> With India’s labour cheaper compared with China, and the gradual expansion of its supplier base here, Apple will be able to use the country as an export hub
While there are negatives, I appreciate how globalization of manufacturing helps lift poorer economies (albeit it slowly and not always agreeing with the politics of the newly-built middle classes). One might expect manufacturing in mid-Africa in two decades.
Actually I think, the most ideal countries to expand manufacturing to are African countries, they have some of the same advantages once china had.
1. Mineral Resources.
2. Cheap Labour.
3. High Density of Lanthanide and Actinide group minerals.
China also has a fourth advantage which is a good mix of Production, Manufacturing and Electronics Engineers. Which Africa doesn't have. On the other hand India doesn't have the raw mineral resources required to do long term manufacturing. For instance India doesn't have the ideal coal quality to produce steel, India imports 90% of its Anthracite from Australia.
So the ideal situation in my view would be to setup manufacturing hub in African countries. Hire Chinese/Indian/American/Russian manufacturing Engineers and the rich mineral resources in African countries. This would fuel the growth of the world for next few decades. Though one thing to notice African countries may or may not have the rare earth metals but the probability if explored is quite high.
Africa as an industrial hub would probably be better than a lot of poverty and exploitation yet somehow it breaks the usual picture of that continent :)
That's was the entire idea of globalized manufacturing for the past fifty years.
Africa however will be much more difficult as a whole. But there are individual countries that will maybe be able to benefit from it some day.
For now, it's more lucrative in most cases to "receive aid" instead of "produce things". In that sense, "aid" has similar effects as natural recourses have.
> I appreciate how globalization of manufacturing helps lift poorer economies
I really think we have to move to a Commons-based peer production paradigm. Ask yourself, would I want to work for Foxconn assembling $1k iPhones for meager pay? [1] And I am not asking you from a hypothetical standpoint where you pretend to be an Indian in the context of the country India. My question is: would you accept a job starting work at Foxconn today, in the place where you are living?
> While there are negatives, I appreciate how globalization of manufacturing helps lift poorer economies
Let's be real about those negatives.
It seems as though it's always just the next country in line taking it's turn to provide subsistence-wage labor. The likes of Steve Pinker may argue that living standards continue to trend upwards across the board, but it seems like people are just becoming more and more time-poor (happy to be proven wrong on this point).
If we follow this pattern, once every country has lifted itself up by the bootstraps, the end-game would not be some poorer nations providing the subsistence-wage labor, but the poor population of each country providing subsistence-wage labor. Their living standards might be much higher, but they will pay in hours, or having to give up freedoms, like living on-site at Foxxcon. Why? Because those holding power have the upper hand, and would hardly be motivated to cede their power. Replace power with capital if you want. The only possible countervailing force being collective action, say in the force of democratic institutions, and a socially-minded polity.
But eventually, automation will outcompete everyone... at this point we're then forced to resort to either welfare or artificial means of population control. It seems more humane to consider policy on population and welfare sooner rather than later, but that's just my humblest of opinions.
EDIT: Cowards who downvoted me, might you refute any of my points?
A lot of people have talked about the weakness in India, but have forgotten the strengths.
Outside China, India is one of the largest single market
The long term growth rate is expected to be good
There is a countrywide GST (similar to VAT)
Uber, Amazon, Google are relatively free to be in the market, this is more liberal than in many EU countries
Add to that the younger population, surplus labour, tightening global immigration
More over India is a new unwritten partner with US, Japan, Taiwan, South Korea - there is plenty of give and take. India has concluded multi billion dollar defence deals with the US.
India has made a huge push in infrastructure investments, and building several industrial corridors
India has a strategic location in the ocean
India is the only big power in the region that can kick the CCP's ass if it has to, and the Chinese have been testing it out several times
Since the coronavirus, the state of UP (200 million population) has relaxed all labour laws that was preventing employment generation and investment, has aggregated government land for new industrial setup, twice the size of Luxembourg.
> Since the coronavirus, the state of UP (200 million population) has relaxed all labour laws that was preventing employment generation and investment, has aggregated government land for new industrial setup, twice the size of Luxembourg.
Removing laws that protected the employees will only lead to exploitation. Is this the only way to entice investors? Factories with suicide prevention nets is the last thing India needs.
> Outside China, India is one of the largest single market
Having a large population (without purchasing power) isn't enough to call a region one of the largest single market in the world.
China and India have growing middle class but 95% of their population still have no savings, these people only spend on food and household.
The largest single market in the world is the European Economic Area, the second largest is the United States (+ Canada and Mexico), all other markets are incomparable from these two developed markets because the difference is so large.
<India is the only big power in the region that can kick the CCP's ass if it has to>
Let's be realistic about India's military power.
In 1999, India lost 500 men when they were ordered to charge up the Kargil mountains WWII style even though they had complete air superiority and were backed by a Bofors artillery barrage all while facing an enemy whose long supply lines consisted of men and donkeys hauling ammunition and food for miles up steep mountain sides.
I wonder if this will be the start of an Exodus of manufacturing away from China. Corporations are constantly under scrutiny with their brand messaging and signaling with respect to various conflicts involving China, Hong Kong and the unrest within the United States.
India on the other hand, is a Democratic republic, might help alleviate some issues.
If India plays its cards right, they may pave the way for a manufacturing revolution for their 1+ billion people. For better or worse, only time will tell.
One of the key reasons for manufacturers to move to India is the massive domestic market. Apple's devices have to be imported into India which attracts an import duty. Minus this tax, Apple's products would be substantially cheaper, which would help it sell a lot more units.
There will be no 'exodus of existential consequence'.
But there will be a shift away.
China is producing a level of design and manufacture that nobody can compete with.
Other countries can take on some of the low-end stuff, but there's just a lot they will not be able to do.
China has an educated workforce that also works at very low wages, and a government bent on providing the infrastructure necessary to make it all work.
Huawei is not going to be reproduced in Vietnam for example.
I think this will depend on how much of an ally they are in the future.
If they are seen as an economic threat, like Japan in the 80s, the media will probably start to report more on the atrocities committed in Kashmir along with the new Citizenship Law that appears to target or disadvantaged Muslims.
Vietnam might he another alternative, but they are also a communist country, so the optics might not be better than China.
Unlike the US, Foxconn has functioning plants in India where they are already making iPhones and Nokia devices.
This investment is not a greenfield one like in the US. It's further investment in an already successful venture. So very few chances of a Wisconsin repeat.
If I were anyone relying on China right now I would diversify to other countries as fast as possible. Everyone should ask: what if I get cut off tomorrow? And have a strategy for that.
As we increase the offshore footprint for manufacturing of devices consumed by Americans, we set ourselves up for a future where our national interests are far away, hard to defend, and subject to the whims of foreign nations. This is a strategic error.
India seems like a good counterbalance to China -- it is, after all, an adversary of China in the region. But that could change in 10 years.
Geography is important. Instead of diversifying away from our own continent, we should use the power of our consumer demand to establish high-tech manufacturing facilities in the poorer/cheaper reaches of our own continent.
We already saw the dangers of offshore production when COVID-19 hit and we were unable to provide basic necessities like patient masks and protective gowns. The lesson there is that far-away manufacturing is problematic when the global market experiences heavy shocks.
This assumes that low cost labor is the only necessary condition for an acceptable geography. Likely, it is not. Surely companies such as Apple, with their army of supply chain professionals, has given deep thought to many options, including and beyond what the armchair analysts here on HN can dream up in the 10 minutes this topic catches their fancy.
Serious question: Modern manufacturing, especially for things like electronics, is highly automated and increasingly so. That implies you don't need a lot of labor to do it and what you do need is skilled labor anyway. Lower unskilled labor costs don't seem like a huge advantage there. So what's still keeping it in countries like China and India and not e.g. Minnesota, which would yield a PR advantage and lower transportation costs?
I can think of a few reasons in the nature of China devaluing their currency or other countries ignoring pollution, but these seem like illegitimate reasons. They're not a true advantage of China or India, they're perfidious regulatory arbitrage and a failure of US policy to punish cheating or impose the same environmental standards on all manufactured goods sold in the US regardless of country of origin.
So are those the only reasons (to which plausible yet unimplemented solutions exist), or is there something else we have to fix?
The main reason modern manufacturing is in (mostly south) China is the ecosystem! For electronics specifically, you have a tightly woven network of suppliers, factories, part distributors, logistics companies, and lots of local expertise tying it all together, as well as lots of established relationships and processes that keep it running smoothly. A factory, however highly automated, does not run in isolation. Of course you can build that kind of ecosystem elsewhere, but that's a 3-4 decade project and requires enormous investment at high political and financial risk (which is what China did in the 80s with the SEZs).
Regulation. It's not that easy to buy land, build a building, hire and fire people. If this is confusing, try buying some land and building a building.
Also the supply chains are all over there so the lead times and communication are vastly better.
Foxconn is getting ahead of the curve here. They know its going to happen and so its better they do it and keep the client than letting others get in to the game.
Indian consulting companies use the same strategy. They have offices all over the world and actively go to places where the wages are low and set up shop themselves.
Well didn't foxconn managed to get Trump to paddle a shovel in Wisconsin and then managed to do almost nothing for years? India shouldn't be happy until the billion dollar is actually invested instead of promised.
Someone help me understand this. If China and India get into a conflict, doesn't that mean each side would be trying to get the other's exports banned? Which means, effectively, Foxconn is handicapping itself?
> The Information wrote on Thursday that at least one Apple supplier has been asked to ship iPhone SE components to a facility in India starting in July
> Assembling iPhone SEs in India helps Apple to avoid a 20% tax on imported smartphones, and potentially to gain a greater foothold in the growing market. Apple earns just 2.2% of its global revenue in India
I'm surprised big companies haven't built up India to make it's own type of Shenzhen there. Seems like a huge investment by any forward looking metric. They already outsource a lot of software development.
Would be interesting to see the politics surrounding this in light of the recent border conflict between India and China and the Indian government's ban on 59 Chinese apps and government contracts to Chinese firms.
There's a pent up demand in India for cheap iPhones. Most of the phones manufactured would be for domestic market. Local manufacturing would provide better pricing to compete with Android market in India.
[+] [-] kodablah|5 years ago|reply
While there are negatives, I appreciate how globalization of manufacturing helps lift poorer economies (albeit it slowly and not always agreeing with the politics of the newly-built middle classes). One might expect manufacturing in mid-Africa in two decades.
[+] [-] pankajdoharey|5 years ago|reply
1. Mineral Resources. 2. Cheap Labour. 3. High Density of Lanthanide and Actinide group minerals.
China also has a fourth advantage which is a good mix of Production, Manufacturing and Electronics Engineers. Which Africa doesn't have. On the other hand India doesn't have the raw mineral resources required to do long term manufacturing. For instance India doesn't have the ideal coal quality to produce steel, India imports 90% of its Anthracite from Australia.
So the ideal situation in my view would be to setup manufacturing hub in African countries. Hire Chinese/Indian/American/Russian manufacturing Engineers and the rich mineral resources in African countries. This would fuel the growth of the world for next few decades. Though one thing to notice African countries may or may not have the rare earth metals but the probability if explored is quite high.
[+] [-] agumonkey|5 years ago|reply
[+] [-] peroporque|5 years ago|reply
Africa however will be much more difficult as a whole. But there are individual countries that will maybe be able to benefit from it some day.
For now, it's more lucrative in most cases to "receive aid" instead of "produce things". In that sense, "aid" has similar effects as natural recourses have.
[+] [-] hola1231|5 years ago|reply
[+] [-] bergstromm466|5 years ago|reply
I really think we have to move to a Commons-based peer production paradigm. Ask yourself, would I want to work for Foxconn assembling $1k iPhones for meager pay? [1] And I am not asking you from a hypothetical standpoint where you pretend to be an Indian in the context of the country India. My question is: would you accept a job starting work at Foxconn today, in the place where you are living?
If not, why not?
I believe the Precariat revolt is imminent.
[1] https://www.theguardian.com/technology/2017/jun/18/foxconn-l...
[+] [-] h0l0cube|5 years ago|reply
Let's be real about those negatives.
It seems as though it's always just the next country in line taking it's turn to provide subsistence-wage labor. The likes of Steve Pinker may argue that living standards continue to trend upwards across the board, but it seems like people are just becoming more and more time-poor (happy to be proven wrong on this point).
If we follow this pattern, once every country has lifted itself up by the bootstraps, the end-game would not be some poorer nations providing the subsistence-wage labor, but the poor population of each country providing subsistence-wage labor. Their living standards might be much higher, but they will pay in hours, or having to give up freedoms, like living on-site at Foxxcon. Why? Because those holding power have the upper hand, and would hardly be motivated to cede their power. Replace power with capital if you want. The only possible countervailing force being collective action, say in the force of democratic institutions, and a socially-minded polity.
But eventually, automation will outcompete everyone... at this point we're then forced to resort to either welfare or artificial means of population control. It seems more humane to consider policy on population and welfare sooner rather than later, but that's just my humblest of opinions.
EDIT: Cowards who downvoted me, might you refute any of my points?
[+] [-] naruvimama|5 years ago|reply
Outside China, India is one of the largest single market
The long term growth rate is expected to be good
There is a countrywide GST (similar to VAT)
Uber, Amazon, Google are relatively free to be in the market, this is more liberal than in many EU countries
Add to that the younger population, surplus labour, tightening global immigration
More over India is a new unwritten partner with US, Japan, Taiwan, South Korea - there is plenty of give and take. India has concluded multi billion dollar defence deals with the US.
India has made a huge push in infrastructure investments, and building several industrial corridors
India has a strategic location in the ocean
India is the only big power in the region that can kick the CCP's ass if it has to, and the Chinese have been testing it out several times
Since the coronavirus, the state of UP (200 million population) has relaxed all labour laws that was preventing employment generation and investment, has aggregated government land for new industrial setup, twice the size of Luxembourg.
[+] [-] rbar|5 years ago|reply
Removing laws that protected the employees will only lead to exploitation. Is this the only way to entice investors? Factories with suicide prevention nets is the last thing India needs.
https://theprint.in/india/governance/up-suspends-labour-laws...
[+] [-] komocsi|5 years ago|reply
Having a large population (without purchasing power) isn't enough to call a region one of the largest single market in the world.
China and India have growing middle class but 95% of their population still have no savings, these people only spend on food and household.
The largest single market in the world is the European Economic Area, the second largest is the United States (+ Canada and Mexico), all other markets are incomparable from these two developed markets because the difference is so large.
[+] [-] AareyBaba|5 years ago|reply
Let's be realistic about India's military power.
In 1999, India lost 500 men when they were ordered to charge up the Kargil mountains WWII style even though they had complete air superiority and were backed by a Bofors artillery barrage all while facing an enemy whose long supply lines consisted of men and donkeys hauling ammunition and food for miles up steep mountain sides.
[+] [-] xster|5 years ago|reply
Are you referencing something specific?
[+] [-] harshalizee|5 years ago|reply
[+] [-] dehrmann|5 years ago|reply
[+] [-] puranjay|5 years ago|reply
[+] [-] jariel|5 years ago|reply
But there will be a shift away.
China is producing a level of design and manufacture that nobody can compete with.
Other countries can take on some of the low-end stuff, but there's just a lot they will not be able to do.
China has an educated workforce that also works at very low wages, and a government bent on providing the infrastructure necessary to make it all work.
Huawei is not going to be reproduced in Vietnam for example.
[+] [-] theduder99|5 years ago|reply
[deleted]
[+] [-] pankajdoharey|5 years ago|reply
[deleted]
[+] [-] throwaway4425|5 years ago|reply
If they are seen as an economic threat, like Japan in the 80s, the media will probably start to report more on the atrocities committed in Kashmir along with the new Citizenship Law that appears to target or disadvantaged Muslims.
Vietnam might he another alternative, but they are also a communist country, so the optics might not be better than China.
[+] [-] paxys|5 years ago|reply
[+] [-] notRobot|5 years ago|reply
[1]: https://www.bloomberg.com/news/features/2019-02-06/inside-wi...
[2]: https://gimletmedia.com/shows/reply-all/wbhjwd/
[+] [-] quantummkv|5 years ago|reply
This investment is not a greenfield one like in the US. It's further investment in an already successful venture. So very few chances of a Wisconsin repeat.
[+] [-] broken_symlink|5 years ago|reply
[+] [-] linuxftw|5 years ago|reply
[+] [-] mchusma|5 years ago|reply
[+] [-] pinkfoot|5 years ago|reply
I suspect even more are asking whether they are going to be cut off from American tech.
[+] [-] ycombonator|5 years ago|reply
[+] [-] PostThisTooFast|5 years ago|reply
[+] [-] totalZero|5 years ago|reply
India seems like a good counterbalance to China -- it is, after all, an adversary of China in the region. But that could change in 10 years.
Geography is important. Instead of diversifying away from our own continent, we should use the power of our consumer demand to establish high-tech manufacturing facilities in the poorer/cheaper reaches of our own continent.
We already saw the dangers of offshore production when COVID-19 hit and we were unable to provide basic necessities like patient masks and protective gowns. The lesson there is that far-away manufacturing is problematic when the global market experiences heavy shocks.
[+] [-] xibalba|5 years ago|reply
[+] [-] nine_zeros|5 years ago|reply
[+] [-] AnthonyMouse|5 years ago|reply
I can think of a few reasons in the nature of China devaluing their currency or other countries ignoring pollution, but these seem like illegitimate reasons. They're not a true advantage of China or India, they're perfidious regulatory arbitrage and a failure of US policy to punish cheating or impose the same environmental standards on all manufactured goods sold in the US regardless of country of origin.
So are those the only reasons (to which plausible yet unimplemented solutions exist), or is there something else we have to fix?
[+] [-] jerrybee|5 years ago|reply
Napkin math if you were to move 500k workers to the US and paid them $100 a day instead of $5 a day it would cost you $17B a year.
Would be interesting to see how labor per unit is trending to determine if manufacturing is actually getting more automated and at what rate.
[+] [-] Kliment|5 years ago|reply
[+] [-] bfieidhbrjr|5 years ago|reply
Also the supply chains are all over there so the lead times and communication are vastly better.
[+] [-] myopenid2|5 years ago|reply
[+] [-] yalogin|5 years ago|reply
Indian consulting companies use the same strategy. They have offices all over the world and actively go to places where the wages are low and set up shop themselves.
[+] [-] Aperocky|5 years ago|reply
[+] [-] brisance|5 years ago|reply
[+] [-] hkmaxpro|5 years ago|reply
> The Information wrote on Thursday that at least one Apple supplier has been asked to ship iPhone SE components to a facility in India starting in July
> Assembling iPhone SEs in India helps Apple to avoid a 20% tax on imported smartphones, and potentially to gain a greater foothold in the growing market. Apple earns just 2.2% of its global revenue in India
https://www.thestreet.com/investing/apple-to-move-iphone-se-...
[+] [-] vishnugupta|5 years ago|reply
https://goo.gl/maps/GDwxEKhaBEJSs7YR7
https://www.business-standard.com/article/companies/apple-st...
[+] [-] sizzle|5 years ago|reply
[+] [-] ChicagoDave|5 years ago|reply
[+] [-] jokestir|5 years ago|reply
Too much red tape. I will believe it when I see it.
[+] [-] noisy_boy|5 years ago|reply
[+] [-] harichinnan|5 years ago|reply
[+] [-] dutch3000|5 years ago|reply
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] charliebrownau|5 years ago|reply
[deleted]
[+] [-] PostThisTooFast|5 years ago|reply
[deleted]