For years, the West relied on cheap labor from China. Meanwhile, the relationship has cooled. Not only the Swiss, but also the big companies are turning their backs on China.
Final example: Apple. As the Wall Street Journal reported, the US tech group has stepped up its plans to outsource at least some of its production from China to other Asian countries. This is not a side note: China is the dominant country in Apple’s supply chain.
Problems at the most important manufacturing facility in Zhengzhou were decisive. About 300,000 workers manufacture iPhones and other Apple products in a huge factory owned by Apple’s partner Foxconn. Foxconn alone made about 85 percent of the Pro iPhone lineup.
Manufacturing location China weakened
At the end of November, Foxconn employees held a protest in Zhengzhou. They are rebelling against China’s strict zero-Covid policy and increasing government repression. There were protests elsewhere as well.
China’s status as a stable manufacturing hub has weakened. For this reason, Apple also wants to reduce the risk of clustering in production caused by years of concentration, especially in China and Foxconn. To better prepare for the new conditions, more production sites will be built partly in China, but increasingly in countries such as Vietnam or India. More than 40 percent of iPhones will be produced in these countries in the future.
The transition won’t be easy. Production pressure is high and the necessary infrastructure outside of China is still insufficient. (rae)