NY Times Explains “Why Apple America Outsourcing to China”? Causes/Effects

Apple’s outsourcing to China is the main topic of the U.S. tech and economic circles and the folks are much interested in knowing the reasons behind this Apple’s strategy and its effects on the U.S. economy. No doubt, Apple can contribute in boosting up the country’s economy and the company is in position to offer thousands of jobs to Americans by building up the plants within the country for production of its globally acknowledged products. Recently, Apple’s outsourcing to China has been discussed in the CNN’s “Southern Republican Presidential Debate” where some heavyweight participants have pushed out their views and suggestions regarding this matter. But, today’s NY Time’s comprehensive account  on Apple’s outsourcing to China is a masterpiece of thoughtful overview  on this issue and is a great guide for the politicians to learn a lot from it.

Most precisely, this report hints to a global law concerning to economic growth of a country; Investor always like to spend their pretty bucks there where they are sure that they can earn huge profits by investing less money. Moreover, the investors always try to hide their income from taxes and other monitory restrictions which can potentially dame their profit. Apple is also following the same economic rules; and the U.S strict fiscal rules and regulations don’t fit in Apple’s business strategy.

Only the cost, which is comparatively less in China, is not the vital factor. A gadget is made up of hundreds of tiny parts and all are being manufactured in China and its surrounding countries (Korea, Japan) at very low prices. Moreover, the Chinese government has subsidized building cities of factories which can hire 3,000 workers in a day Or 8700 Industrial Engineers in two weeks. Keeping in view all those factors, one can simply conclude that Apple could never try to invest within the U.S. since it would considerably increase the initial cost of their Macs, Macbooks, iPhone, iPad and iPod touch devices leaving Apple absolutely unable to compete with its rivals especially those having their origin in Asia like Samsung and LG (the Korean based tech giants) and Sony (a Japanese Tech giant).

The most interesting piece from the NY Time’s overview on Apple’s outsourcing to China is embedded below for your reading pleasure;

In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.

Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.

People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”

After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.

 New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?

Some other tidbits from the report are given below;

1. Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.
2. Various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense.
3. “Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”
4. At the Silicon Valley Summit: “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is insanely great. What I’m worried about is that we don’t talk enough about solutions.”

And finally the most interesting fact is; the vital part of an iPhone made in the US is the processor, which is manufactured by Texans working for Samsung.

Via: 9to5mac 

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