Apple devices have always been made in China until now.
The company now says it will move production of its iPhones to Chennai in India. The Taiwanese company Foxconn which produces Apple’s iPhone In China has already organized facilities in the new locations to make this happen.
So why is Apple moving from China Where it has been for 15 years?
China is no more a cheap place to do business now because there was a huge population that was willing to take low-wage jobs, but wages have now been soaring across China as the country becomes more developed.
The three main reasons why your next iPhone will be made in India are as follows:
1. China no longer has the cheapest labor in the world: For 30 years, China has been considers to be a middle-income country according to the World Bank. That means it’s a country, which has a per capita income between $1000 and $12000. But now workers in factories like in India, Vietnam and Mexico are cheaper than those in China.
2. For a very long time, Apple has been producing many of its products in Shenzhen. With the current geopolitical climate that we find ourselves in, China and the US have become economic adversaries. Apple decided it doesn’t want to keep all its eggs in one basket since China still operates on a zero covid basis. This means factories are immediately closed when workers contract the virus. Even if it’s not a serious case of covid.
The Chinese governement has been shutting down production lines in recent times. This makes it highly unpredicatble to site a production line in China.
3. Another reason why Apple wants to move its production to Chennai is that people in India, don’t use apple much. Only 1% of the Indian smartphone market in 2018 were iPhones.
Apple wants to raise that and it’s also suspected that the Indian government may have offered some incentives to Foxconn which is Apple’s manufacturer.
It is not just Apple, that is doing this. Many companies have been withdrawing out of China for the past decade, most notably Samsung. The Korean tech guant is in fact nearing a complete exit out of China in the next few years.
Other companies that have left, China are Walmart, Panasonic and others.
The Chinese economy is going through a rough time and it will go through an even rougher time in the coming years. Thanks, largely due to its zero covid policy, where it will shut down business before allowing covid in and around the country. And because of these withdrawals and shutdowns. The unemployment rate in China is also rising.
Could India be the next China in the coming years?
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