Companies are leaving the Middle Kingdom
Apple also wants to be less dependent on China
The withdrawal of companies from China is accelerating. Now, Apple, a giant corporation with particularly close ties to the country, has promised to diversify into other countries. One reason for this: the current protests against lockdowns.
Chinese customers in an Apple Store in China: The production site has suffered from the strict Chinese Covid measures.
Jean Claude RaemyEditor Economics
For years, the West relied on cheap labor from China. In the meantime, however, the relationship has cooled down. Not only the Swiss are turning their backs on China, but also large companies.
Latest example: Apple. As the Wall Street Journal reports, the US technology group has accelerated its plans to outsource at least part of its production from China to other Asian countries. This isn’t a side note: China is the dominant country in Apple’s supply chain.
Problems at the most important production site in Zhengzhou were decisive. Around 300,000 workers manufacture iPhones and other Apple products in a gigantic factory owned by Apple’s partner Foxconn. Foxconn alone made about 85 percent of the Pro line of iPhones.
Production location China weakened
At the end of November, Foxconn employees protested in Zhengzhou. They are rebelling against China’s strict zero-Covid policy and increasing state repression. There were also protests elsewhere.
China’s status as a stable manufacturing center has been weakened. That’s why Apple also wants to reduce the cluster risk in production that has arisen due to years of concentration on China and Foxconn in particular. In order to be better prepared for new circumstances, more production sites are to be built – partly in China, but increasingly also in countries such as Vietnam or India. In the future, more than 40 percent of the iPhones will be produced in these countries.
The transition will not be easy. Production pressure is high and the necessary infrastructure outside of China is still sparse. (rae)