Postby gurey25 » Mon Oct 16, 2017 4:02 am
He says that the design of iphones is by apple and the production is farmed out to taiwanese company foxxcon that manufactures in china, and that most of the profits go to apple.
This is true but what does this have to do with the rise of china?
Most of the supposed value of consumer products is from the brand name and intellectual property, in the case of the iphone the cost to manufacture it is close to 15% of the actual price , Apple gets most of the 75%. Chinese suppliers get a small slice of the 15% of the cost of manufacture while foxxcon gets the lions share.
The same with a can of coke, its all in the brand name, how much do you pay for your cola? a $1, $1.5? it costs around 10cents to make per can or bottle.
The whole point of china becoming the worlds factory is use foreign investment, to create jobs and to gain technology, profit is the last thing in their minds.
In the case of mobile phones , the biggest cost in a unit is the integrated chipset and this is dominated by taiwanese companies. When manufacturing first started in China nearly 100% of components came from outside, only the casing and frames came from local suppliers. The amount of locally sourced components increased as local manufactured climbed the technology ladder. Today Chinese manufacturers produce 100% using local components, even the taiwanese are losing market share to chinese chipsets.
The local market is overwhelmingly chinese brands with apple and samsung having a small share and losing it everyyear.
Its the same with cars, chinese brands dominate the local market and have 100% locally made parts. They are also at the top of the race in electric vehicles and will soon dominate the export market, BYD already is the largest battery producer in the world and its quality competes with the best, just 10 years ago they depended on japanese and german batteries.
Chomsky is probably clouded by US corporate thinking where profit and shareprice is the goal. Even the Japanese in the 70's to 90's hardly cared about profits, Toyota, Hitachi etc all the major corporations hardly made any profits , they focused on gaining market share and building quality. When they destroyed all competition then they started to enjoy profits. They had access to government support through cheap credit and a financial infrastructure geared towards production instead of seeking profits. They also did not give a shit about shareholders or their share price.
All that China has been doing has paid off, they have built a supply chain that is unbeatable, even if you move iphone production to a hypothetical country that has slave labour where you pay them zero, a factory in china would be able to beat you in cost of production.
