JOIN USIndia, Vietnam seen as likely alternatives as Apple mulls shifting production out of China: Report
Apple, the world's most valuable company, is reportedly looking to accelerate plans to shift production outside China, a decision that has been propelled by violent protests in Zhengzhou, which is also known as the 'iPhone City'.
According to a report by The Wall Street Journal, which cited company officials "involved in the discussions", Apple is eyeing India and Vietnam as alternatives to China as it looks to reduce dependence on both Beijing, as well as Taiwanese assemblers led by Foxconn.
Apple's relationship with China goes back years, and by and large, had been beneficial for both parties.
However, workers' protests against low wages and Covid-19 restrictions at the Zhengzhou plant in November appear to have shaken Apple's confidence in the stability of business in China, so much so that the company no longer feels comfortable having a considerable chunk of its business tied to China.
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"In the past, people didn't pay attention to concentration risks. Free trade was the norm and things were very predictable. Now we've entered a new world," a former US executive for Foxconn told WSJ.
At the moment, however, it is unclear what route Apple might take to reduce its dependence on China.
People involved in Apple's supply chain told WSJ that the firm could consider expanding its pool of assemblers. To that end, it could rope in two Chinese companies—Luxshare Precision Industry Co and Wingtech Technology Co—which, reportedly, may be willing to do more work outside China if urged to do so by Apple.
The other option, of course, is looking to India and Vietnam, but each come with their own challenges.
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Vietnam, to start with, is seeing quick growth in manufacturing, but is short of workers.
India, meanwhile, has no dearth of workers, but the federal structure of the country and the varied demands of state governments are downsides that may discourage Apple from relying too much on the country.
"India is the Wild West in terms of consistent rules and getting stuff in and out," Dan Panzica, a former Foxconn executive and supply-chain consultant, told WSJ.
That being said, "Apple is going to have to find multiple places to replace iPhone City," Panzica added. What route it takes will become clear in the months to come.