Will Foxconn be replaced by India's Tata? Tata assembles 85% of Apple phone components from China?

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This article is over 2100 words in total and takes 7 minutes. Readers are patient to read. Originality is not easy, please feel free to like and follow.

Apple is one of the globally recognized great technology companies, and China is Apple's largest overseas consumer market and has always been the location of Apple's global assembly line.

However, in the past year, Apple has not only emptied its production capacity of over 300 billion yuan in China, but also kicked out the original 13 Chinese suppliers from the Apple industry chain.

So why does Apple persist in its pursuit of consumer potential in the Chinese market? Is Cook intentional or forced to kick Chinese suppliers out of the Apple industry chain?Foreign media commented on this, saying that Apple's big trouble is still ahead after leaving China.

Decoupling or risk control?

Since the United States imposed restrictions on China's high-tech industry, Apple has realized that it cannot overly concentrate its production capacity on China.

Apple's current market value is 2.8 trillion US dollars, equivalent to nearly 20 trillion RMB, which naturally cannot be separated from the contribution of the Chinese market.

Data shows that Apple accounted for 23.7% of smartphone sales in China in the fourth quarter of 2022, making it Apple's largest overseas sales market.

This is just a phone, not including Apple computers, tablets, smartwatches, and other related products.

It is no exaggeration to say that in recent years, Apple has maintained its position as the world's largest market value mainly thanks to the support of the Chinese market.

Relying on the Demographic dividend of the Chinese market, from the production end to the consumer end, Apple has a huge profit margin. When Cook took over Apple, the Chinese market accounted for less than 5% of Apple's global market, and the market value was only about 14 million dollars.

Apple's profit margin has been consistently maintained between 30% and 50%, and the high profit margin is truly rare!

What is the reason?

The general manufacturing industry chain includes seven parts: raw material procurement, product design, warehousing and transportation, manufacturing and processing, order processing, wholesale operation, and terminal retail.

Apple has mastered the core of the industry chain except for manufacturing and processing, and our processing and manufacturing operations have the lowest profits.

So Apple's profit margin is very high.

For the selection of industry chain suppliers, Apple will eliminate a batch of unqualified suppliers every other cycle.

With the implementation of the "decoupling and chain breaking" policy in the United States, the sanctions and restrictions imposed on Huawei have also made Apple aware of the danger of placing most of its production capacity in China.

As Apple accelerates its transfer to Vietnam and India, its dependence on China's production side is also decreasing.

Especially with the relocation of Foxconn's 300 billion yuan final assembly, 13 Apple suppliers in China have been excluded from the layout of the Apple industry chain.

Where will these companies on the Apple industry chain go?

Where are the 13 suppliers going?

Some American media have stated that moving out of China and kicking out Chinese suppliers may cause trouble for Apple later on.

We can see from the above that Apple's market value has soared since it came to China. Does moving out mean that Apple will slowly lose its market in Loss of China?

For Apple, there are concerns in this regard, as China accounts for almost a quarter of Apple's revenue.

But in fact, for Chinese companies that have been kicked out of the industry, short-term pain may come, but China's smartphones are developing rapidly.

In terms of global smartphone market share, besides Apple and Samsung, the top five are all Chinese companies, including Xiaomi, OPPO, Huawei, and more Chinese mobile phone manufacturers in the top ten.

So, even if these companies are eliminated from the Apple industry chain, there are still a large number of mobile phone manufacturers in China who have demand, just changing their owners.

Due to Apple moving its assembly line to India, these 13 suppliers were naturally replaced by local Indian companies.

When Apple moved to India, it was optimistic about the Demographic dividend of India, but the population may not be a Demographic dividend, or even a trap.

Analysis suggests that Apple is "making a big fuss" and there may still be big trouble ahead.

India, known as the tomb of multinational companies, can't go anywhere, including Xiaomi and Vodafone in Britain.

Because of the Caste, the enthusiasm of Indian workers is very low, and they do not have the spirit of hard work of the Chinese people.

The quality of workers in India is generally low and their work efficiency is low. According to data, the defect rate of mobile phone cases produced in India is over 50%, which is surprising.

In addition, India's business environment is not good, especially in India where land acquisition is very difficult. Local officials who want to build dams will be stranded due to obstacles from locals, let alone foreign investment in building factories.

Apple will also encounter the problems encountered by other multinational corporations.

Apple's trouble is coming soon

Of course, Apple is aware of the trouble of moving to India and also understands the importance of the Chinese market, so it recently visited China.

China's national strength is increasing day by day, and people's wages are also rising, so Apple has also begun to relocate its factories located in our country to Southeast Asia or India.

Especially Foxconn's major relocation became the trigger for Apple's accelerated evacuation.

In May, Apple CEO Cook met with Indian Prime Minister Modi, which actually foreshadowed Apple's expansion into the Indian market and the achievement of Apple's second decade of glory in the overseas market in India.

But the actual situation may exceed imagination.

Apple is optimistic about India's population, but its per capita income is too low. Currently, over 50% of India's population still lives in rural areas.

The consumption capacity will not change much in the coming years, so the risk of Apple hastily moving into the Chinese market is indeed significant.

In addition, Tata Group, the largest company in India and the manufacturer of Land Rover, is the largest Apple assembly company in India,But in fact, only 15% of its components come from India, and the majority of the rest still come from China.

Foxconn is willing to follow Apple, but Terry Gou may shed tears on the Indian market, and he may also be replaced by Indian Tata.

We actually don't have to worry too much about Apple's relocation. We have our own mobile phone manufacturers, and these suppliers should also learn from Apple. Don't put eggs in one basket and get rid of dependence on a single enterprise.

In addition, we should shift from low-end manufacturing to Industry 4.0. Only in this way can we ensure that China is at the forefront of the global industrial chain layout.

What is everyone's opinion on Apple moving out of our country? Can India become the second China? Welcome to likes, reposts, and comments.

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