I was attracted to an article with title above in the Guardian today, the info is eye-opening to me, if not shocking. I'd think it will be the same to you.
For your conveniences sake, let me summarise the points here:
1. Back in 2011, Barack Obama asked Steve Jobs why Apple products could not be made in the US. The most admired man in Silicon Valley was reportedly blunt: "Those jobs aren't coming back."
2. The wildly popular 4G iPhone assembled in China, the total cost of putting together just one phone was $178.45. Compare that with a sale price (including downloads) of $630 and Apple makes $452 on each phone: a whacking gross margin of 72%.
3. Chinese labour accounts for a tiny proportion of the company's costs: $7.10 for each phone. So what would it cost to make the same iPhone in America? The average wage in the US electronics industry of $21 per hour and calculated that the total production cost would increase to $337.01. That is a big jump – but it still leaves Apple with a gross margin of 46.5% on each iPhone – a level that Apple probably still make it the most profitable phone in the world.
In the case of Apple, outsourcing manufacturing is not about keeping costs to customers down – they are still paying huge prices for the latest handset or tablet computer. Nor is it about the company's survival: it would still do tremendously well were it to bring those factories back home.
So, why do you think Apple doesn't want to do iPhone in her country?
Answer: In the case of Apple, moving jobs offshore has become a way of directing ever more money to those at the top of American society.
Above conclusion is not from one or 2 parties, it is backed up by the Asian Development Bank. In a 2010 study of an earlier model of the iPhone, ADB researchers concluded: "It is the profit maximisation behaviour of Apple rather than competition that pushes Apple to have all iPhones assembled in the PRC."
Proof? Tim Cook, who is now CEO of Apple, announced a few weeks ago that he would begin buying back shares and paying dividends to investors. Among other people who benefited from this arrangement was Cook himself, who was awarded $376.3m in Apple stock when he took over last year. That pile of shares is now valued at around $634m!!!
The article also said this: For all the stylishness and sleekness of its products, the Apple business model is an unattractive and, over the long term, possibly an unsustainable one.
Apple's stock price dropped 10 percent last friday to US$573 from the all-time high of US$644 reached earlier in the month because of fears on its weaker sales for Qtr 2, to be announced on this Wednesday!
So, will Apple rot soon?
LohZhong used to be involved in couple of products/production transfer projects from Germany to China back in 2007-09. For his previous co, it was necessary for the transfer but then the company didn't make stellar earnings still! Could it be Mgmt's fault? He firmly believes so...
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