Have you ever thought for a moment that even though the Apple iPhone was designed in America, why is that phone made in China?
Although many people have given different interpretations to this, the New York Times and an interview with the current CEO of Apple, Tim Cook, have given the exact reasons for this.
The main reason is that they do not have enough manpower to set up an Apple phone factory in the United States. That is, they do not have a sufficient number of workers.
Apple products assembly plants in China today employ more than 230,000 people, equivalent to 80 cities in the United States with the same population. This shows that China has a very large workforce that can surpass the United States. This workforce has the potential to bring a huge production capacity to market in a very short period of time.
After designing Apple products and delivering them to China for production, it is very easy for China to adapt to this new product. This is because their workforce is made up of very large number of engineers and technicians. With such a large engineering workforce, they can be serviced in a very short period of time. As a result, the efficiency of factories is very high. But with a declining workforce in the United States, it will be difficult to bring more products to market in a very short period of time.
The other factor is the cost of manpower. In the United States, one worker has to pay a huge amount of money for wage insurance and other benefits, whereas he has to spend a huge amount of money for 200,000 employees. As a result, the cost of Apple products is high. But labor costs are very low in China. This is due to the high population in China and the intense competition in the job market due to unemployment. As a result, companies are able to cut back on labor costs, and as a result, many people are paid very low wages.
It is for these reasons that China is able to provide a workforce capable of producing enormous production capacity at a very low cost in the short time mentioned earlier.
In addition to these two points, Mr. Cook further stated that the distances from the final factory of assembly of Apple iPhones to other factories that manufacture spare parts and the transportation costs for them are very low in China as compared to the United States. The fact that many of the spare parts manufacturing factories associated with Apple’s manufacturing in China are geographically close and China has the potential to maintain a very low cost to the final product by minimizing the cost of transporting those parts to the main product assembly center.
Summarizing these three factors, in terms of the cost and time it takes to produce one apple in the United States, it costs the least and the least amount of time to produce the same quality Apple product in China. Accordingly, it is very clear that Apple has chosen China to manufacture its products.
By Piyumal Senarathna (Level 01)