In September 2023, Apple released the iPhone 15 series of mobile phones and the new generation Apple Watch "step by step". However, perhaps due to the "lack of sincerity" in the model upgrade, this year's new iPhone failed to arouse as much discussion in the digital circle as in previous years. Even the title of "Digital Spring Festival Gala" was snatched away by Huawei's Mate60Pro conference.
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However, the iPhone 15 series is not said to have completely disappeared from the public eye. Since the release of the mobile phone, there have been endless topics about the so-called "iPhone does not support USB-C" and "iPhone fake 5G". This morning Xiaolei discovered a "latest topic" about iPhone 15 - "Apple plans to export high-quality iPhones produced in China to Europe and the United States, and then sell iPhones produced in India to China."
To be honest, when I first saw this topic, it was difficult for me to take the news seriously - this overly straightforward fishing technique seemed to be in the same vein as the way small magazines advocated the high quality of overseas products before 2010. After seeing it, Xiao Lei originally planned to take a screenshot and show it to his friends as a joke, but when he clicked on the comment area of the relevant article, Xiao Lei discovered that the audience for this statement was not large at all.
So let’s take a look today at what this “Indian iPhone is exclusively for China” is all about.
India can’t even sell enough iPhones made in India
A simple query, the news about the production of iPhone 15 in India first came from Bloomberg. In the article "Apple sells phones produced in India for the first time at iPhone launch", author Sankalp Phartiyal mentioned that "new iPhone models purchased on launch day are likely to be manufactured in India."
At the same time, the author quoted people familiar with the matter as saying, "Apple in the United States plans to offer the Indian-made iPhone 15 in the South Asian country of India and some other regions on the first day of global sales. Although the vast majority of iPhone 15 will still come from China, this will be the first time that the latest generation of Indian-assembled devices will be available on the first day of sales."
Image source: Apple
In fact, after seeing this, we can conclude the fake news about the so-called "Indian iPhones are exclusively for China". However, instigated by traffic-generating self-media, some people still express concerns about the "Indian iPhone". After all, the article only mentioned that Indian iPhones accounted for only a small part, but did not specify where this small part of iPhones were sold. What if these iPhones are really special versions for China?
You really don’t have to worry about this, because iPhones made in India may not even be enough for the Indian market to digest internally.
On May 4, 2023, Apple announced its financial results for the second quarter of fiscal year 2023 as of April 1, 2023: data showed that Apple's three-month revenue was US$94.8 billion, with revenue in the Americas, China and Japan all declining, and the European market increasing by US$658 million. However, other than the Chinese and Japanese markets, the remaining Asia-Pacific markets have experienced extremely significant revenue growth, which increased from US$7 billion in the same period last year to US$8.1 billion, an increase of more than 15%.
Image source: Apple
There is no doubt that in this "Rest of Asia Pacific", in addition to the Australia and New Zealand markets that have been saturated with growth, there are naturally emerging Asian markets led by India. In an interview with the American TV channel CNBC, TimCook said that performance exceeding industry expectations is inseparable from the replacement demand in the Indian market.
In addition, the reason why "international companies" such as Apple and Xiaomi have put into production in India has never been the high level of Indian manufacturing technology, but the use of "Indian assembly" to bypass India's obstacles to overseas technology companies. The Indian-made iPhone, which has extremely limited production, must of course be given priority to the local Indian market.
A mobile phone factory that is “adapted to the local environment”
In order to meet the relevant requirements of "Made in India", Apple began to manufacture and assemble iPhones locally in India in 2017. However, due to factors such as labor costs, yield rate, raw materials, and logistics, Apple only produces older iPhones of certain years in India. In 2020, Apple began manufacturing iPhone flagship models in India, and Indian factories are also increasing production capacity as much as possible: according to Bloomberg, as of April 1, 2023, the proportion of new iPhones coming from India has reached 7%. Apple said it hopes to increase this proportion to 25% by 2025.
In other words, whether in 2023 or 2025, iPhones made in India will only account for a small part of the total market, and manufacturing in China will always be the quality guarantee for iPhones.
It’s just that the threats faced by Made in China are not just made in India.
Image source: Weibo
I don’t know if you still remember the large-scale “overturn” of AirPods3 produced in Vietnam at the end of 2021: After receiving AirPods3, many consumers discovered that these batches were not made in China as everyone is familiar with, but were produced in Vietnamese factories. Moreover, the workmanship of the earphones is uneven. Some have rough edges, some have glue residue, and some even have obvious current sounds. They are "not even as good as the quality of Huaqiangbei's high-quality imitations."
In June 2022, Apple will move some iPad production lines from China to Vietnam. In August 2022, some media broke the news that Apple's main suppliers Luxshare Precision and Foxconn had planned to trial-produce Apple products, such as Apple Watch, in Vietnam. This is also the first time in history that the device has been produced in Vietnam.
If iPhone orders are allocated to India to meet India’s complex local regulatory requirements, then moving AirPods 3 to Vietnam is undoubtedly a bold attempt by Apple to save costs. However, due to problems with local production levels, replacing China with emerging "Asian factories" such as Vietnam is obviously not something that can be achieved in a short time.
The threshold for “Made in China” is higher
In fact, the Vietnamese version of AirPods has actually led to another phenomenon, that is, not all companies and all products are eligible to enjoy the "Made in China" treatment. First of all, after years of development, China's manufacturing industry development is undoubtedly a more mature representation. Compared with the nascent manufacturing technology in small Southeast Asian countries, the domestic yield rate is obviously higher. All other things being equal, a higher yield usually means a higher price.
On the other hand, the improvement of domestic economic level has also led to the increase of labor costs. This has also caused the cost of manufacturing in China to increase day by day, so that only products that require high-precision craftsmanship and high profit margins can be made in China. As for products with low technical requirements such as sports shoes and T-shirts, brands have long left them to small factories in Southeast Asia. Under the influence of higher labor costs and longer production cycles, the United States is also powerless to face Apple's massive orders.
Image source: Apple
In other words, even if Apple is looking for more possibilities besides manufacturing in China, products such as iPhone and iPad are still inseparable from manufacturing in China.
However, this does not mean that "Made in China" can continue to be so carefree.
Behind the transfer of production lines usually means supply chain adjustments, and the cost of decoupling from Apple's supply chain is huge. A dozen Chinese companies have been kicked out of the supply chain by Apple, causing their performance to plummet. Take the familiar OFILM as an example. OFILM’s profits plummeted by 90% after leaving Apple’s supply chain.
For Chinese companies, entering the Apple supply chain is an opportunity but also a challenge. The opportunity is that Apple's supply chain can bring massive orders, but the challenge is that companies need to be prepared for Apple's "decoupling" at all times. For this reason, Chinese suppliers have to prepare for the next 10 years, so Foxconn and Luxshare Precision have stopped building cars; Goertek has increased its focus on AR/VR; Lens Technology has entered photovoltaics, and Changying Precision has laid out the power battery structural parts business.
There is a famous saying about the Indian market on Zhihu - India makes money and India spends it, and I want to take it home. As a famous "cemetery of foreign companies" in Asia, the unpredictable Indian market has caused many domestic mobile phone brands to adjust their market strategies due to "well-known" reasons. India is a market with huge potential, but poor business operations are forcing many multinational companies to withdraw.
But even if India does attack Apple in the future, what does this have to do with us, who are "way ahead" and relying on China's intelligent manufacturing?