Apple's plan to sell used iPhones in India officially gets rejected
cnet.com
cnet.com
With the iPhone Upgrade Program, Americans can finance a new unlocked phone with 0% interest, reducing the cell carrier lock-in. After 12 months, you can exchange your old phone for a new one.
Now, Apple has millions of 12 month old, last gen phones. India requires 30% of products sold to be sourced in India, so Apple planned to refurbish these used iPhones in India and then sell them in market.
It really was a great way to get Americans to upgrade more often, reduce the power of American cell companies, and provide an affordable product to an emerging market.
Apparently refurbishing the phones in India isn't enough to satisfy the 30% rule.
I cringe in fear when I read this line. The voracious appetite and the unwavering focus on economic growth is hurting the entire world. Isn't it a time to step back and rethink our long term strategy as one species?
I routinely board very large airplanes without having the vaguest idea of how they work or how to fly them - I'm a passenger, and happy to ride along. I take buses, and taxis, and ride shotgun when others drive, without sweating it. But put me behind the wheels of the car, and I suddenly need to know a whole lot more. Manual or automatic? Mirros adjusted right? Where is the knob for the headlights? Emergency break, just in case? Where I buy a new car, I actually do skim over the manual.
...
A reporter called recently and asked how long it would take Earth to "forget" humanity if we suddenly disappeared. In some sense, we are now unforgettable - the human-caused plant and animal extinctions have emptied biological "jobs" and that will be filled over many millions of years by creatures who will owe their existence to use wiping out the competition. We have pumped oil and gas out of the ground that had been there for hundreds of millions of years, through holes that may not be eroded away for additional hundreds of millions of years. The human "layer" of plastic and aluminum foil and heavy metals may be recognizable in sedimentary piles hundreds of millions of years from now.
...
With the among of stuff we use, and the amount of the world we occupy, we are no longer passengers napping in the back seat of the car. We are everywhere, and changing everything. Hence many environmental scientists are now involved in figuring out what we are doing, how to operate a remarkably complex and involved Earth system, and how to make the ride as enjoyable as possible.
I'm concerned that a lot of people, including some of those whow are making laws, still think that they are sitting in the back of the car, looking our the window and enjoying the ride.
- 'Earth - The Operators' Manual' By Richard B. Alley
The only people this benefits are apple stockholders. Why not build a device intended to last years?
Some salient points are,
- Indian Government acts paternalistic (at times with good intentions) but becomes parasitical in practice.
- Indian corruption is rent-seeking unlike some high growth nations where corruption is more like profit sharing
- India is a Center-Left country, with Fabian Socialism as the default political mindset, so Price controls and market control is the favorite practice of protectionism and fountainhead of black and gray markets.
I strongly recommend, whether you are Indian or interested in India.
This made curious, and interested. Could you please expand more on this?
How are they different? Why this specific kind happens more on India than other countries?
It is almost as if the nation has internalized its mediocrity and decision-making is overly focused on potential losses.
Tim cook, on his recent visit to India, admitted that iphone is indeed mispriced in India. In my view this is very good decision by the government. You must understand more about the topic at hand than putting that passive aggresive comment here
For the reason that pretty much all other countries allow it - that it benefits the buyer and seller?
You would have to prove that assertion. Or at-least make a case beyond the superficial level.
Like the parent poster said, India doesn't want to turn itself into a e-waste dump for the world. Such a situation would be bad for its citizens as the older phones need to be recycled/processed.
The same policy implemented here would be great to rebuild our crumbling economy and get money flowing.
There are significant second-order effects of protectionism that are harmful yet not well understood by politicians or voters: retribution by other trading partners, increased prices and inflation are but a few.
Ok, then conversely, which companies have chosen not to comply? Would that mean the policy is a huge failure?
Selling used iPhones there would have allowed them to dramatically increase sale volume in the low-end market which could have helped them regain some ground.
[1]: http://www.thehindu.com/sci-tech/technology/gadgets/samsung-...
In my opinion, this is a very intelligent law. It's goal is to induce industry in India and limit (predatory/highly desired) products that remove wealth from the country, a country that needs desperately work for it's people.
Africa has a big problem with this. Due to trade agreements, many European meat producers sell their "leftovers" into the African market at extremely low costs, which has lead to the demise of domestic producers of live stock. Which then resulted in a loss of jobs.
Yes, some people might be able to purchase things at a lower cost now, but some other people will loose their jobs and won't be able to purchase anything at all, which also negatively affects the domestic market.
For the outside producer is not a problem, they simply can move on. But kick starting a domestic market and bringing wages back up again will be huge issue for any government in the long run.
Specific groups of producers seem to always be able to influence government policies in their favor while the disbursed interests of everyone else get discounted.
And just to be clear, I'm not talking specifically about India, this phenomena is common everywhere.
I would argue that any form of trade protectionism is not intelligent: it's very short-sighted and sacrifices actual wealth for employment. It's the type of thing that sounded and felt good to me only before I actually tried to learn a bit of economics.
Think of it in terms of a small town that passed a law banning any form of trade between residents. Technically, 100% of people would be employed. They would be employed knitting their own sweaters, milking their own cows, growing their own grain, cooking their own food, gathering their own building materials, pumping their own water, etc. So life would be paradise with 100% employment right? Without trade, people would be on the edge of starvation and extreme poverty constantly. Scale up that analogy to put the residents of that small town as countries, and you can see where protectionist policies protect jobs at the expense of actual prosperity. North Korea is an imperfect extreme example, but you can easily see what effects limiting trade has on prosperity.
If I was a politician, I'd love to pass all kind of trade policies like this because most people haven't really studied economics so it's easy to spin up your consolidation of power as protecting jobs.
As an extreme example, if your country exports nothing but you have citizens buying goods from other countries then over time the country is going to become poorer and poorer as the capital flows out of the country.
Free trade is good for regions with industry and when workers have the means to relocate to areas with employment. Until our immigration policy is indistinguishable from 'we're all basically one country' then trade protections are going to sometimes be a country's best option.
Frankly I think you're only part way through your stages of view development, and currently on a very common one for people who've learned "a bit of economics" but not yet delved much deeper. There are a couple of initial issues with your argument (which themselves rapidly spiral into far more complexity) once it reaches the real world.
The first is that when labeling protectionism "not intelligent" you're failing to consider geopolitical and domestic realities. We do not have one world government, and there exist extremely genuine diametrically opposing views on proper governance amongst the world's sovereign nation-states. Trade between nations does not exist in a vacuum, leaders have a responsibility to at least consider future strategic priorities, how relations with a given nation may evolve in the future, whether trade will be strategically positive or not and in what industries, etc. Influence by focused interests, regulatory capture, and so forth are all serious issues that you correctly identify as economically destructive, and on the whole trade should be a huge net win. But that doesn't mean that all political concerns are unfounded, or that trade cannot be destructive longer term in some cases.
On the domestic front, there have objectively been major issues with how the gains from trade have been distributed to populations. We can talk average net wins, but individuals are not entirely averages and the human factor must be taken into account. Simple classical economics often tends to treat humans as far more fungible and fluid then they actually are. Actual humans cannot necessarily simply switch jobs easily (or at all) into an entirely different field if their area of expertise is obsoleted, and while most systems can handle tiny numbers alright a significant enough shift can result in political unrest and a negative effect for the country, even if theoretically the country is "richer" for it. Now, there are certainly more and less efficient ways to deal with this. Ideally, a strong retraining system and some sort of electronic basic income combined with proper taxation would allow the gains to be spread out to some extent and enhance the ability to shift jobs, reducing the problem of those who lost out sufficiently. In practice this may not be politically or technically feasible for a given government at a given time, leaving cruder and less efficient measures up to and including pure protectionism. But don't confuse a negative, even a significant negative, vs an ideal with an absolute negative vs other goals.
Whether the second issue applies depends on what exactly you're including in the basket of "any form of trade protectionism". It's common for economists arguing for pure Free Trade to include in this any sort of regulation or tariffs whatsoever, particularly if they could "benefit" domestic suppliers over foreigns ones even if that is not the specific goal. Here the problem is that that view puts Free Trade in direct conflict with the Free Market and sovereign cultural goal making, and the Free Market in particular is one of our most powerful and successful economic tools. Remember, a Free Market is a specific construct that requires certain foundations, and that it's also then up to a polity to decide exactly what sort of goals they want to optimize efficiency towards (and in turn other baselines). Foundations include things like information symmetry and cost internalization. Different countries can and do have radically different policies there, so if trade between them is not normalized then it will tend to be artificially destructive towards the markets one or both. Cost internalization is a simple example: if one country has a solid market wherein pollution costs are reasonably consistently internalized and controlled, and another does not, then absent trade controls companies will naturally tend to shift to the country where they can pollute without market price consequence to them. This however does not represent an actual real net efficiency gain, rather it represents an economic subsidization. The closer two countries are in Free Market quality, the lower the trade barriers should be in principle (and where they aren't really does represent more and more stupid waste), but when they diverge "trade protectionism" is a key tool to protect genuine efficiency.
http://www.livemint.com/Companies/lDn53REhqvhqGoIxs9MgwJ/App...
Apple isn't actually prevented from selling either new or refurbished iPhones in India. What it appears that they cannot do, though, is open any Apple Stores there, because they don't (or can't) comply with a rule that "at least 30 per cent of the value of procurement of manufactured/processed products shall be sourced from Indian small industries" (from a similar story about Walmart: http://www.thehindu.com/business/Industry/30-local-sourcing-...)
It looks like what they wanted to do was to manufacture the original phones in China, as always, but do the refurbishment in India, and thereby call the refurbished phones "locally sourced". If they could do that, then they could run their own stores in the country, assuming that the refurb phones made up 30% of their product.
The Indian government rejected that idea, so I presume that Apple will need to continue selling through third-party retail stores, or come up with another way to comply with the rule.
Ford, Hyndai, GM, Toyota are all car companies. They're used to dealing with local production requirements.
China has many such restrictions on many such products. China blocked out internet and internet companies, which resulted in home grown products emerging and becoming really successful (alibaba, tencent, baidu, didi etc). Indian government did not put any such restriction on virtual products. This has resulted in Google, facebook and microsoft having literal monopoly on the market. There are some restrictions for companies like Amazon and Uber. This has resulted in a healthy local competition and ecosystem to develop and compete with international competition like Uber and Amazon. In the end, some of these local companies won't survive independently and got bought by international players. This, in my view, is a much better outcome as this makes international players to entrench heavily and invest in the local market.
Lets look at telecom, banks and airlines. Govt discouraged entry of foreign players into Indian markets by making rules of entry tighter. This has resulted in companies like Airtel, Idea, Reliance and Tata to become strong players in telecom. Believe me, Indian telecom sector has lowest tariff in the world and has really huge reach with more than 850mn subscribers. These companies have innovated and made sure that global competition did not kill them. Sure some companies got bought by likes of Vodafone. However, companies like Airtel managed to go global.
In banks, none of the foreign players have managed to pickup any significant market share in view of healthy competition by private Indian banks like HDFC and ICICI. In airlines, again, government disallowed foreign players. They have to be content with buying large chunks of really successful Indian homegrown players.
Lets look at mobile phone market. Indian government did not put a barrier for phones to be imported. They just blocked second hand phones by slapping a large anti dumping duty. This has resulted in virtually zero production of these mobile phones. With more than 400 mn smartphone users, who lost by letting big smartphone makers to import ? No Indian homegrown industry, no ecosystem. All they managed to do is to make sure all these phones where new and not refurbished.
I strongly believe that big countries like India, should have some sort of protectionism in the infancy stage of an industry. When you have strong local competition, only then these markets should be opened up for global competition. If the local competition that has managed to sprout is capable it will ward off global competition and establish a healthy equilibria. If not, global competition would rule the market and that should be fine. Point being, give local ecosystem a chance. By letting Apple sell second hand phones, India would open itself up to be dumping ground of the world. Soon enough all end of life phones would end up in India masquerading as refubrished.
These aren't you cars, these are chips which could'nt care or show effect of being n-handed.
All that's happening is that Apple can't classify their refurbished phones into a regulatory category they would like to classify them as.
The fact this "news" source made that misinterpretation possible in the first place means they knew the story was boring. So they made it vague in a way that you wound assume the wrong thing.
Edit: looks like iclelland explained it https://news.ycombinator.com/item?id=11822713
There is no single 'correct' price for anything because everybody values things differently.