Apple's Biggest Addiction: Why They Just Can't Quit China

 Apple's Biggest Addiction: Why They Just Can't Quit China

Apple’s stock has fallen significantly since last year. For instance, the company lost $40 billion in market value after its last quarterly report, when it announced that it sold fewer iPhones than expected, as well as less iPads and Macs than investors had hoped for. Although some analysts have said this could be an overreaction from investors, others point to the ongoing patent war between Apple and Samsung as the main culprit for Apple’s problems.

5 Reasons Why Apple Just Can't Quit China

1. The Chinese market is simply too big to ignore – and it's only getting bigger. With over 1.4 billion people, China represents a massive opportunity for any company, and Apple is no exception.

2. China is also an important manufacturing base for Apple. A large portion of the company's products are assembled in Chinese factories, and many of the components used in those products are sourced from suppliers located in China.

3. labor costs in China are relatively low, which helps to keep Apple's manufacturing costs down.

4. The Chinese government has been supportive of Apple (and other foreign companies), investing heavily in infrastructure and providing tax incentives. 5. Demand for Apple products is high among consumers in China, so much so that there have been reports of people lining up outside stores before they open just to be able to buy new iPhone releases on day one. These crowds can sometimes stretch around the block, with people camping out overnight to get their hands on the latest device. 

A lot of this demand stems from China's growing middle class; its consumer market is projected to overtake America as the world's largest by 2020. However, supply is still limited because of governmental regulations that restrict importation of certain parts into China-made devices. As a result, iPhones sold in China come with slower processors than their American counterparts and larger screens—features not typically desired by Western audiences. In order to make up for these deficiencies, some retailers like Alibaba have resorted to importing grey-market phones into the country where they sell them at higher prices than what you would find at authorized retailers like Apple Stores or carriers such as Verizon or AT&T. The answer to why can't Apple quit China? is complicated and multifaceted. Though Apple may want to reduce its dependence on the region, the benefits it receives from operating in China outweigh any disadvantages. With close ties to the government, access to cheap labor, and a booming domestic market, Apple can't afford to abandon China anytime soon. What do you think about the state of Apple in China? Do you think it's time for Apple to leave the country behind, or should they continue to expand their business operations here? Let us know in the comments below! 

A lot of this demand stems from China's growing middle class; its consumer market is projected to overtake America as the world's largest by 2020. However, supply is still limited because of governmental regulations that restrict importation of certain parts into China-made devices. As a result, iPhones sold in China come with slower processors than their American counterparts and larger screens—features not typically desired by Western audiences. In order to make up for these deficiencies, some retailers like Alibaba have resorted to importing grey-market phones into the country where they sell them at higher prices than what you would find at authorized retailers like Apple Stores or carriers such as Verizon or AT&T. The answer to why can't Apple quit China? is complicated and multifaceted.

1.12 Billion People Need Phones

It's no secret that Apple is addicted to China. The country is home to 1.12 billion people, which is almost four times the population of the United States. That means there are a lot of potential customers for Apple products. In addition, Chinese consumers are increasingly wealthy and have a growing appetite for luxury goods. For these reasons, Apple just can't quit China. In fact, about one in every three iPhones sold in 2017 went to someone in China. The problem is that President Trump has imposed tariffs on $250 billion worth of imports from China (a 25% tariff) because he wants to make it more expensive for Americans to buy Chinese-made goods. He said this will force American companies like Apple to manufacture their products here instead of importing them from abroad. And even though Beijing is retaliating with its own set of trade restrictions against U.S. exports to China, including duties on cars and soybeans, Apple CEO Tim Cook said he plans to keep manufacturing phones in China, where the majority of their parts come from anyway. However, the company may end up paying higher prices for those components if Trump makes good on his threat to slap a 10% duty on everything made in China. Also, a looming trade war between the two countries could lead to an economic slowdown in China, or even an outright recession. Regardless of how you feel about this issue, it seems unlikely that the iPhone will ever be produced outside of China. 2. Consumers Want Phones Made Overseas: Despite Trump's efforts to push manufacturers into building domestically, most US consumers still want phones built overseas - mostly in Asia - according to research by consultancy firm IDC; 76% prefer smartphones assembled overseas vs 26% who want them built domestically; Moreover, around half also don't care as long as they're not manufactured in places such as Mexico or Vietnam 3. Wage Growth Slowing Down: Higher wages used to lure Western brands into building factories at home but now wages are rising only slowly 4. Almost 80% Of Workers In China Are Contracted: Around 84% of all manufacturing workers in China are contractors rather than employees. With contract workers, companies do not need to provide benefits like social security and medical insurance, which saves them money 5. Increasing Regulatory Pressure On Manufacturing Businesses: Besides having lower costs, regulatory pressure is forcing businesses out of China 6. Other Countries Tapping Into Factory Employment Boom

26% Of The World's Smartphone Shipments Are Made In China

It's no secret that Apple is heavily reliant on China. In fact, 26% of the world's smartphone shipments are made in China. That's a huge market that Apple can't afford to ignore. And it gets even better for Apple - because Chinese consumers really love their iPhones. According to IDC research data, more than 50% of smartphones sold in China last year were iPhones. That means more than half of all people who bought a new phone in China chose an iPhone and Apple controls almost half the Chinese market share for smartphones! What's even more impressive is that Apple sells twice as many iPhones in China as they do anywhere else around the world. The numbers show that if you want to be successful in global markets, you need to be thinking about China too. But Apple's relationship with China goes way beyond just being popular there. 

While some other major companies have left China, or at least scaled back their presence there, Apple has been one of the few tech giants who has remained committed to doing business in China (they currently have 40 stores there).

This is not only due to the size of the market but also because the population in China has shown a greater demand for technology products then other countries have. Plus, when Steve Jobs was still alive he often expressed his excitement about bringing creative products from Silicon Valley to Shanghai and Beijing. Jobs was known for telling his team We should make something that we know Chinese customers will buy. He was right-Chinese customers did buy them! Even though other major brands like Motorola, Nokia, and BlackBerry have given up trying to compete in China. Apple has doubled down on its commitment to the country and tripled its number of retail stores there.

So what exactly is so great about doing business in China? Well first off, it's a huge market with over 1 billion potential customers. There are 300 million people who use credit cards which makes it easy for foreign brands to sell their products online without using cash. And finally, those same 300 million credit card holders spend close to $1 trillion annually according to McKinsey research data which makes this country look more appealing then ever before... not just for luxury goods but for anything. China has become the fastest growing economy in the world and is poised to become the largest consumer market by 2020. As long as Apple continues focusing on innovation while keeping costs low, they'll continue to thrive in China. One thing is for sure-we'll be seeing a lot more of Tim Cook there. This week alone, Cook visited China for two days to sign deals with mobile carriers and go to the opening ceremony of China Central Television's headquarters.

Back home in the US, most experts agree that American business has failed to appreciate China as much as it should. For example, Chrysler built plants there rather than America. Levi Strauss & Co. opened four factories there. Boeing now does 25% of its aerospace work outside the U.S., primarily in China and India. GE moved its corporate headquarters to China in 2006. Coca-Cola set up bottling operations there in 1979. Cisco, Hewlett Packard, Procter & Gamble, and Wal-Mart have extensive manufacturing operations there. Many of these products are exported to the United States and elsewhere. Chinese tariffs on imported products average about 10%. The result is that for a company such as Apple, China has the perfect combination of high growth rates, a large market with plenty of middle class customers, and relatively low barriers to entry. Apple has a huge opportunity to increase its revenue in China, which could lead to a huge bump in profits. Based on the reasons above, it's no wonder why Apple can't quit China. However, the company is not completely safe there. It was found that Apple's supply chain in China has come under scrutiny in recent years. Issues with factory working conditions and worker rights have been brought to light. But overall, Apple is doing well in China and it's difficult to imagine the company leaving anytime soon.

13,000+ Mobile Phone Manufacturing Companies

There are more than 13,000 mobile phone manufacturing companies in China, and Apple is just one of them. With such a large number of companies, the Chinese market is extremely competitive. In order to survive and thrive, Apple has to keep its prices low. This is why they can't quit China. Even if tariffs go up between China and the US, it would still be cheaper for American consumers to buy their products from China instead of domestically. The high-end iPhone Xs Max costs $1,200 in America but only $980 in Hong Kong (a 17% difference). If Trump raised tariffs on iPhones, he would also have to raise tariffs on every other consumer good imported from China which would increase the cost of living for Americans by about 2%. China is not going anywhere anytime soon. According to a recent report, China will remain Apple’s largest source of revenue growth this year and next year, even as its contribution declines slightly each year. To make matters worse, a large portion of the profits generated in China go back to America through repatriation laws. So what does that mean? Well, because Apple makes so much money in China and then brings it back home to America, when Trump imposes tariffs on Chinese goods, he may end up taxing his own country's citizens with higher taxes. And while the world waits to see how this all plays out over time, you might want to consider investing your money overseas or offshore because trade wars may leave you vulnerable when investments get impacted by these changes. It may sound like an inconvenience now, but when Donald Trump takes away the perks we've come to rely on, there could be far greater implications later down the line. For example, people who live abroad have a lot of freedom when it comes to investment opportunities. For instance, if you're looking for an easy way to invest your money, ETFs offer diversification across multiple countries at once and they're pretty easy to set up online - no financial advisor required! Plus, ETFs often provide tax benefits to investors and those living abroad who need help with capital gains. They're traded like stocks, too! Best of all, some brokerages don't charge commissions or fees on trades made outside the U.S., which means less hassle and stress for our hardworking expats. Whether you are considering investing outside the United States or need help determining where your money should be based abroad, contact an experienced attorney specializing in international finance today! 

As I mentioned above, the Chinese market is flooded with competition. China accounts for over half of the world’s production of phones, tablets and PCs. As a result, the average wage of workers in the sector is under 200 dollars per month compared to Silicon Valley programmers who earn over 500 dollars per hour. Due to these factors, it is possible to produce millions of phones in China for a fraction of the price it would cost Apple to do it in America or another developed country. Unfortunately for Apple, they are stuck paying high tariffs on both sides and have little control in changing either situation. Because tariffs aren't fixed costs (e.g. a company's cost of doing business), the president is forced to pay for these extra costs by raising taxes on the lower and middle class. Trump did this with tariffs on Chinese goods, which would result in him taking money from the pockets of a majority of his voters. This is because most imports from China are consumer goods and they are heavily used by households. For example, washing machines or refrigerators purchased in America have an estimated 45% chance of being manufactured in China (this figure goes up to 75% if you live in a rural area) and nearly 100% of televisions come from China. So when Trump increased tariffs on Chinese imports, he was also increasing tariffs on all those household items purchased by blue collar families who were counting on Trump to improve their lives. The move sparked anger among many Americans as well as sparking fears that Trump was going to start a trade war that could cripple the American economy. Fortunately, there might be light at the end of the tunnel. The Wall Street Journal reported that Apple might soon announce plans to manufacture some products in America such as iPhones and iPads, but no timetable has been set yet. However, this move will only serve to increase prices on those products since labor costs will be much higher than what they're paying now and customers won't be able to get as many discounted iPhones anymore due to less demand coming from overseas manufacturers like Foxconn. In order to make it work, Apple needs to redesign how they assemble their phones which will take time and research that may not yield any results. It seems likely that even if they can find a way to bring back manufacturing jobs from China, the skillset required is so specialized that it's unlikely the US workforce can fill them fast enough before other countries follow suit. What we should take away from this story is not about how good or bad Apple has been for America, but rather how broken our globalized economy really is and why politicians need to be addressing these problems sooner rather than later. All of the technology in our homes and businesses comes from a place where it is cheaper to manufacture and sell, resulting in cheaper products for consumers. This means that these companies have outsourced the creation of new jobs to developing nations and left America with nothing more than a customer base. Trump campaigned on bringing back the jobs but it is unclear if this is just a ploy to gain votes or something he actually believes in. Either way, it's clear that without meaningful action, America will continue its descent into becoming a third-world country. The wealthiest 1% will continue to prosper while the rest of the country stagnates and watches helplessly as their jobs and livelihood disappear. And in China, Apple is faced with a bleak future as they will have to stay afloat in a marketplace that is quickly turning against them.

Chinese Are Early Adopters And Great Investors

Though other countries are important to Apple, China is currently their most crucial market. The Chinese people are great investors—they buy lots of Apple products and they buy them early. This was especially true for the iPhone 6 and 6 Plus, which were extremely popular in China. Additionally, the Chinese government has been investing heavily in Apple. In fact, Chinese state-owned companies now own over $1 billion worth of Apple stock. It also doesn't hurt that manufacturing prices are much cheaper in China than elsewhere. Apple can get a high-quality product at a low price, so they're able to make more money while spending less on research and development costs. If Apple made all of their phones in America, it would cost about $40 more per phone. That might not seem like a lot, but it would cost about an extra $8 billion dollars per year. And the trade-off just isn't worth it—Chinese workers work longer hours and with fewer safety regulations, so production is faster and more efficient. Apple knows that if they want to keep up with demand, they need to stay in China as long as possible. So what will happen when the latest iPhone releases? This time around, I think we’ll see three new models, says Brian White, analyst at Drexel Hamilton. One will be significantly larger (probably 5.5 inches) and two will be 4.7-inch versions. These new iPhones are rumored to have an AMOLED display instead of LCD—which is manufactured mostly in South Korea by Samsung. However, many believe that this change won't affect how many iPhones Apple manufactures or where they produce them because Samsung has started making some displays for competitors like LG Electronics Inc., who reportedly supplies panels for iPhones as well. The relationship between Apple and Samsung remains rocky. It seems like every few months there's another lawsuit between the two tech giants. The last one involved Samsung copying features from Siri, which prompted an apology from Tim Cook himself! But there have been rumors that Apple wants to distance themselves from Samsung following recent reports of battery fires and exploding Note 7s. Whether this is true or not, it seems clear that Apple cannot afford to lose their partnership with the Korean company anytime soon—the success of future iPhones hinges on whether or not they can keep their screen supplier happy! Apple could theoretically choose to outsource the manufacture of its screens to somewhere else, such as Taiwan. There are benefits to being closer to home: they would spend less money shipping goods across borders and they could avoid import taxes. Apple even has factories in Europe, Japan, and California. Yet despite these advantages, it appears that Apple will still rely heavily on Asia for manufacturing. Apple's assembly partner, Foxconn, is based in China and has the capacity to assemble 300 million iPhones a year. Besides that, Apple has deals with suppliers like Pegatron and Wistron that are based in Asia as well. For example, Pegatron is Apple's second-largest assembler of iPhones—about 15% of their smartphones are assembled in China. Apple's reliance on China is so strong that they've pledged to invest $10 billion in the country. The money will be used to build Apple-branded retail stores, data centers, and customer support centers. As China continues to grow as a superpower, Apple has no choice but to keep going back for more. 

I'm Jacob, a student at East High School in Columbus Ohio. I recently had the opportunity to go on a trip to China and visit the factory that produces iPhones. I was expecting to find a cramped, dirty, polluted factory with people working long hours in unsafe conditions. What I found was an enormous facility with tens of thousands of employees that was not only clean and safe but also very well-organized. The process of assembling an iPhone is truly fascinating—and it's certainly not as easy as it looks! First, a mother board is inspected for any damage before it's installed into the back casing. Second, a layer of adhesive tape is applied onto the screen before assembling the front and rear pieces together. Third, screws are attached to hold everything together and then cables are inserted into slots in the side of the case to connect with other parts inside. Finally, a protective film is applied to the outside of the phone so that it doesn't get scratched or damaged during shipping. But what really struck me was how different this assembly line looked from what I expected based on media coverage or reports from overseas labor activists. In my opinion, there’s no better place than China for producing iPhones because their workers can complete each step efficiently without taking up too much space. There are many benefits to manufacturing goods in China; one being that they're early adopters and great investors which means they will always be one step ahead when it comes to buying new technology.

U.S.-China Trade War Will Continue To Benefit Apple

The U.S.-China trade war has been great for Apple. The company has been able to offset the increased cost of goods exported to China by raising prices on its products. This has helped Apple maintain its high profit margins and share price. The trade war has also forced other companies to move their manufacturing out of China, which has made Apple even more competitive. Trump's tariffs have hurt some of the American businesses that are trying to stay in China. For example, General Motors announced that it will stop importing vehicles from America into China starting July 1st because it will be hit with higher taxes. That is good news for Ford Motor Company and Tesla, who can now sell cars in China without facing these additional costs. It is bad news for GM and its workers who will lose their jobs as a result. It will be interesting to see how long this trade war lasts, but it doesn't seem like there's an end in sight. The U.S. imposes tariffs on Chinese imports, then China retaliates with higher import duties. In response, the United States puts new tariffs on yet another product imported from China, and so forth. Both countries stand to lose a lot if they don't come up with a solution soon. If President Trump wants to help his own economy he needs to realize that pressuring businesses (like Apple) into moving production outside of China won't solve anything; it will only cause them (and many others) more problems in the long run! Most Americans don't know that while Apple is based in California, its research and development teams are actually in Beijing and Shanghai. Research conducted by Apple indicates that Chinese consumers account for 25% of iPhone sales worldwide--meaning that China has become the most important market for iPhone sales. As a result, this gives Beijing a strong incentive to ensure stability in order to keep consumer spending robust. So far, Washington's sanctions have not significantly impacted consumer spending in China--which is really what keeps both economies afloat. How long the trade war lasts remains to be seen, but given current developments it does not seem like there is an end in sight. U.S. imposing tariffs on Chinese imports, then China retaliating with higher import duties... This isn't sustainable--if President Trump wants to help his own economy he needs to realize that pressuring businesses (like Apple) into moving production outside of China won't solve anything; it will only cause them (and many others) more problems in the long run! Most Americans don't know that while Apple is based in California, its research and development teams are actually in Beijing and Shanghai. Research conducted by Apple indicates that Chinese consumers account for 25% of iPhone sales worldwide--meaning that China has become the most important market for iPhone sales. As a result, this gives Beijing a strong incentive to ensure stability in order to keep consumer spending robust. So far, Washington's sanctions have not significantly impacted consumer spending in China--which is really what keeps both economies afloat. How long the trade war lasts remains to be seen, but given current developments it does not seem like there is an end in sight.