Made in China? Not for much longer, reckons Foxconn boss
- Reference: 1597327292
- News link: https://www.theregister.co.uk/2020/08/13/china_world_factory_done_foxconn/
- Source link:
Speaking to investors on a conference call, the Apple supplier's boss predicted local markets would grow their own manufacturing ecosystems, pointing to India and the Americas. Foxconn – also known as Hon Hai Precision Industry Co – now performs 30 per cent of its production outside of China, up from 25 per cent in June 2019.
"No matter if it's India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each," he said.
China's manufacturing base rapidly expanded following its entrance into the World Trade Organisation on 11 December 2001. Standardised trading rules and a cheap labour force attracted foreign firms, which swiftly shifted jobs and production to the Middle Kingdom. It only took a couple of decades for China to emerge as a manufacturing powerhouse with a thriving middle class and breakneck economic growth.
But this trend couldn't continue forever. Rising wages in China made the nation less attractive to outside investors, who could find cheaper sources elsewhere in Southeast Asia, like Vietnam and the Philippines.
Samsung, for example, does the bulk of its smartphone assembly [1]in Vietnam , making the country the second-largest exporter of smartphones in the world.
Other nations, namely India, saw domestic manufacturing soar thanks to the imposition of crushing import tariffs on foreign made equipment. This has led to surprising anomalies, like Chinese smartphone brand [2]Xiaomi operating seven manufacturing facilities in India to cater to that local market. Apple [3]also manufactures in India , with an iPhone 11 production plant based near Chennai.
The growing assertiveness of China's foreign policy has caused some Western governments to try to reverse the flood of manufacturing goods eastward, particularly in industries with national security consequences. This resulted in TSMC [4]planning a $12bn 5nm fab in the US – no doubt thanks to some carrot-dangling from US president Donald Trump's administration.
There's also the Foxconn plant in Wisconsin, although [5]perhaps it's best not to mention that . ®
Get our [6]Tech Resources
[1] https://www.theregister.com/2020/03/02/samsung_hanoi_rd_facility/
[2] https://www.theregister.com/2015/08/12/foxconn_builds_xiaomi_phones_india/
[3] https://www.theregister.com/2017/02/03/apple_to_move_iphone_production_to_india/
[4] https://www.theregister.com/2020/05/15/tsmc_to_build_new_5nm_fab_in_usa/
[5] https://www.theregister.com/2017/08/18/wisconsin_3bn_foxconn/
[6] https://whitepapers.theregister.com/
Re: I don't suppose ...
They naturally object to the human rights abuses but when the president requires you to buy parts made in the confederacy you don't have much choice
Re: I don't suppose ...
To be fair, are Apple and Samsung any worse that a number of other companies? Just take a look at clothes, tools, appliances, ad infinitum. Even if you can find a product that comes from a country with decent labor laws, the components probably came from countries with the cheapest labor.
The components?
Assembly is the easy part. It's not easy to find basic parts like chip capacitors from anywhere outside China or Korea
Capitalism baby
You start out your economy making cheap mass produced parts, use that to pay for education and rising standards of living until your workers are too expensive and you offshore the cheap low skill grunt work to poorer country with lower cost, more exploited, workers while you move up the value chain to produce the higher value more skilled parts.
That's how Britain evolved from being the "workshop of the world" to being the leading exporter of Wallace and Grommet movies
It's too late. They have all the money.
The Pattern Continues
I read an article 20 years ago in the WSJ were a Korean business leader said Korea must make the transition from low cost producer of the cheap to a producer of quality products or get crushed by China. One of the concerns is rising wages eliminate the wage advantage that Korea was enjoying at the time. China is seeing rising wages combined with a serious distrust of the government (many issues) causing retaliatory tariffs on Chinese made goods.
What many do not factor in is the shipping and duty costs when comparing final costs and thus eventual retail prices. The cost to ship must be recovered in the final price. As manufacturing costs and tariffs rise for China, there will be a tipping point were moving manufacturing out China makes economic and political sense. Where is moves to will vary but it will move. This has been the postwar pattern with first Japan, then Korea, and now China.
I used to work for German companies importing stuff to North America. There were three problems we had to deal with: shipping costs, tariffs, and transit time. The first 2 added to overall costs and made us sensitive to exchange rates (not a good situation to be in). The latter made our guaranteed delivery dates stretch out if we put goods on the water, plays havoc with JIT delivery and inventory management. North American competitors could more easily beat us on delivery direct from the factory and often had cost advantage for Ex Works (customer takes delivery at the factory).
The Paradigm Shift
As 3D printing becomes more widespread (I see one company is using a 3D sintering process for large aircraft landing gear parts), I wonder if at some point almost all manufacturing will become local and on demand.
In that case, the money might be in holding copyrighted/patented printing files.
I don't suppose ...
that Apple, Samsung, etc, would look at the human rights record of any countries that the chose to buy kit from.
.
No, I did think that that was too much to ask.