For years, China was the country where absolutely everything related to electronics was made. It is not for nothing that more than half of smartphones come from there. They were fast, good, efficient, cheap and obedient. It is something inherent in their culture, even if over the years and generations, things change. Especially the ambitions of young people.
It is not something exclusive to there, it is seen all over the world. In USA there are fewer and fewer farmers and more and more office workers, in the United States the countryside is more abandoned than ever and in the rest of the West it is the same. It is the result of a professionalization of society, which you train and demand jobs that meet what you are looking forThis makes the relocation of production to China, which was previously the norm, increasingly expensive, and Apple is already looking to other countries, with India as its base of operations.
Apple no longer wants to depend on China
We need to understand the history of China to understand why all this is happening. This is a country that has suffered for years from famine, disease, wars, etc. Its economy lived on agriculture and it had little to do with the West at the time or with itself today. In 1982, its GDP was $205 billion. Today, it is $8.3 trillion. This is a growth of 4.048%. In this same space-time, the illiteracy rate fell from 35% to 3.85%.
This is no accident, they simply knew how to optimize their resources. They were not an educated people, nor particularly demanding in terms of education, but they were numerous, they handled small objects well, their cost of living was low and their labor regulations were non-existent. This is how they became the world’s factory.
The main goal of most parents is for their children to live a better life than they did, and China is no exception. Those who initially lived in factories saved and passed it on to the next generation, until They came to see the first one who had enough to study.. From an anthropological point of view, it is interesting to analyze it.
Today, China is facing the consequences of its own demographic development and this generation of children studied through the efforts of their parents, grandparents, great-grandparents and great-great-grandparents. They don’t want to take your place
Apple expands into India and surrounding regions
According to the latest report from BusinessKorea, the production of the iPhone 16 has forced Foxconn to offer contracts with an hourly wage increase of up to 25 yuan (3.17 dollars). In contrast, the Zhengzhou factory is offering bonuses of up to 7,500 yuan (952 dollars, almost a base salary), a significant increase from the 6,000 yuan bonus offered a month earlier. All this with a single goal: to arrive in time to produce the expected 90 million iPhone 16, Pro and Max.
Manufacturing in China is starting to become unprofitable. Every time There are fewer workers willing to offer their services under these conditions. Factories must be modernized with large windows, cafeterias, relaxation areas, free food, rest hours and even rooms to sleep for a while. In this way, they avoid the flight of staff, but they also increase their costs considerably, and Apple does not like that.
Those in Cupertino decided that it was better to go elsewhere. More specifically to countries like India, Vietnam, Pakistan, etc. These are meeting places — saving distances — more or less equivalent to the situation in China a few years agoand everything is cheaper there. “Vietnam is the new China,” they say in the Commercial standardand they’re not completely off track.
In any case, we cannot leave China overnight. This other group of countries has not yet assimilated all the processes, and It is a transition that must be done little by little.. For example, until a few months ago, 50% of all iPhones sold in India did not meet Apple standards. Something that is quite common and has improved over time.
Everything indicates that the era of cheap production is coming to an end. At least in China. Its place will be taken by others, less developed but with the same desire to grow. The problem as such does not arise now, but when there are no more countries like this, what will we do?
Cover | Business Insider
An older version of this article was originally published on 08/21/2023.
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