of water after their fist is removed."
Dear Apple, as a Vim user, the only thing that will get me to buy your touchbar macbook is a stamp that says "Made in the USA". I will learn Emacs to buy that laptop.
It’s actually harder to move out of China with higher levels of automation. Labor is everywhere. Expertise around assembly automation is much more limited, and is easier to find in China than Vietnam and other countries typically being moved to.
Manufacturing technology in China is not at a monopoly and is not highly automated. In fact, if you look at what's being built in the Chinese tech hubs (e.g. Shenzhen), it tends to be more of an advanced assembly hub than raw component manufacturing because the that's where China wants to sit in the value chain for now.
Manufacturing of the components can be done pretty much anywhere, even incredibly high-tech components like CPUs (e.g. Intel has fabs in the US, Ireland, Israel and China, but also used to be in Malaysia, Vietnam, Costa Rica and so on). However, most component manufacturing is commodity stuff like capacitors or springs or whatnot. Very low profit and growth. It's not to say that China doesn't make a large number of those things, but those are even easier to manufacture pretty much anywhere and there's no real monopoly on those things in China and once they're automated it means that there's no specific reason they have to stay in China.
China manufacturers want to move up the value chain and thus are really doing final assembly of the components or sub-assembly work (with final assembly perhaps also being performed in China) of other people's designs. The next step up the value chain is of course to sell their own designs, and services around selling designs, and it's pretty clear that there's ample talent in China's domestic market to get there very soon.
Anyways, what makes money and grows is figuring out how to put the existing components together into novel products and then charge for profit for product demand. A capacitor might cost $.01, but in an iPhone that same capacitor might be "worth" $.03 as a fraction of the total sale price. It's better to be Apple selling 1,000,000 iPhones than to be the capacitor maker selling 1,000,000 capacitors because Apple gets to pocket the extra $.02.
The reason China has become such a major manufacturing center is because of two factors:
1) The raw components are readily available.
2) The labor is cheap.
As I've mentioned, #1 isn't really important for mass manufacturing. Over the decades similar major tech manufacturing centers have sprung up in quite a few places, for example Akihabara in Tokyo or Yongsan in Seoul. These places are now shadows of their former selves, but you can still go to Yongsan and buy 100,000 3" computer power supply fan motors for cheap if you really want to.
What made the whole thing work in China is #2 - cheap labor. And that exactly why it used to work in Japan and then Korea. But the economy got better in those places and the labor got less cheap. It's why Akihabara mostly just sells used stuff and video games and nobody really buys computers and radios at Yongsan anymore. The labor market is just simply got too expensive to keep employed manually soldering tiny components together.
Folks I know now say that things aren't so cheap in Shenzhen anymore. Facilities cost as much as any first-world country, and labor is getting to be Eastern European levels or higher. The availability of components is still unstoppable, but that only exists because the manufacturers exist and that only exists because the labor was cheap. Which means Shenzhen is becoming more and more of a good place to rapidly prototype and engineer designs for manufacturing...but is starting to feel less and less like the place you want to do the final factory work for a million copies of the thing you just designed.
Once the labor pool prices itself out, the ubiquitous availability of parts will eventually dry up and it will no longer be the manufacturing paradise it was and won't even be a great place to design stuff. So where does it move to? I don't really know, but you need a good combination of:
a) poor to not wealthy
b) reasonably well educated
c) ability to move materiel in and out
d) not a global pariah
e) a culture of hard work
f) not lots of other natural resource traps to focus the economy on
I think there will be a few years of fooling around with repatriating some manufacturing in the U.S., but the conditions here are bad for electronics manufacturing. So I think it'll eventually settle for a generation in maybe SE Asia or somewhere in Latin America. Wildcards might be Eastern Europe (maybe Poland, Slovakia, Czech, Hungary) or or a few places in Africa (Kenya, Ethiopia, South Africa, etc.).
Or even more intriguing, the countries that China has focused their Belt and Road program on -- after all China will need a future China to make cheap stuff for them!
Most likely they will move to some country around China so its still easy for them to move stuff and raw materials around. They can also move the production to India a place where they always struggled to sell the phone.
Maybe, just maybe, tariffs aren't such a bad idea. Yes, we realize it's really just a "tax on everything" but by making it a little less cost-effective to move manufacturing to China, we may bring more jobs and money back into the United States.
>The countries being considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said, citing sources who did not want to be identified as the discussions are private.
India has import tariffs (is it correct to call them tariffs?) on stuff like that. It is a huge yet growing economy. If you you relocate your production there you avoid the tariffs. Bet you dollars to donuts if or when they move it'll be to the Indian subcontinent.
"Apple's India Move Is Risky, But Better Than Facing Trump's Trade War"
Production capacity may move out of China, but it would most likely be assembled by the same (Chinese/Taiwanese) companies who are doing it now in China, like Foxconn and others. That’s the only way this can move forward at a quicker pace. Some of these companies have facilities and people in other countries.
Looks like taxes can alter behavior after all. The "tariffs don't work" lie is now observably false.
That it took Donald Trump to get companies to make their supply lines less fragile is pretty depressing. Never rely on a single source for anything if you don't have to.
No one had any doubts that taxes or tariffs "work", corporations respond to incentives. If you want to get political about it, Apple's not going to be making their "big, beautiful plants" in the US [1].
Trump was dealt a very strong hand given the global macroeconomic state, and he had no compunction about playing it to achieve nationalistic goals.
It’s wading into ideological territory not best treaded on HN, but IMO tariffs are an important tool in the arsenal, and they are being used to good effect here. The upcoming G-20 summit will be an important data point on whether we are going to see a beneficial resolution soon.
I think China is doing the math on whether a Democrat President will be less likely to wield the cudgel of tariffs so strongly, and if they can afford to wait it out, it would be much more effective if the tariffs were a bipartisan effort. Obviously that was never going to happen.
Nobody is going to claim that a 25% tariff won't destroy a trading relationship, of course it will. That's a monster tariff. It's big enough and wide enough it will have substantial effects if it's held.
The issue is who actually wins, who loses, what are the after-effects etc..
All things considered, China will be the bigger loser here, but America doesn't stand much to gain, other than some overall strategic leverage.
iPhone's won't be any cheaper, and Apple likely won't be making more money over this, rather, they'll possibly have a more resilient supply chain, and America will maintain more power in the ensuing balance.
If anything 'the rest' of SE Asia is probably the winner in all of this. Which is fine.
Edit: I should add, if 25% tariffs are maintained, all of America will soon start to see that hit them personally; there will be a material lift in consumer prices that will be noticeable even at the consumer level. I don't think it will be a 1970's OPEC shock, but we'll see it. It takes a long time to realign supply chains, and even then a lot of it is not very amenable to shifting away from China. It will be interesting to see what happens when this goes from an 'abstraction' to materially popping into people's lives.
It's already hitting my business hard as we're scrambling to figure out what to do, and this reality will soon trickle into the lives of regular people.
I actually do support some kind of trade re-negotiation with China, and the 25% tactic is in some ways a nice manoeuvre, the problem is, it might have to be a bluff because it's going to hit the economy very hard.
While I’m loath to credit Trump for intentionally bettering the world... uh...
Has he done just that by starting this economic war with China? I mean, the less power China has, the better for humanity as a whole.
i.e. if one would choose to be born in China, I’d be curious as hell to know why. It’s pretty far down on my list of preferred places to live due to its government’s nakedly anti-human approach to... well, pretty much everything.
This might be the most damaging of all announcements made thus far.
Companies have known they probably have relied a little bit too much on 'one country' thus far, and that there could be ramifications, and this 'mini trade war' is basically the red flag which caused them to 'do something'.
Apple is a monster, representing alone a good chunk of the trade.
But it isn't this specific move, it's the knock-on effects and the permanency of it the changes that will be the real damage.
Apple is an industry leader, and this will cause everyone to think about their situation in the same way.
Even if the 'trade war' ended today with happy smiles, companies will still look into this, because all of this could happen again, and it's probably the right thing to do anyhow in their eyes.
Once a portion of manufacturing leaves, it's never coming back, and as other sources become more reliant and competitive and other companies see leaders planting their flags elsewhere, there will be follow-on and the genie will not be put back in the bottle.
I think this year is a major change point for China and the world, as the 1990's were fast but quiet, the 2000's it came to everyone's attention, the 2010's concerns started to rise outside the border, jingoism, 'head of state for life' and enough critical mass of concerned voices lead by Mr. Big in the Presidency (rational acting or not, it's made a mark).
Combined with a natural slowdown which would have occurred regardless.
Apple is 12% of the smartphone market and falling, they're no monster. They're huge by market cap but not by handset volume. I'm not denying that they're a significant player but let's keep things in perspective. If anything, Samsung is the monster.
> Apple is an industry leader, and this will cause everyone to think about their situation in the same way.
I don't think they are. Arguably Samsung is on the hardware front. Google is on the software front.
> I think this year is a major change point for China and the world, as the 1990's were fast but quiet, the 2000's it came to everyone's attention, the 2010's concerns started to rise outside the border […] Combined with a natural slowdown which would have occurred regardless.
Although the economy is slowing slightly most agree it is still growing in the 6% range. Given that most economists believe that China has more or less the largest economy in the world in PPP terms even taking into account that their regions definitely tend to over-inflate key numbers. We can see by metrics like electricity production and consumption that the economy is probably the largest in the world at least according to the CIA Factbook anyhow.
# Last year China built ~6,000kms of high-speed rail, actually increasing the rate of build out in the face of an economic trade war. To put that in perspective that's more kms than Spain has ever built and Spain has the second longest high-speed rail network on the planet.
# Global patent applications leader starting from 1980 (a proxy for innovation) …
# In 2013 China became the third country ever to soft-land on the moon.
# “China is the world's leading country in electricity production from renewable energy sources, with over double the generation of the second-ranking country, the United States.” according to Wikipedia
# Has the largest electric vehicle market in absolute terms and is on track to be 50% of the global market by 2025
[+] [-] semicolon_storm|6 years ago|reply
[+] [-] culturestate|6 years ago|reply
Today's uncertainty really only started to creep in around 2014[2], and in those 14 years the global supply chain concentrated so heavily in and around China that you need to overcome a lot of inertia to move elsewhere. Most attempts to do so until now have been either for low-value mfg - t-shirts or bicycles - or focused on relatively less complicated finishing and assembly stages.
1. What I mean here is that in earlier days, you were more likely to be concerned about access to the PRC market and making sure you had strong internal IP protections in place with your contract partners.
2. In addition to the politics, this is also around the time it became clear that the Chinese economy in general needed to change, because they were starting to lose out on low-margin products to lower-wage countries.
[+] [-] reaperducer|6 years ago|reply
But the reality is that these factories, often as the insistence of the Chinese government, are merely contract manufacturers. If another factory can be located somewhere else at a competitive price, moving production isn't as big a deal as if the company actually owned the factory.
[+] [-] dheera|6 years ago|reply
[+] [-] curiousgal|6 years ago|reply
If anything, it's the U.S. government that's been volatile and unpredictable.
[+] [-] nabla9|6 years ago|reply
They still keep manufacturing in China. Products that go to Chinese markets or non US markets can still be manufactured in China.
[+] [-] ptah|6 years ago|reply
[+] [-] devoply|6 years ago|reply
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] _cs2017_|6 years ago|reply
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.
[+] [-] writepub|6 years ago|reply
Considering the 3X labor buying power compated to the US, $10B/annum is directly supporting the livelihood of plenty in China. The indirect benefit of training a workforce in cutting edge high tech manufacturing, and R&D, is possibly much higher. So high in fact that Huawei, Xiaomi and Oppo combined probably outsell Apple and Samsung combined
[+] [-] gingabriska|6 years ago|reply
[+] [-] baybal2|6 years ago|reply
It did, and not so few times. There was a case in 2015 when some low level customs bureaucrat made Apple C-levels loose sleep for close to a month when he arrested the whole new model iphone shipment just before the holiday season on grounds of them either having a typo in the declaration, or something equally silly
[+] [-] ksec|6 years ago|reply
Not really the main reason. Apple has an extremely good relationship with China, and has been helping them from NAND, Glass, Battery, Display, Plastic, to every other form of components up to speed and quality.
[+] [-] sunstone|6 years ago|reply
[+] [-] Fjolsvith|6 years ago|reply
[+] [-] killjoywashere|6 years ago|reply
[+] [-] iezepov|6 years ago|reply
[+] [-] lallysingh|6 years ago|reply
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] rootoor|6 years ago|reply
[+] [-] meruru|6 years ago|reply
Is it easier to move away from China now than in the past due to more automation meaning less need for cheap labor?
Will the need to move away from China going to accelerate the development and adoption of automation technology?
[+] [-] nrp|6 years ago|reply
[+] [-] bane|6 years ago|reply
Manufacturing of the components can be done pretty much anywhere, even incredibly high-tech components like CPUs (e.g. Intel has fabs in the US, Ireland, Israel and China, but also used to be in Malaysia, Vietnam, Costa Rica and so on). However, most component manufacturing is commodity stuff like capacitors or springs or whatnot. Very low profit and growth. It's not to say that China doesn't make a large number of those things, but those are even easier to manufacture pretty much anywhere and there's no real monopoly on those things in China and once they're automated it means that there's no specific reason they have to stay in China.
China manufacturers want to move up the value chain and thus are really doing final assembly of the components or sub-assembly work (with final assembly perhaps also being performed in China) of other people's designs. The next step up the value chain is of course to sell their own designs, and services around selling designs, and it's pretty clear that there's ample talent in China's domestic market to get there very soon.
Anyways, what makes money and grows is figuring out how to put the existing components together into novel products and then charge for profit for product demand. A capacitor might cost $.01, but in an iPhone that same capacitor might be "worth" $.03 as a fraction of the total sale price. It's better to be Apple selling 1,000,000 iPhones than to be the capacitor maker selling 1,000,000 capacitors because Apple gets to pocket the extra $.02.
The reason China has become such a major manufacturing center is because of two factors:
1) The raw components are readily available.
2) The labor is cheap.
As I've mentioned, #1 isn't really important for mass manufacturing. Over the decades similar major tech manufacturing centers have sprung up in quite a few places, for example Akihabara in Tokyo or Yongsan in Seoul. These places are now shadows of their former selves, but you can still go to Yongsan and buy 100,000 3" computer power supply fan motors for cheap if you really want to.
What made the whole thing work in China is #2 - cheap labor. And that exactly why it used to work in Japan and then Korea. But the economy got better in those places and the labor got less cheap. It's why Akihabara mostly just sells used stuff and video games and nobody really buys computers and radios at Yongsan anymore. The labor market is just simply got too expensive to keep employed manually soldering tiny components together.
Folks I know now say that things aren't so cheap in Shenzhen anymore. Facilities cost as much as any first-world country, and labor is getting to be Eastern European levels or higher. The availability of components is still unstoppable, but that only exists because the manufacturers exist and that only exists because the labor was cheap. Which means Shenzhen is becoming more and more of a good place to rapidly prototype and engineer designs for manufacturing...but is starting to feel less and less like the place you want to do the final factory work for a million copies of the thing you just designed.
Once the labor pool prices itself out, the ubiquitous availability of parts will eventually dry up and it will no longer be the manufacturing paradise it was and won't even be a great place to design stuff. So where does it move to? I don't really know, but you need a good combination of:
a) poor to not wealthy
b) reasonably well educated
c) ability to move materiel in and out
d) not a global pariah
e) a culture of hard work
f) not lots of other natural resource traps to focus the economy on
I think there will be a few years of fooling around with repatriating some manufacturing in the U.S., but the conditions here are bad for electronics manufacturing. So I think it'll eventually settle for a generation in maybe SE Asia or somewhere in Latin America. Wildcards might be Eastern Europe (maybe Poland, Slovakia, Czech, Hungary) or or a few places in Africa (Kenya, Ethiopia, South Africa, etc.).
Or even more intriguing, the countries that China has focused their Belt and Road program on -- after all China will need a future China to make cheap stuff for them!
[+] [-] dheera|6 years ago|reply
[+] [-] akshayB|6 years ago|reply
[+] [-] starman100|6 years ago|reply
[+] [-] ulfw|6 years ago|reply
[+] [-] rntksi|6 years ago|reply
[+] [-] Apocryphon|6 years ago|reply
[+] [-] Despegar|6 years ago|reply
>The countries being considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said, citing sources who did not want to be identified as the discussions are private.
[+] [-] igravious|6 years ago|reply
"Apple's India Move Is Risky, But Better Than Facing Trump's Trade War"
https://www.forbes.com/sites/davidvolodzko/2019/01/17/will-a...
[+] [-] Mtinie|6 years ago|reply
[+] [-] wtmt|6 years ago|reply
[+] [-] temprelrel|6 years ago|reply
[+] [-] User23|6 years ago|reply
That it took Donald Trump to get companies to make their supply lines less fragile is pretty depressing. Never rely on a single source for anything if you don't have to.
[+] [-] Despegar|6 years ago|reply
[1] https://www.wsj.com/articles/trump-says-apple-ceo-has-promis...
[+] [-] zaroth|6 years ago|reply
It’s wading into ideological territory not best treaded on HN, but IMO tariffs are an important tool in the arsenal, and they are being used to good effect here. The upcoming G-20 summit will be an important data point on whether we are going to see a beneficial resolution soon.
I think China is doing the math on whether a Democrat President will be less likely to wield the cudgel of tariffs so strongly, and if they can afford to wait it out, it would be much more effective if the tariffs were a bipartisan effort. Obviously that was never going to happen.
[+] [-] m463|6 years ago|reply
[+] [-] pertymcpert|6 years ago|reply
[+] [-] sonnyblarney|6 years ago|reply
Nobody is going to claim that a 25% tariff won't destroy a trading relationship, of course it will. That's a monster tariff. It's big enough and wide enough it will have substantial effects if it's held.
The issue is who actually wins, who loses, what are the after-effects etc..
All things considered, China will be the bigger loser here, but America doesn't stand much to gain, other than some overall strategic leverage.
iPhone's won't be any cheaper, and Apple likely won't be making more money over this, rather, they'll possibly have a more resilient supply chain, and America will maintain more power in the ensuing balance.
If anything 'the rest' of SE Asia is probably the winner in all of this. Which is fine.
Edit: I should add, if 25% tariffs are maintained, all of America will soon start to see that hit them personally; there will be a material lift in consumer prices that will be noticeable even at the consumer level. I don't think it will be a 1970's OPEC shock, but we'll see it. It takes a long time to realign supply chains, and even then a lot of it is not very amenable to shifting away from China. It will be interesting to see what happens when this goes from an 'abstraction' to materially popping into people's lives.
It's already hitting my business hard as we're scrambling to figure out what to do, and this reality will soon trickle into the lives of regular people.
I actually do support some kind of trade re-negotiation with China, and the 25% tactic is in some ways a nice manoeuvre, the problem is, it might have to be a bluff because it's going to hit the economy very hard.
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] camdenlock|6 years ago|reply
Has he done just that by starting this economic war with China? I mean, the less power China has, the better for humanity as a whole.
i.e. if one would choose to be born in China, I’d be curious as hell to know why. It’s pretty far down on my list of preferred places to live due to its government’s nakedly anti-human approach to... well, pretty much everything.
[+] [-] sonnyblarney|6 years ago|reply
Companies have known they probably have relied a little bit too much on 'one country' thus far, and that there could be ramifications, and this 'mini trade war' is basically the red flag which caused them to 'do something'.
Apple is a monster, representing alone a good chunk of the trade.
But it isn't this specific move, it's the knock-on effects and the permanency of it the changes that will be the real damage.
Apple is an industry leader, and this will cause everyone to think about their situation in the same way.
Even if the 'trade war' ended today with happy smiles, companies will still look into this, because all of this could happen again, and it's probably the right thing to do anyhow in their eyes.
Once a portion of manufacturing leaves, it's never coming back, and as other sources become more reliant and competitive and other companies see leaders planting their flags elsewhere, there will be follow-on and the genie will not be put back in the bottle.
I think this year is a major change point for China and the world, as the 1990's were fast but quiet, the 2000's it came to everyone's attention, the 2010's concerns started to rise outside the border, jingoism, 'head of state for life' and enough critical mass of concerned voices lead by Mr. Big in the Presidency (rational acting or not, it's made a mark).
Combined with a natural slowdown which would have occurred regardless.
This is a new chapter.
[+] [-] DevKoala|6 years ago|reply
[+] [-] igravious|6 years ago|reply
> Apple is an industry leader, and this will cause everyone to think about their situation in the same way.
I don't think they are. Arguably Samsung is on the hardware front. Google is on the software front.
> I think this year is a major change point for China and the world, as the 1990's were fast but quiet, the 2000's it came to everyone's attention, the 2010's concerns started to rise outside the border […] Combined with a natural slowdown which would have occurred regardless.
Although the economy is slowing slightly most agree it is still growing in the 6% range. Given that most economists believe that China has more or less the largest economy in the world in PPP terms even taking into account that their regions definitely tend to over-inflate key numbers. We can see by metrics like electricity production and consumption that the economy is probably the largest in the world at least according to the CIA Factbook anyhow.
https://www.cia.gov/library/publications/the-world-factbook/...
> This is a new chapter.
I agree. People keep underestimating China.
# Last year China built ~6,000kms of high-speed rail, actually increasing the rate of build out in the face of an economic trade war. To put that in perspective that's more kms than Spain has ever built and Spain has the second longest high-speed rail network on the planet.
# Global patent applications leader starting from 1980 (a proxy for innovation) …
# In 2013 China became the third country ever to soft-land on the moon.# “China is the world's leading country in electricity production from renewable energy sources, with over double the generation of the second-ranking country, the United States.” according to Wikipedia
# Has the largest electric vehicle market in absolute terms and is on track to be 50% of the global market by 2025