Ali Rogin:
The world's most valuable company Apple at one point in time had their main supplier making 500,000 of its cell phones per day at one mega factory in China. Then last year, COVID-19 lockdowns and protests of harsh working conditions caused major disruptions at the factory. It cost Apple an estimated $1 billion per week.
Since then, Apple has reportedly told its manufacturing partners that it wants to do more business outside of China. Apple's main supplier, the Taiwan based Foxconn has been moving more of its production out of China into India.
Nilesh Christopher is the South Asia correspondent for the technology publication Rest of World and he's been reporting on the transition. Nilesh thank you so much for joining us.
Let's talk a little bit more about why Foxconn has been making these moves out of China into India.
Nilesh Christopher, Rest of World: I think it all ties to geopolitics. For the longest time, iPhones have always been produced in China. But over the past couple of years. The U.S.-China trade war is effectively meant that Apple has been increasingly pushing its suppliers to shift its supply chain outside of China.
So, what effectively has happened over the past year is Foxconn chairman has met Indian Prime Minister Narendra Modi thrice to be able to build relations and improve their investments in the country. The government has offered subsidies to Foxconn to the tune of a million dollars to be able to ramp up production. And all this has effectively meant that Foxconn right now has to hit the ground running and be able to produce iPhone 15s.
Nilesh Christopher:
Apple is absolutely beholden to China. Because of the efficiency of these factories and the production that's happened. 91 percent of the phones being shipped iPhone 15s are still outside of China. India right now has produces about 10 percent of the iPhones. And there's a long way to go from shipping about 4 million units in 2020 there are about 9 million right now.
One of the ways is to be able to train Indian workforce and engineers to produce the most advanced phone Apple has yet produced. And for this Foxconn has been sending in engineers from China to India to train the local engineers in work, which is brought about interesting culture clashes.
One of the interesting sort of production kings that came about is the culture shock that many of these Chinese engineers felt. One is they felt Indian workers were a little lazy. And one Chinese engineer was surprised that like a 30 minute delay did not bother an Indian worker on workflow.
And an Indian engineers and workers were more acclimatized to take offs. And one flippantly said that even for Black Moon day or lunar eclipse the take-off, which is sort of culturally it's in this in auspicious day for women to work.
So, all these are the cultural differences in attitudes that are highly efficient cutthroat manufacturing culture in China to be able to replicate that in India under these conditions, relations. That's the big challenge.
Nilesh Christopher:
Absolutely. The One Party system effectively gives them subsidies, infrastructure, buses in labor, when they will labor shortages. But India, it's a noisy democracy. You have to contend with lawmakers, landowners, labor groups, bunch of these people to be able to get the same level of efficiency.
That doesn't mean that the Indian state governments have not done it. Last February, some of the state governments passed local laws which increased the work hours from eight hours to 12 hours. And one of the interesting things that has happened is once this bill was passed in the assembly, there was immediate backlash from even the local government affiliate labor. That meant that a couple of days after the bill was passed, it was immediately shelved.
So it showcases the new kind of normal that Apple and Foxconn has to deal with in being able to meet the Indian shop floor as efficient as the Chinese one.
