How Apple conquered China and learned to think like the Communist Party.

http://www.foreignpolicy.com/articles/2011/08/01/red_delicious_and_rotten?page=full

by jibjab • 15 years ago

50 57 15 years ago

I think it's unfortunate that Apple chooses to not build it's hardware in the US, or model its manufacturing on Germany's successful mid-size firms.

Apple makes and builds high-end products and has the fat margins that goes along with it - instead of outsourcing all manufacturing to China, it could choose to build everything in the US, employ the locals and use that as a selling point. If I pay premium dollar for quality and durability, I would rather that support local manufacturing and local economies, than have that sitting in Apple's vaults. In the end, this is not unlike the the local food movement - people would rather pay extra and support local farmers and economies.

bbgm• 15 years ago

I want quality products at a reasonable cost. If Apple can maintain that quality with Chinese manufacturing, then all power to them.

Steko• 15 years ago

Right, let's blame Apple for the decline in American manufacturing.

Now combine that with this article and people like Mike Daisey's views that Apple is somehow uniquely responsible to blame for the plight of blue collar workers in China.

Apparently Apple is the cause of all pain in the world. Sheesh I thought they just sold electronics.

olalonde2• 15 years ago

> Apple makes and builds high-end products and has the fat margins that goes along with it - instead of outsourcing all manufacturing to China, it could choose to build everything in the US, employ the locals and use that as a selling point.

Why do you assume Americans are more deserving of Apple's manufacturing jobs than the Chinese?

> If I pay premium dollar for quality and durability, I would rather that support local manufacturing and local economies, than have that sitting in Apple's vaults.

Unfortunately, the Chinese also pay premium dollar and would also rather support local manufacturing and local economies. As China is deemed to become Apple's largest market, it makes sense for Apple to support the Chinese economy rather than the US one.[1]

[1] http://blogs.computerworld.com/18517/apple_crazy_china_will_...

viae• 15 years ago

> Why do you assume Americans are more deserving of Apple's manufacturing jobs than the Chinese?

Because the consumers of every nation on earth, deep-down, are superficially patriotic. We don't want to recognize that the global economy is post-nation state. We want to pretend that when we buy an American company's products it is, American. Just as if we decide to buy an Italian sports car we want it to be Italian. Companies prey on these emotional ties to our identities in all manner of ways. In the parent thread's example, Apple does that by labeling their products' packaging, "Designed by Apple in California."

technoslut4• 15 years ago

I do think that Americans are more deserving of products being produced here. I've always felt (maybe others do not) that you give back something to where you grew up or the society you are apart of. I see it no different in this case. Sony has done the same in Japan and I respect them more for it.

There are great benefits to the US market and many, such as Apple, have taken advantage of it. They also take advantage of the system and keep their money overseas so it won't get taxed.

curt3• 15 years ago

Even if Apple wanted to the regulations surrounding manufacturing, especially on a large scale are crazy. Can't tell you how many operations are moving overseas not because of the labor costs but because of the bureaucracy, paperwork, EPA, and regulations in the US.

diogenescynic2• 15 years ago

An interesting hypothetical scenario is one where Apple had all iPhones assembled in the US. Assuming that the wage of American workers is ten times as high as those of their Chinese counterparts, the total assembly cost would rise to $68 and total manufacturing cost would be pushed to approximately $240. Selling iPhones assembled by American workers at $500 per unit would still leave a 50% profit margin for Apple. In this hypothetical scenario, the iPhone could contribute to US exports and reduce the US trade deficit, not only with China, but also with the rest of world. More importantly, Apple would create jobs for US low-skilled workers: http://www.voxeu.org/index.php?q=node/6335

cageface2• 15 years ago

The endgame of all this could be that no country anywhere can enforce any environmental or labor laws because corporations will just move somewhere more desperate for jobs.

cubicle67• 15 years ago

(australian here)

counter-point first: I've heard good things about Sears stuff, but it's not available here

I've never considered American manufacturing to be high quality or premium. My experience is mostly based on American cars - which tend to have appalling build quality and reliability - and a few "made in America" bits I have, all of which are pretty average.

I tend to associate American manufacturing with things like welding huge bits of iron together. durability? sure. attention to detail and care? not so much

yardie• 15 years ago

American here. Most of American things of quality you wouldn't be able to buy in a consumer version. You can tell the quality of a product by the warranty that is assigned to it. For example most of the Sears Kenmore stuff have something like 10 year warranties. The Craftsman tools have a lifetime warranty.

Most of the American bits never really leave the US because logistics cost the same everywhere. A big heavy washing machine from china loses its cost advantage once shipping and duties are added to the price. A high-end laptop has most of the price in labor and parts. Shipping costs next to nothing for it.

American cars haven't really impressed me. For a while I also questionned the quality; why settle for something with a 3 year warranty when the japanese and koreans have 7 and 10 years. I believe the American car makers have learned a lot about this after getting trounced in the market. They have been extending there warranties and covering parts that weren't covered before.

But it's not until you get into the really high-tech stuff that American builds even show up. Like 7-10 layer circuit boards, aerospace equipment, military hardware, and extreme environment hardware. To put it another way, the Americans, Japanese, and Germans sell the equipment to China to build the stuff they sell.

jstevens85• 15 years ago

Apple is an international company. They sell stuff outside of the US. Why would someone living in Europe/Asia/Africa give a shit about American jobs?

Qa8BBatwHxK8Pu• 15 years ago

I hate to read anything about poverty in China. Brings me back to my childhood.

wallflower• 15 years ago

If you have not read "What is China", read it after:

http://www.tapsns.com/blog/index.php/2010/01/what-is-china/

jackfoxy2• 15 years ago

Would really like folks who down-voted you to explain themselves. The fact China (and Russia) are the only supports of North Korea says everything you need to know about the essence of the rulers of both countries.

Tsagadai• 15 years ago

That's not quite true. North Korea is also getting resources and labour from Burma, Iran and Zimbabwe. That is not counting countries that are doing business with North Korea through intermediaries in China or Russia.

forensic3• 15 years ago

Well, someone needs to be friends with NK. I don't think China leaning on NK could really help there. NK would just get more isolated. The solution to North Korea is to stop scaring them so that they will come out of their shell a bit.

guard-of-terra3• 15 years ago

As far as I heard, some european studios have their cartoons drawn in North Korea (you can buy a lot of quality and really really cheap work there). Does that count as support? If it doesn't, what does?

Volpe3• 15 years ago

For those that don't quite understand what "everything you need to know" means, could you spell it out?

jackfoxy2• 15 years ago

http://www.theamericanscholar.org/the-new-generation/

Volpe3• 15 years ago

BS Anti-China Agg-prop.

If you read this, and agree with it whole heartedly. Please stop, get an education, and learn about how economies grow.

sunyc2• 15 years ago

most people buy imac then install win 7 it's free anyway..

sunyc2• 15 years ago

I'm surprised that people can't sense the irony here, I'm telling the true situation, btw.

gkanai• 15 years ago

Dalai Lama Apple advertisement:

http://www.flickr.com/photos/jgdaily/4862908782/

Apple Removes the Dalai Lama From Its Ads in Hong Kong

http://www.nytimes.com/1998/04/17/world/apple-removes-the-da...

buddylw• 15 years ago

I am no fan of Apple - mainly for their closed architecture, but I am also a cold-hearted economist when it comes to these types issues and this article is a bit of a one sided hit piece.

I would like to throw in a few counterpoints so we can all maintain a proper context.

1.) When companies become as large as Apple and begin purchasing products from vendors. It is not possible for them to guarantee the safety and operation of every vendor. Just as when you go buy oranges at the grocery store, you might know what country or farm it came from, but you don't know working conditions at that farm. Even if you could know you don't have time to dig through that info - you just want an orange. You, like everyone else, just respond to the major media outrages and exposés and blindly avoid Wal-Mart, etc.

Apple has more leverage here since they are a large company, but when it comes down to it, Apple ordered more screens and the vendor made the bad decision to use n-hexane. All Apple can do is lean on the vendor to make it right and not let it happen again. Believe me, even if Apple hates the workers and secretly wants them to die a horrible death for their stock holders, they don't want this bad press and would have avoided it if they could have.

2.) Outsourcing has real costs. It's not just cheaper because labor is cheaper. When you outsource you have to worry about the government, the infrastructure, shipping, recruiting talent etc. If you paid the Chinese workers American wages, it would not be worth the other costs to outsource at all.

3.) You can't compare living and working conditions between countries. As bad as a 3rd world outsourced job is to us 1st worlder's it's still generally BETTER than what they would have otherwise. In fact Apple and other 'outsourcers' are the one and only reason for the breath-taking trend line that is China's per capita growth: http://www.wolframalpha.com/input/?i=china+income+per+capita

Just read about living in China in the 60s. It's horrifying to even think about and makes China today seem like paradise. In short the Chinese are better with Apple than without.

4.) There are not a fixed number of jobs in the world - there are only a fixed number of resources. If China can make us a product cheaper than we can make it WE benefit. Our resources are free to build other things for China when they want to cash in some of those US Dollars they so graciously accepted from Apple in exchange for real goods. Voluntary trade benefits both parties by its very nature or it doesn't happen.

Also, the US unemployment issue is bit off the main topic of an already lengthy comment, but it has much more to do with sticky wages and our past decisions than it does outsourcing.

5.) Finally you can't not outsource. It's impossible. In this age of globalization everything is from everywhere. You can't even build a toaster by yourself: http://www.ted.com/talks/thomas_thwaites_how_i_built_a_toast...

naner2• 15 years ago

As bad as a 3rd world outsourced job is to us 1st worlder's it's still generally BETTER than what they would have otherwise. In fact Apple and other 'outsourcers' are the one and only reason for the breath-taking trend line that is China's per capita growth

This always seemed like a bullshit argument to me. So it is marginally better to work 16 hour days in terrible conditions while dumping chemicals in local groundwater than it is to starve to death. Well, it turns out that overworking people and polluting is still bad behaviour. These outsourcing companies shouldn't be commended for it. Provide these people good working conditions and a safe environment or don't bother outsourcing.

As an analogy, you wouldn't commend me for purchasing a mail-order bride from a poor country with sex trafficking problems. Yeah, it is marginally better for her than prostitution and she'll have better living conditions, but my behavior is still abusive and exploitative.

olalonde2• 15 years ago

> Well, it turns out that overworking people and polluting is still bad behaviour.

Fast-forward to year 2085

> Well, it turns out that asking people to do mechanical work 30 hours a week and dumping CO2 in the atmosphere is still bad behaviour.

forensic3• 15 years ago

We can't save the world. Even if our entire country voted for it, we could not save the Chinese from their own policies.

They are adults living in a sovereign nation; they are responsible for their own working conditions.

I'm not going to feel white-guilt for stuff that happens in a foreign country over which I have zero control.

berntb2• 15 years ago

>>Well, it turns out that overworking people and polluting is still bad behaviour.

I usually give this link at this point. http://www.slate.com/id/1918/

Krugman discuss, well, why you are a judging hypocr.. cough, a bit harsh. :-)

Edit: Let me put it this way. A millennia ago, my ancestors made today's Afghanistan look like a cosy and peaceful place. Now, it is a bit different -- a welfare state where there haven't been war for a couple of centuries. Both situations are inside the range of human behaviour/nature. The trick is to organise things so society works and so that it gets better over time. So few ways of doing things really works, so it is a bit funny when you complain about just those, from a moral perspective.

tomjen32• 15 years ago

This is the way every society goes - Milton Friedman pointed out when confronted with how horrible living in the cities at the time of Charles Dickens was that the reason people moved to the cities was that it was far worse in the countryside.

Also the reason companies outsource isn't to provide the workers with great work environments (that may or may not happen) but to save money.

w1ntermute• 15 years ago

> When companies become as large as Apple and begin purchasing products from vendors. It is not possible for them to guarantee the safety and operation of every vendor.

It's one thing to have occasional issues of the sort. It's a completely different matter to be so bad at preventing these problems that you're ranked dead last amongst international IT companies in China. Apple's famous perfection clearly only applies to things that make it money:

> Ma Jun is one of the leaders of the Green Choice Alliance, a coalition of 36 Chinese NGOs that tracks pollution reports among international brands operating in China. In January, they released a report focusing on global IT companies that ranked Apple dead last among 29 companies in responding to inquiries about pollution and workers' safety. Last winter, Ma met with Jia and helped him pen a letter about working conditions and medical compensation to Apple CEO Steve Jobs. It went unanswered. So did a second letter.

r00fus• 15 years ago

cite?

eridius• 15 years ago

Yeah, and PETA routinely ranks Apple very low in their reports (even immediately after praising them for their green efforts on whatever the newest product is at the time). They do this because it gets media attention. I have no idea what this group is that tracks pollution reports, and no reason to expect that they're a fair and impartial body that is portraying a completely accurate picture in their reports.

alexbowman• 15 years ago

Hello economist. Jack of all trades here. I agree it seems like a one-sided piece. But. Apple can very clearly know what happens in its vendors, it simply has to look in a very clever way. It has to run a very black black ops. Most multinationals don't do this, they take the word of these vendors literally.

A simple metric: ask the senior management questions that have clear quantified answers. If they, or if anyone reading this that has an outsourced operation, cannot answer that, then outsourcing is being done either badly or astoundingly badly.

erikpukinskis• 15 years ago

When companies become as large as Apple and begin purchasing products from vendors. It is not possible for them to guarantee the safety and operation of every vendor.

Yea, but here's what's scummy: they refuse to even disclose who their suppliers are. Which means that neither journalists nor customers can go out and find out what's going on.

I don't need Apple to spend billions verifying that the children of every last worker are getting their shoes tied in the morning. But I think they should at least give us the chance to look it up ourselves.

Maybe it should be federal law that you should have to report all of your suppliers if you want to sell goods in the US. Maybe report (anonymized) salaries of everyone too, benefits, etc.

mahyarm• 15 years ago

The parallels between america vs europe back in the 1800s and china vs america now are very interesting.

guard-of-terra3• 15 years ago

I don't understand why your beloved apple won't throw in a $1000 monthly stipend for neurodamaged workers and close this horrible issue forever. Financially, it means considerably smaller than for me tossing a poor beggar a buck, and I do that when I can, even if I'm not a cause of their poorness, I ain't blamed for their misfortune and I won't be praised if I do.

Also, why won't you Apple users boycott buying Apple until they take care of the issue in question? Other than being unable to function without the drug you're addicted to?

guard-of-terra3• 15 years ago

It seems that the only reason why capitalistic company would give out money is fear.

AirBNB is going to fix a problem which is obviously not caused by them because they are afraid of repercussions. Apple is not afraid of anything, therefore they're going to sit on a pile of gold like a dragon and that's it.

How Apple conquered China and learned to think like the Communist Party.

Related Stories