Does Tim Cook have a Plan B in China? | Hacker News Reader

Does Tim Cook have a Plan B in China?

economist.com

53 pointsedward31 comments

> “Designed by Apple in California. Assembled in China”.

More accurately: "Designed by Apple in California. Components from Taiwan, South Korea, Japan, USA and China. Assembled in China."

If you count the value added in China, only $8.50 of the cost of iPhone comes from China. Chinese import components to assemble iPhone.

Slapping $160 tariff to iPhone assembled in China is indirect tariff to the US allies in the region and even to the US itself. Foxconn can move their iPhone assembly to Vietnam but it takes time.

http://theconversation.com/we-estimate-china-only-makes-8-46...

Thanks for the link. Indeed this might be a tariff on Apple indirectly. When US Companies were moving everything to China, hopefully they had a plan on how to react if China goes south? Perhaps someone at Apple management knows?

iPhones are made in special export zones, so technically their components or machinery used to make them aren’t even imported into China. Because none of its inputs were tariffed, iPhones face tariffs when they are imported into China even though they were made in China.

If Trump decides to tariff iPhones anyways, well, double hilarity will ensue.

why I just ask someone to repair my iPhone screen, it would cost me $50 to $100? should not less than $8.50 as that actually assembly the whole phone.

1) Assembly and repair are completely different tasks.

2) You're paying for repair in different country with different wages.

3) Economies of scale. How many identical phones with identical problems are you bringing in to be repaired using identical steps? One million or just one?

You provide some reasonable explanation, but that still overlooked the value for China's manufacture provided. For the folks of supporting Made in USA, do you think they would accept the price tag that assembly whole iPhone would just charge less than $10?

The $160 tariff is a tax on Apple basically. There is no way they will pass that on to consumers with current products. You may see an increase in new products but that will only work if the financing product they offer remains attractive. Basically few people can afford a $1k iPhone in cash so they need to pay for it over time. Does $1k matter vs $1200? Not specifically no.

Is the Economist really implying that Cook, the CEO of Apple, one of the world's largest publicly traded corporations, has not thought about forming a future facing outlook that is comprehensive in its strategy and planning?

A cursory glance at Apple's leadership page shows that Isabel Ge Mahe is vice president and managing director of Greater China [1], which to me indicates that yes, Apple definitely is thinking about China at a high level, by formally naming an executive specifically to focus on strategy in China. This is further indicated in their recent highlighting of Chinese-centric features on OS products at events such as WWDC.

As far as the trade war is concerned, I think it's a little premature to assume that it will drag on and increase in its scope and scale. Apple has pull in D.C., and the interconnected nature of the global economy will likely ensure that there will be a resolution to this at some point in the near future.

[1] https://www.apple.com/leadership/isabel-ge-mahe/

> the interconnected nature of the global economy will likely ensure that there will be a resolution to this...

I hope so. Rational actor models worry me more in politics and foreign policy than in economics.

Reasons this might just keep getting worse:

1) Diffusion of responsibility: Those who see the trade war as dangerous assume someone else will influence events to avoid a greater crisis before we get there.

2) Frog boiling: People are setting expectations based on the current week and ignoring cumulative damage.

3) Self-doubt: Those who could use leverage in DC question whether traditional tools would be effective in the current political environment

4) Policy disagreements: Many powerful policy advisors believe the trade war will be good in the long run. Some are convinced that it is good in the short run.

5) Commitment devices: There are moments where both sides will "burn their ships" and be unable to move towards compromise without a show of contrition from the other side.

6) Madman theories: Leaders can justify irrationality in the short term by appealing to the long term benefits.

7) Lack of understanding: Each side can underestimate the others' domestic political forces that prevent quick compromise

I still hope you're right. Things could get worse rapidly in ways that are too staggering to wrap my head around, but it's also hard for me to imagine off-ramps based on all the personalities (and systems of advisors) involved on both sides.

> As far as the trade war is concerned, I think it's a little premature to assume that it will drag on and increase in its scope and scale. Apple has pull in D.C., and the interconnected nature of the global economy will likely ensure that there will be a resolution to this at some point in the near future.

Alibaba just decided to IPO (again) in Hong Kong -- as opposed to offering more shares through their existing US exchange. Given the timing of this decision, it sounds like at least their leadership think this trade war may go on for a while.

There is another reason for that. Alibaba has always wanted to be listed in HK. But system in places requires all shares has equal right, you don't get those A B C Shares in US where they have little to zero voting right. Jack Ma said the these rules are old and US way of cooperate ownership is the way going forward. Which leads to Alibaba went to US to be listed.

Now HK has relaxed its rules a little bit. So this is the major reason why Alibaba is coming back to HK.

> Is the Economist really implying that Cook, the CEO of Apple, one of the world's largest publicly traded corporations, has not thought about forming a future facing outlook that is comprehensive in its strategy and planning?

Looking at Uber, is is really that far fetched that executives are very good at achieving short and medium term success while completely lacking any viable long term vision? Given that even economist cannot predict the future (see the trade war) despite what certain outlets want us to believe, that's not so dumb after all (in the case of Apple).

Does Apple have any other significant manufacturing facilities outside of China? If not, I’d say they don’t have much of a plan B, otherwise they’d have hedged their bets a while ago and moved some manufacturing to other locations.

And to add to what you said. Tim Cook is considered a supply chain and operations master that had just as much to do with Apple’s resurgence under Jobs as Jobs himself.

Nearly 25% of all Smartphone were iPhone according to different Data Sets in China. That is very high considering the majority of population has Sub $10K salary.

From about 800M Smartphones, 25% equals to 200M iPhone in use. China has to be top 3 countries ( if not top 2 ) with the most iPhone in use.

And that is one reason China seems to have sided with China so far.

I feel the worker expertise is overblown by Cook to justify his business decisions, Samsung basically doesn't produce any cellphone in China now, do Samsung phones require little expertise to make?

Since Apple production employs cities of people, and the unempolment rates in China likely are at alarming levels, to further lock in Apple and Foxconn should be the reasonable move for Chinese govs, while angling for more cooperation from Apple.

Samsung's market share in China is below 1 percent.

Maintaining market share and the brand in massive Chinese markets is important for the long term. Just 5-10 percent can be good enough for a luxury brand like Apple.

Apple might be willing to eat the cost of tariffs if it helps them to avoid political backlash that can shut them out from the markets completely. Keeping China as the part of the value chain may be condition for the market access.

That's the patriot backlash Samsung paid for, Samsung phones were the best and most swanky in China before it.

to be honest why as consumers do we not object to Apple pursuing China profits from both sales and manufacture when China's human right abuses keep coming right and left and their never ending threat toward Taiwan?

Apple touts their stance on human rights at every opportunity in the West but looks away in the East and this hypocrisy is something they need to be called to the carpet on. They need to move manufacturing out of China as the rest of world should until China ends the threat towards Taiwan and end the persecution of Hindu and Muslim citizens, if not others.

Rational boycott based on human rights should involve Wal-Mart, Amazon, Nike. etc. It should be followed with boycott to imports from Russia, Israel, Saudi Arabia, etc.

Which Hindus is China persecuting?

He probably meant Buddhists.

People ultimately do their values with their hands. Perhaps most people don’t care very much and what you hear are loud tech people.

I guess the answer is no? Can’t tell outside the paywall.

Just clear cache and cookies.

Here's a link using outline.com

https://outline.com/ajm9j7

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