Apple for the first time makes a top-of-the-line iPhone model in India(m.economictimes.com)
m.economictimes.com
Apple for the first time makes a top-of-the-line iPhone model in India
https://m.economictimes.com/tech/hardware/the-i-in-iphone-11-now-stands-for-india-made/articleshow/77135725.cms
164 comments
“Designed by Apple in California. Assembled in India.”
"... Taxed in Ireland"
Or even "... barely taxed in Ireland"
Apple pays taxes in every country it does business in. The remaining profits it keeps in Ireland because of the low tax rate, otherwise if returned to the US it would be taxed again.
US international corporate taxation works like this if you repatriate profits to dividend to shareholders: 1) First pay taxes on profits in each country the profits were made.
2) Out of the remainder pay state corporate income tax in the US state you are headquartered in.
3) out of remainder pay federal corporate income tax.
4) out of remainder shareholder pays state income tax.
5) out of remainder shareholder pays federal dividend tax.
Typically the shareholder is able to keep about 30-40% of their share of the original profits after they go through the five layers of taxation.
US international corporate taxation works like this if you repatriate profits to dividend to shareholders: 1) First pay taxes on profits in each country the profits were made.
2) Out of the remainder pay state corporate income tax in the US state you are headquartered in.
3) out of remainder pay federal corporate income tax.
4) out of remainder shareholder pays state income tax.
5) out of remainder shareholder pays federal dividend tax.
Typically the shareholder is able to keep about 30-40% of their share of the original profits after they go through the five layers of taxation.
Well yes, the problem is people seems to think it should be "revenue" taxed and not profits "taxed". ( Dont ask why, but that is the general sentiment )
And you can see they are very vocal about it, If they are sold in X, they should be taxed in X.
The problem with current Profits based system is that it allows Apple X to paid Apple Ireland 99% of your profits as IPR, Brand / Logo usage ( Apple France paying to Apple Ireland ). Effectively leaving only 1% of the profits being taxed in X.
And there is no way to determine the proper value of those IPR. Apple spends tens of billions every year on R&D and Marketing. So not paying for those IPR would be wrong, but also paying no tax in countries is also wrong.
And no one so far has a reasonable solution to fix the current profit transfer problem. And it is a much harder problem with Globalisation.
And you can see they are very vocal about it, If they are sold in X, they should be taxed in X.
The problem with current Profits based system is that it allows Apple X to paid Apple Ireland 99% of your profits as IPR, Brand / Logo usage ( Apple France paying to Apple Ireland ). Effectively leaving only 1% of the profits being taxed in X.
And there is no way to determine the proper value of those IPR. Apple spends tens of billions every year on R&D and Marketing. So not paying for those IPR would be wrong, but also paying no tax in countries is also wrong.
And no one so far has a reasonable solution to fix the current profit transfer problem. And it is a much harder problem with Globalisation.
Yes, profit transfer is a problem, but it’s not nearly as big a problem as you make it out. Companies can’t just make it up on their own, there are accounting rules they must follow.
Secondly, there is a simple and much better solution that would boost everyone’s economies. Stop taxing investment and savings, tax consumption instead.
In the US it would be as simple as taxing capital gains and dividends at higher ordinary income rates, while no longer taxing corporate income at all. That would increase capital for building new businesses, while restoring progressivity to the tax code.
Secondly, there is a simple and much better solution that would boost everyone’s economies. Stop taxing investment and savings, tax consumption instead.
In the US it would be as simple as taxing capital gains and dividends at higher ordinary income rates, while no longer taxing corporate income at all. That would increase capital for building new businesses, while restoring progressivity to the tax code.
[deleted]
[deleted]
VAT is basically a revenue tax.
For each iPhone sold in Finland the government gets ~20%. Plenty of countries have a similar system.
For each iPhone sold in Finland the government gets ~20%. Plenty of countries have a similar system.
VAT is taxing the difference between the procurement price and the sales price (thus its name Value-Added Tax), not the revenue.
E.g., if Apple Finland procures the phone from Apple Inter Co., two separate entities, for USD 499 and sells it for USD 500, the tax would be on the USD 1, i.e., 20 cents, since Apple Finland would get the VAT paid to Apple Inter Co offset by the Finnish tax authorities.
E.g., if Apple Finland procures the phone from Apple Inter Co., two separate entities, for USD 499 and sells it for USD 500, the tax would be on the USD 1, i.e., 20 cents, since Apple Finland would get the VAT paid to Apple Inter Co offset by the Finnish tax authorities.
While true in a sense, that's not the best way of looking at it.
VAT is charged on the sale price of every intermediary, however businesses can claim back VAT on their purchases. In your example, Apple Inter Co. would sell the iPhone to Apple Finland for $499 + $119.76 (VAT in Finland is 24%). Apple Finland would pay $618.76, claim back $119.76, and sell the phone for $500 + $120 to the consumer, charging the consumer $620 and giving $120 to the government.
So yes, Apple Finland will have given effectively about 20 cents to the government, but the total $120 of VAT will still be paid and calculated on the end sale price, not the profit margin.
VAT is charged on the sale price of every intermediary, however businesses can claim back VAT on their purchases. In your example, Apple Inter Co. would sell the iPhone to Apple Finland for $499 + $119.76 (VAT in Finland is 24%). Apple Finland would pay $618.76, claim back $119.76, and sell the phone for $500 + $120 to the consumer, charging the consumer $620 and giving $120 to the government.
So yes, Apple Finland will have given effectively about 20 cents to the government, but the total $120 of VAT will still be paid and calculated on the end sale price, not the profit margin.
Kind of agree in concept, although as the comment below it really is sales tax, not "revenue" tax.
And in reality when I said something similar to those that support "revenue tax" ( Whatever that means ) their counter argument are:
>Apple is not paying VAT, the consumer are paying for it.
>VAT is VAT, it is different. Apple needs to paid revenue tax.
If you think these are some random people comments, I have had a journalist at a reputable newspaper gave me roughly similar response as above....
And in reality when I said something similar to those that support "revenue tax" ( Whatever that means ) their counter argument are:
>Apple is not paying VAT, the consumer are paying for it.
>VAT is VAT, it is different. Apple needs to paid revenue tax.
If you think these are some random people comments, I have had a journalist at a reputable newspaper gave me roughly similar response as above....
> Apple is not paying VAT, the consumer are paying for it.
This has nothing to do with what kind of tax it is.
If the company lacks competition then the price they can charge is the total value of the product to the customer. In that case any kind of tax is going to get paid by the company, because the customer won't pay any more than they already do or it's not worth buying the product anymore.
If the company is in a competitive market then they have thin margins and any tax is going to be paid by the customer because the company has no choice but to pass it on or go out of business.
If the company has some competition but not very rigorous (i.e. like Apple) then some of the tax is paid by the company and some by the customer, but it still doesn't matter what kind of tax it is.
> VAT is VAT, it is different. Apple needs to paid revenue tax.
This is just inaccurate. VAT and "revenue tax" are effectively equivalent. They may differ in some implementation details but not in anything fundamental.
This has nothing to do with what kind of tax it is.
If the company lacks competition then the price they can charge is the total value of the product to the customer. In that case any kind of tax is going to get paid by the company, because the customer won't pay any more than they already do or it's not worth buying the product anymore.
If the company is in a competitive market then they have thin margins and any tax is going to be paid by the customer because the company has no choice but to pass it on or go out of business.
If the company has some competition but not very rigorous (i.e. like Apple) then some of the tax is paid by the company and some by the customer, but it still doesn't matter what kind of tax it is.
> VAT is VAT, it is different. Apple needs to paid revenue tax.
This is just inaccurate. VAT and "revenue tax" are effectively equivalent. They may differ in some implementation details but not in anything fundamental.
> VAT and "revenue tax" are effectively equivalent.
I mean VAT is a type of revenue tax, sure. However it is rather uniform and generally it's rate is not affected, e.g. by the total revenue of a business, the type of business, and other such qualities.
It's very easy to just shift the burden to the customer, not only due to the above but also because there's general understanding in the population (which visibly see the government set that tax uniformly on all their receipts).
But there's typically also additional taxation on corporate income. Isn't that essentially the "revenue tax" people meant?
I mean VAT is a type of revenue tax, sure. However it is rather uniform and generally it's rate is not affected, e.g. by the total revenue of a business, the type of business, and other such qualities.
It's very easy to just shift the burden to the customer, not only due to the above but also because there's general understanding in the population (which visibly see the government set that tax uniformly on all their receipts).
But there's typically also additional taxation on corporate income. Isn't that essentially the "revenue tax" people meant?
> However it is rather uniform and generally it's rate is not affected, e.g. by the total revenue of a business, the type of business, and other such qualities.
Neither are most corporate income taxes. Otherwise the company would use many small corporations instead of one larger one (which they already do to varying extents for other reasons) and avoid the higher rates.
And, of course, the type of business can easily be taken into account with VAT if you like that sort of thing.
> It's very easy to just shift the burden to the customer
It's not any easier or harder than anything other way. Again, if they had thin margins, they have no choice but to raise prices or go out of business, so they raise prices and the customer pays. If they have higher margins they may (or may not) eat some of the tax because the reduction in demand from raising prices might cost them more than paying the tax would. That's the primary consideration in practice, not what you call the tax or whether the customer sees it on their bill.
In some cases the customer may end up paying more than the amount of the tax because the business has to pass on the tax, which reduces demand, which lowers the sales volume they have to amortized fixed costs over, which requires them to raise prices even more.
Though whether the customer sees it on their bill certainly affects the politics of it, because then they notice that they could be the one paying it, even though that was true either way.
> But there's typically also additional taxation on corporate income. Isn't that essentially the "revenue tax" people meant?
It is, the problem with "income" is that it doesn't have a jurisdiction. If you make sales, the customers are somewhere. If you hire employees, the employees are somewhere. If you own property, the property is somewhere. If you make "profit" it's just numbers in a bank's computer, which can be anywhere, so it goes wherever the taxes are lowest without regard to where anything tangible is.
So if you don't want that to happen you have to tax the thing that actually happens in your jurisdiction, and we're back to VAT or payroll tax or whatever.
Neither are most corporate income taxes. Otherwise the company would use many small corporations instead of one larger one (which they already do to varying extents for other reasons) and avoid the higher rates.
And, of course, the type of business can easily be taken into account with VAT if you like that sort of thing.
> It's very easy to just shift the burden to the customer
It's not any easier or harder than anything other way. Again, if they had thin margins, they have no choice but to raise prices or go out of business, so they raise prices and the customer pays. If they have higher margins they may (or may not) eat some of the tax because the reduction in demand from raising prices might cost them more than paying the tax would. That's the primary consideration in practice, not what you call the tax or whether the customer sees it on their bill.
In some cases the customer may end up paying more than the amount of the tax because the business has to pass on the tax, which reduces demand, which lowers the sales volume they have to amortized fixed costs over, which requires them to raise prices even more.
Though whether the customer sees it on their bill certainly affects the politics of it, because then they notice that they could be the one paying it, even though that was true either way.
> But there's typically also additional taxation on corporate income. Isn't that essentially the "revenue tax" people meant?
It is, the problem with "income" is that it doesn't have a jurisdiction. If you make sales, the customers are somewhere. If you hire employees, the employees are somewhere. If you own property, the property is somewhere. If you make "profit" it's just numbers in a bank's computer, which can be anywhere, so it goes wherever the taxes are lowest without regard to where anything tangible is.
So if you don't want that to happen you have to tax the thing that actually happens in your jurisdiction, and we're back to VAT or payroll tax or whatever.
> Apple pays taxes in every country it does business in.
It doesn’t in New Zealand - or at least it didn’t up until 2019.
https://www.theguardian.com/world/2017/mar/23/apple-paid-no-...
It doesn’t in New Zealand - or at least it didn’t up until 2019.
https://www.theguardian.com/world/2017/mar/23/apple-paid-no-...
According to the article, Apple is following the law, that is, Apple pays taxes where it is legally required to do so.
"A tax agreement between New Zealand and Australia sees dual claims on income tax default to where the company is controlled."
"A tax agreement between New Zealand and Australia sees dual claims on income tax default to where the company is controlled."
Perhaps, but it paid no tax in NZ, and the OP stated Apple pays tax in every country in which it does business.
After all the money collected by the government is spent back to not government. It all gets melted into the interest rates.
[deleted]
Seriously? 30-40? Is that accurate!?
Following is roughly accurate from memory.
Worldwide, Corporate tax rates by country range between 5-55%, but typically are between 20-30%.
US Corporate tax rate is now 20%.
State corporate tax rates range from zero (NV) to 10%.
State income tax rates range from zero to 11%.
Federal dividend rates range from 15-20%.
Using the the best case scenario (no state income or corporate tax, foreign corporate tax of 5%) gives a total effective tax rate of 35%.
Using more typical rates (8% state income/corporate, 25% foreign) produces a total tax rate of 58%.
So looks like I was pessimistic, probably because my from memory numbers didn’t include Trump tax cut.
But a worst case scenario (France 35%, CA 9%, Dividend 20%) still produces a 65% total effective tax rate.
Worldwide, Corporate tax rates by country range between 5-55%, but typically are between 20-30%.
US Corporate tax rate is now 20%.
State corporate tax rates range from zero (NV) to 10%.
State income tax rates range from zero to 11%.
Federal dividend rates range from 15-20%.
Using the the best case scenario (no state income or corporate tax, foreign corporate tax of 5%) gives a total effective tax rate of 35%.
Using more typical rates (8% state income/corporate, 25% foreign) produces a total tax rate of 58%.
So looks like I was pessimistic, probably because my from memory numbers didn’t include Trump tax cut.
But a worst case scenario (France 35%, CA 9%, Dividend 20%) still produces a 65% total effective tax rate.
And it's a bit worse than that even because of inflation. You buy some shares of Verizon for $21.11 in 1990, you sell them for $56.85 today, they claim you have a taxable gain of $35.74. But 20.62 of that was just inflation, so the rate you're paying on the last bit is really ~47% rather than 20%.
Less if you include sticker price then deduct VAT.
You can always pay more taxes than you’re legally obligated to pay, or else you can do what Apple does.
Isn't this only for revenue generated in the European Union?
True, but find me a member of the Fortune 500 that does not do this kind of thing.
Not sure why you're getting downvoted. It's true that it doesn't make it any less immoral, but at the end of the day companies will seek to lower their costs, after all it is their mission, hence this (major) problem is political and shouldn't depend on corporations good will.
Paying the minimum in tax allowed by law to reserve the maximum amount of money possible for pursuing your own social or charitable goals is not immoral.
The government is not a charity (indeed, Apple HQ’s government uses some fraction of their tax revenues to conduct mass murder) and to argue that anyone is immoral for not paying more tax than is specified by the law is an argument against the rule of law in society.
If you don’t like the laws, take it up with your lawmakers, or with the concept of representative government or democracy in general, NOT those who explicitly comply with the law, and indeed spend millions on staff (and their payroll taxes) to ensure that they do.
The government is not a charity (indeed, Apple HQ’s government uses some fraction of their tax revenues to conduct mass murder) and to argue that anyone is immoral for not paying more tax than is specified by the law is an argument against the rule of law in society.
If you don’t like the laws, take it up with your lawmakers, or with the concept of representative government or democracy in general, NOT those who explicitly comply with the law, and indeed spend millions on staff (and their payroll taxes) to ensure that they do.
It outprortionally transfers the cost of doing business to normal taxpayers, even those not interacting with said companies. It swoops local money and hides it in coffers of unrelated countries. I don't blame them for doing it, I blame it on global politics (it will probably require a global response), but it doesn't make it any more moral or damageless, tho I guess it's somewhat subjective.
> It swoops local money and hides it in coffers of unrelated countries.
It absolutely does not. Tax revenues (“local money”) are based on the law and the law alone.
It’s simply not “local money” if the law does not describe it belonging to that local jurisdiction. The concept of ownership and rights to money are legal ones, and the cash flows are flowing according to the law.
You may argue that it goes against the spirit of the idea of tax, but that is simply not documented anywhere and thus could not be complied with precisely even if someone wanted to.
Don’t criticize people for obeying the law as written, and certainly don’t criticize them for not voluntarily donating to organizations that like to use their resources to run torture camps and bomb children.
It absolutely does not. Tax revenues (“local money”) are based on the law and the law alone.
It’s simply not “local money” if the law does not describe it belonging to that local jurisdiction. The concept of ownership and rights to money are legal ones, and the cash flows are flowing according to the law.
You may argue that it goes against the spirit of the idea of tax, but that is simply not documented anywhere and thus could not be complied with precisely even if someone wanted to.
Don’t criticize people for obeying the law as written, and certainly don’t criticize them for not voluntarily donating to organizations that like to use their resources to run torture camps and bomb children.
I don't understand why you are adopting this tone, read my message again as you seem to be misinterpreting it. I explicitly mentioned that I am blaming the laws themselves and not the corporations for abiding by them, it is the entire point and premise of the few comments I left on this thread. These laws are at fault for allowing corporations to make money in country X and pays tax for it in country Y, to defend this form of taxation seems boneheaded to me.
Apple plays a shell game with revenue and gets away with it.
Shkreli plays a shell game with revenue and has to go to prison.
Corporations are people right?
Corporations are people right?
> for pursuing your own social or charitable goals is not immoral.
Assumption of facts not in evidence.
Assumption of facts not in evidence.
Lack (or later loss) of those social or charitable goals does not cause the prior act to be (or retroactively become) immoral.
In case there was any doubt:
https://www.nytimes.com/2020/07/29/us/mackenzie-scott-billio...
https://www.nytimes.com/2020/07/29/us/mackenzie-scott-billio...
Governments have to close this loophole. A CEO is going to be quickly ousted if they suggest not taking advantage of the well known tactic. For one it means less money in the pockets of shareholders but also reduces the ability to compete if all other companies are paying little to no tax. Until governments step in, nothing will change.
This is the nature of regulation in general. Without it anyone who does shady stuff gains a massive advantage.
The problem is political.
Corporations have way more money than the rest of is in politics for just this reason.
Because, as you say, at the end of the day companies will seek to lower their costs.
Corporations have way more money than the rest of is in politics for just this reason.
Because, as you say, at the end of the day companies will seek to lower their costs.
That's true in the US where corruption is legal, in most other developed nations it is severely limited or forbidden, making it much less rampant and outproportioned. Here in Canada (and I assume many similarly developed countries), stories of corporate donations to political parties are often big enough scandals to make the party lose thereafter. Citizens United v. FEC has to be one of the grossest judicial change a developed country could adopt. I doubt political donation regulations are this loose even in tax havens. It didn't birth the US era of crony politics, but it sure does contribute to cement it. It's up to the people now to tackle these issues.
Wikipedia:
>The Court held that the free speech clause of the First Amendment prohibits the government from restricting independent expenditures for political communications by corporations, including nonprofit corporations, labor unions, and other associations.
Wikipedia:
>The Court held that the free speech clause of the First Amendment prohibits the government from restricting independent expenditures for political communications by corporations, including nonprofit corporations, labor unions, and other associations.
Citizens United is also a threat to national security as it opens the floodgates for foreign money to directly influence American politics to an almost unlimited degree.
It may take a constitutional amendment to fix it though.
It may take a constitutional amendment to fix it though.
I think it says more about corporation taxes being unfit for purpose than immorality. They clearly don't work with international companies, so it would be better to charge consumption taxes on their products.
With IP monpolized and enforced by the neo-colonial global North corporatocracy or empire, thanks to TRIPS [1]
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"Meanwhile, the educational, information and intellectual commons have been plundered more than at any time in history. Thomas Jefferson, a founding father of the US Constitution, correctly said, ‘Ideas, in nature, cannot be made the subject of property.’ Sadly, that is precisely what has been done in the neo-liberal era.
A globalised intellectual property rights system was immensely strengthened by TRIPS (Trade-Related Aspects of Intellectual Property Rights) passed through the World Trade Organisation in 1994, shaped by a few US multinationals, backed by the US and UK governments. This has facilitated the commercialisation, privatisation and colonisation of ideas. Since 1994, the annual filing of patents has more than tripled, with the global stock of patents close to 12 million, each giving monopolistic control of some idea for 20 years or more.
Many patents result from publicly-funded research, diminishing the risk. But TRIPS allows corporations to receive monopolistic income for two decades, or use the patent to block others from producing something. Those claiming to believe in free markets should have opposed the trend, but reveal their class-based ideology by keeping quiet. There is evidence that the patent system hinders economic growth and innovation. It merely increases inequality and rentier capitalism."
[1] https://www.opendemocracy.net/en/oureconomy/plunder-commons-...
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"Meanwhile, the educational, information and intellectual commons have been plundered more than at any time in history. Thomas Jefferson, a founding father of the US Constitution, correctly said, ‘Ideas, in nature, cannot be made the subject of property.’ Sadly, that is precisely what has been done in the neo-liberal era.
A globalised intellectual property rights system was immensely strengthened by TRIPS (Trade-Related Aspects of Intellectual Property Rights) passed through the World Trade Organisation in 1994, shaped by a few US multinationals, backed by the US and UK governments. This has facilitated the commercialisation, privatisation and colonisation of ideas. Since 1994, the annual filing of patents has more than tripled, with the global stock of patents close to 12 million, each giving monopolistic control of some idea for 20 years or more.
Many patents result from publicly-funded research, diminishing the risk. But TRIPS allows corporations to receive monopolistic income for two decades, or use the patent to block others from producing something. Those claiming to believe in free markets should have opposed the trend, but reveal their class-based ideology by keeping quiet. There is evidence that the patent system hinders economic growth and innovation. It merely increases inequality and rentier capitalism."
[1] https://www.opendemocracy.net/en/oureconomy/plunder-commons-...
Every (or almost every?) industrialized nation already had a patent system. The TRIPS agreement just standardized some aspects of those disparate systems across countries.
"Of all the forms of artificial property and legal privilege in existence, the one most indispensable to corporate power in today's economy is probably "intellectual property.
A large portion of the price of most goods and services consists of embedded rents on “intellectual property.” Tom Peters, in The Tom Peters Seminar, argued that the cost of materials probably accounted for some $60 of the total price of his new Minolta camera, and that he paid “the rest, about $640, for its intellect....” He went on to celebrate the portion of economic value made up of “intellect” and “imagination.”33 Whether Peters' estimate is typical for the portion of the price of manufactured goods made up of rents on IP is doubtful. But in an economy with no property rights in software and product design, with competition unrestricted by "intellectual property" claims of any kind, whatever portion of a product's price was made up of rent on the ownership of designs or ideas—as opposed to labor and materials—would evaporate overnight.
IP is a major legal support to oligopoly, since so many cartels were stabilized by the exchange or pooling of patents between the major players in various industries (e.g. G.E. And Westinghouse in home appliances, the Bell Patent Association as the basis for AT&T, RCA as a patent pooling arrangement for the major radio producers, etc.).
If IP were abolished, there would be no legal barrier against many small companies producing competing modular components or accessories for the same platform, or even big companies producing modular components designed for interoperability with other companies products. That means that IP is an important legal bulwark not only for planned obsolescence, but also for a business model based on selling cheap platforms and then charging an enormous markup to a captive market for accessories. If you've ever remarked on how expensive toner cartridges or glucometer testing strips are, you can thank “intellectual property” for it.
It's odd that the so-called “Free Trade Agreements” promoted by so many professed “free traders” focus so disproportionately on provisions for stricter enforcement of patents and copyrights. IP plays exactly the same protectionist role for global corporations that tariffs did for the old national industrial economies. Patents and copyrights are barriers, not to the movement of physical goods, but to the diffusion of technique and technology. The one, as much as the other, constitutes a monopoly of productive capability. “Intellectual property” enables the transnational corporation to benefit from the moral equivalent of tariff barriers, regardless of where it is situated. In so doing, it breaks the old link between geography and protectionism. With an American tariff on a particular kind of good, the corporations producing that good have a monopoly on it only within the American market. With the “tariff” provided by a patent on the industrial technique for producing that good, the same corporations have an identical monopoly in every single country in the world that adheres to the international patent regime. “Intellectual property,” just as much as the tariff, is a form of protectionism in that it restricts the right to produce a given good for a particular market area to a privileged class of firms."
Source: http://c4ss.org/wp-content/uploads/2010/12/Political-Economy...
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Your argument that patent systems already existed does nothing to critique the systems, or the dynamics of the systems, themselves. Instead of accepting things on face value or because an authority has made a claim, I am trying instead to find out the story of how it came to be.
I am not arguing that we should not have any system at all. I strongly disagree however that the existing systems are as harmless as you make them out to be. When you say it "just standardized some aspects" it brushes under the rug any nuance of the underlying mechanics of these systems.
A large portion of the price of most goods and services consists of embedded rents on “intellectual property.” Tom Peters, in The Tom Peters Seminar, argued that the cost of materials probably accounted for some $60 of the total price of his new Minolta camera, and that he paid “the rest, about $640, for its intellect....” He went on to celebrate the portion of economic value made up of “intellect” and “imagination.”33 Whether Peters' estimate is typical for the portion of the price of manufactured goods made up of rents on IP is doubtful. But in an economy with no property rights in software and product design, with competition unrestricted by "intellectual property" claims of any kind, whatever portion of a product's price was made up of rent on the ownership of designs or ideas—as opposed to labor and materials—would evaporate overnight.
IP is a major legal support to oligopoly, since so many cartels were stabilized by the exchange or pooling of patents between the major players in various industries (e.g. G.E. And Westinghouse in home appliances, the Bell Patent Association as the basis for AT&T, RCA as a patent pooling arrangement for the major radio producers, etc.).
If IP were abolished, there would be no legal barrier against many small companies producing competing modular components or accessories for the same platform, or even big companies producing modular components designed for interoperability with other companies products. That means that IP is an important legal bulwark not only for planned obsolescence, but also for a business model based on selling cheap platforms and then charging an enormous markup to a captive market for accessories. If you've ever remarked on how expensive toner cartridges or glucometer testing strips are, you can thank “intellectual property” for it.
It's odd that the so-called “Free Trade Agreements” promoted by so many professed “free traders” focus so disproportionately on provisions for stricter enforcement of patents and copyrights. IP plays exactly the same protectionist role for global corporations that tariffs did for the old national industrial economies. Patents and copyrights are barriers, not to the movement of physical goods, but to the diffusion of technique and technology. The one, as much as the other, constitutes a monopoly of productive capability. “Intellectual property” enables the transnational corporation to benefit from the moral equivalent of tariff barriers, regardless of where it is situated. In so doing, it breaks the old link between geography and protectionism. With an American tariff on a particular kind of good, the corporations producing that good have a monopoly on it only within the American market. With the “tariff” provided by a patent on the industrial technique for producing that good, the same corporations have an identical monopoly in every single country in the world that adheres to the international patent regime. “Intellectual property,” just as much as the tariff, is a form of protectionism in that it restricts the right to produce a given good for a particular market area to a privileged class of firms."
Source: http://c4ss.org/wp-content/uploads/2010/12/Political-Economy...
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Your argument that patent systems already existed does nothing to critique the systems, or the dynamics of the systems, themselves. Instead of accepting things on face value or because an authority has made a claim, I am trying instead to find out the story of how it came to be.
I am not arguing that we should not have any system at all. I strongly disagree however that the existing systems are as harmless as you make them out to be. When you say it "just standardized some aspects" it brushes under the rug any nuance of the underlying mechanics of these systems.
No matter what the topic is, if you focus only on the negatives and pretend the positives don't exist, it's gonna sound bad. Reasonable people can argue about whether the negatives outweigh the positives, but reasonable people don't pretend that that there just aren't any positives.
> pretend the positives don't exist
Critiquing something is not denying positives. Please point out where I said that? That is not my intention. I would say that critiquing without providing an alternative is about sharing grief [1], than it is about discussing, planning and creating alternatives. I think you've given me the opportunity to reflect on my approach and message.
I am for systemic evolution and integration: technology shapes us, and we shape technology, it's a spiral.
Promoting intellectual property rights while at the same time talking about 'free markets' is one of the most harmful and backward Doublespeak going on in today's system I think.
The systemic components and dynamics that are part of the intellectual property systems are ripe for evolution. I believe we are living with a pre-21st century systemic reality that doesn't account for the new opportunities available to us due to digital technology.
The reality is that there is a world out there with people who are suffering at the bottom of the corporate pyramids (the Precariat, e.g. gig workers - who have no job security, no benefits, and not many prospects of a peaceful retirement). Then there are also the hundreds of millions suffering in so called 'developing' countries whose resources are plundered and whose governments compete for industrial-production contracts with our corporatocracy [2][3], creating continuous race-to-the-bottom dynamics that squash workers' rights and create environmental catastrophes.
Commons-based peer production integrates our new digital technology abilities, and it has to be our future. Firm/corporate production is wasteful and destructive. Imagine if all phones and gadgets were modular, including the software inside. Instead our gadgets today become slow non-backwards compatible bricks because of perceived obsolescence. I can do without Siri, or the gaming capabilities of the latest flagship phone... or multitasking, or whatever other corporate feature I do not have a choice whether to run or not.
Because of the monopoly created by the idea of exclusive intellectual property (and the systems constructed to support it), many of these useful ideas and technologies lie locked up inside corporate databases, unexplored and unused. What a waste. What a cosmic joke and tyranny.
My belief is that by using technologies like Ceptr and MetaCurrency's Holochain, we can be in a large scale transition to Commons-based peer production, where we might be able to reverse climate change in just a few years.
The technologies that can save us are here today, yet the intellectual property regime keeps them artificially scarce.
The big constraint underneath all of this, though, is our dogmatic ideas around wealth and money:
1. The current political economy is based on a false idea of material abundance. We call it pseudo-abundance. It is based on a commitment to permanent growth, the infinite accumulation of capital and debt-driven dynamics through compound interest. This is unsustainable, of course, because infinite growth is logically and physically impossible in any physically constrained, finite system.
2. The current political economy is based on a false idea of “immaterial scarcity.” It believes that an exaggerated set of intellectual property monopolies—for copyrights, trademarks and patents—should restrain the sharing of scientific, social and economic innovations. Hence the system discourages human cooperation, excludes many people from benefiting from innovation and slows the collective learning of humanity. In an age of grave global challenges, the political economy keeps many practical alternatives sequestered behind private firewalls or unfunded if they cannot generate adequate profits.
So my hope is that I can continue dreaming and imagining a world where humans have a non-violent and harmonious relationship with the Great Mother, where we’ve moved to a closed loop resource economy, where all outputs can become new inputs, where nothing is wasted. A world where everything is modular and where the scarcity of our intellectual property systems have become inverted and lead to a rich Copyleft world instead, where intelligence is pushed to the edges.
[1] https://www.thesunmagazine.org/issues/478/the-geography-of-s...
[2] https://www.youtube.com/watch?v=btF6nKHo2i0
[3] https://www.youtube.com/watch?v=OaGp5_Sfbss
Critiquing something is not denying positives. Please point out where I said that? That is not my intention. I would say that critiquing without providing an alternative is about sharing grief [1], than it is about discussing, planning and creating alternatives. I think you've given me the opportunity to reflect on my approach and message.
I am for systemic evolution and integration: technology shapes us, and we shape technology, it's a spiral.
Promoting intellectual property rights while at the same time talking about 'free markets' is one of the most harmful and backward Doublespeak going on in today's system I think.
The systemic components and dynamics that are part of the intellectual property systems are ripe for evolution. I believe we are living with a pre-21st century systemic reality that doesn't account for the new opportunities available to us due to digital technology.
The reality is that there is a world out there with people who are suffering at the bottom of the corporate pyramids (the Precariat, e.g. gig workers - who have no job security, no benefits, and not many prospects of a peaceful retirement). Then there are also the hundreds of millions suffering in so called 'developing' countries whose resources are plundered and whose governments compete for industrial-production contracts with our corporatocracy [2][3], creating continuous race-to-the-bottom dynamics that squash workers' rights and create environmental catastrophes.
Commons-based peer production integrates our new digital technology abilities, and it has to be our future. Firm/corporate production is wasteful and destructive. Imagine if all phones and gadgets were modular, including the software inside. Instead our gadgets today become slow non-backwards compatible bricks because of perceived obsolescence. I can do without Siri, or the gaming capabilities of the latest flagship phone... or multitasking, or whatever other corporate feature I do not have a choice whether to run or not.
Because of the monopoly created by the idea of exclusive intellectual property (and the systems constructed to support it), many of these useful ideas and technologies lie locked up inside corporate databases, unexplored and unused. What a waste. What a cosmic joke and tyranny.
My belief is that by using technologies like Ceptr and MetaCurrency's Holochain, we can be in a large scale transition to Commons-based peer production, where we might be able to reverse climate change in just a few years.
The technologies that can save us are here today, yet the intellectual property regime keeps them artificially scarce.
The big constraint underneath all of this, though, is our dogmatic ideas around wealth and money:
1. The current political economy is based on a false idea of material abundance. We call it pseudo-abundance. It is based on a commitment to permanent growth, the infinite accumulation of capital and debt-driven dynamics through compound interest. This is unsustainable, of course, because infinite growth is logically and physically impossible in any physically constrained, finite system.
2. The current political economy is based on a false idea of “immaterial scarcity.” It believes that an exaggerated set of intellectual property monopolies—for copyrights, trademarks and patents—should restrain the sharing of scientific, social and economic innovations. Hence the system discourages human cooperation, excludes many people from benefiting from innovation and slows the collective learning of humanity. In an age of grave global challenges, the political economy keeps many practical alternatives sequestered behind private firewalls or unfunded if they cannot generate adequate profits.
So my hope is that I can continue dreaming and imagining a world where humans have a non-violent and harmonious relationship with the Great Mother, where we’ve moved to a closed loop resource economy, where all outputs can become new inputs, where nothing is wasted. A world where everything is modular and where the scarcity of our intellectual property systems have become inverted and lead to a rich Copyleft world instead, where intelligence is pushed to the edges.
[1] https://www.thesunmagazine.org/issues/478/the-geography-of-s...
[2] https://www.youtube.com/watch?v=btF6nKHo2i0
[3] https://www.youtube.com/watch?v=OaGp5_Sfbss
Some of their products already say "Vietnam" on them, particularly accessories.
[deleted]
They should use the Foxconn plant in Wisconsin.
Yeah, since Foxconn isn't using it:
https://www.theverge.com/2020/4/12/21217060/foxconn-wisconsi...
https://www.theverge.com/2020/4/12/21217060/foxconn-wisconsi...
Don't think that'd help them avoid Indian import duty ;)
Wasn't that a flop that produced a fraction of the jobs promised for the billions in government hand outs?
It's only a flop if you assume that collecting billions in government handouts wasn't the whole point in the first place.
A tax break on future earnings that never materialize is not "collecting billions in government handouts". Foxconn tried to make it work and ended up several hundred million in the red on that project. They didn't come away richer.
It wasn't the first time this con has been pulled. Greentech Auto did this with an electric car plant in Mississippi.
That one is a little existentially challenged. As it only exists in Trump speeches.
offtopic: this site breaks the back arrow (takes you to blank interstitial)
Hint: for all but the most egregious offenders a long click (or right click) on the back button might bring up a list of the pages you visited before this. You can then click an earlier one to get back to safe ground.
Most people around here probably know already but there's always one or two that will have their life improved a lot I think.
Most people around here probably know already but there's always one or two that will have their life improved a lot I think.
Out of morbid curiosity, how does one become an "egregious offender" and nuke the entire back-button history? Are there ways other than (intentionally or unintentionally) doing history.pushState in a loop?
[deleted]
True, that's pretty infuriating. I have mostly seen illegal sports streaming sites do that.
I think the title should include "India", since I don't know if everybody is expected to know that Chennai is in India.
I did include the word India when I submitted it, but somehow it is gone now...
FYI, it's usually worth checking the headline that shows up after submission. Sometimes things get altered (sometimes capitalization is changed, words may be removed, etc.). Often the alterations are fine, but sometimes they change it in more ways than you expected. If you edit the submission within the first hour (?) the edited title should remain (unless a moderator comes by later and changes it again).
May have been cut off if it was at the end. Perhaps change to "in India" from "near Chennai"
“Hey Siri, where is Chennai”
The article also covers it immediately.
The article also covers it immediately.
>90% of the people who read the headline won’t click... if you want to inform those >90% of people of a pertenant fact (Apple is starting to produce iPhone 11s in India), make the headline say it.
(Only reading the headline isn’t laziness... that’s like saying browsing library bookshelves without reading each book cover-to-cover as you go is laziness...)
(Only reading the headline isn’t laziness... that’s like saying browsing library bookshelves without reading each book cover-to-cover as you go is laziness...)
No, the analogy doesn’t hold because it takes hours to read a book.
If you care that much, you can look up the information within seconds.
Apple even has this nice feature where you click on a word and it lets you look it up immediately.
Telling me that it’s in Chennai, gives me much more information than simply saying India because I know where Chennai is located
And even if I didn’t know, i appreciate the more specific information in the title, which implies the missing information.
Now that the title says India, I need to exert more effort to find the city.
So, does anyone feel like an Ugly American yet?
“Don’t tell me it’s in Milan, tell me it’s in Italy”
If you care that much, you can look up the information within seconds.
Apple even has this nice feature where you click on a word and it lets you look it up immediately.
Telling me that it’s in Chennai, gives me much more information than simply saying India because I know where Chennai is located
And even if I didn’t know, i appreciate the more specific information in the title, which implies the missing information.
Now that the title says India, I need to exert more effort to find the city.
So, does anyone feel like an Ugly American yet?
“Don’t tell me it’s in Milan, tell me it’s in Italy”
The analogy holds because it’s a mere difference in degree, not in quality. I picked the analogy to exaggerate the degree in order to more clearly illustrate the quality.
Although at least this headline is fully honest and not misleading, so kudos there.
Although at least this headline is fully honest and not misleading, so kudos there.
Just curious, did you know?
I'm Indian, so yeah!
I think you might be surprised by how many HN readers (including non-Indians) know that Chennai is in India. I'm going down the list of largest Indian cities and it's not until #7 or #8, Ahmedabad and Pune, where we reach cities that I think a good number of people might not know a lot about.
So give us more credit! :)
So give us more credit! :)
Would you say the same about much smaller cities like Paris or Berlin?
Of course not. Obviously, how well-known a city is to a certain population doesn't depend on its size. There are a dozen cities in China more populous than NYC, but I doubt you could name them all.
There are two: Shanghai and Beijing. I would have guessed more too, but apparently not.
There's more than two. New York has about ~8 million pop. From the top of my head I can at least tell you that Shenzhen, Guangzhou, and Chongqing have over 10 million residents but there's probably more.
I think you may have pulled up NYC's metro area population and compared it to the urban population of Chinese cities. The metro population of large Chinese cities is in the 20-40 million.
I think you may have pulled up NYC's metro area population and compared it to the urban population of Chinese cities. The metro population of large Chinese cities is in the 20-40 million.
Metro area population is a better comparison though because city political boundaries are arbitrary and vary greatly city to city and country to country. The political boundaries in the US are much older than in China, for example, so they correspond a lot less well to where population centers actually ended up being, especially post-automobile when suburbanization allowed people to easily live outside the existing boundaries of a city's limit. And then, crucially, the city's limit was then never redrawn to accurately reflect all the people actually making up a part of that city's economy. Pull up a map of China from 1930 and it's completely different from today, whereas a map of the Northeast US from 1930 is nigh indistinguishable from today.
It's kind of a question of where you draw the boundaries. Chongqing counts ~30M because its administrative area is the size of Austria. The UN World Urbanization Prospects project [0] tries to establish comparability between nations, and came up with a top 10 of:
1. Tokyo - 37M
2. Delhi - 29M
3. Shanghai - 26M
4. São Paulo - 22M
5. Mexico City - 22M
6. Cairo - 20M
7. Mumbai - 20M
8. Beijing - 20M
9. Dhaka - 20M
10. Osaka - 19M
NYC is next at #11 with 19M.
However, if you count strictly by "city proper" (as defined by a very wide range of administrative agglomerations), there are indeed THIRTEEN cities in China larger than NYC. I'm not sure this is a hugely useful metric, however, as economically-relevant city boundaries aren't truly represented by administrative lines of control.
[0]: https://population.un.org/wup/Publications/Files/WUP2018-Hig...
1. Tokyo - 37M
2. Delhi - 29M
3. Shanghai - 26M
4. São Paulo - 22M
5. Mexico City - 22M
6. Cairo - 20M
7. Mumbai - 20M
8. Beijing - 20M
9. Dhaka - 20M
10. Osaka - 19M
NYC is next at #11 with 19M.
However, if you count strictly by "city proper" (as defined by a very wide range of administrative agglomerations), there are indeed THIRTEEN cities in China larger than NYC. I'm not sure this is a hugely useful metric, however, as economically-relevant city boundaries aren't truly represented by administrative lines of control.
[0]: https://population.un.org/wup/Publications/Files/WUP2018-Hig...
Just to be pedantic, if you think about Paris intra-muros, yes it's smaller but still the same order of magnitude. If you think about Paris with the suburb, it's actually about the same.
But the main thing : Paris is much more famous than Chennai.
But the main thing : Paris is much more famous than Chennai.
[deleted]
Wait until you find out the population of Geneva :-) Or Sparta, for that matter.
[deleted]
No, those have much better marketing.
Apple isn't stupid. They know there is a good chance producing in China will no longer be profitable, or maybe not even possible with a future administration.
I predict a lot of production will move out of China because the USA will shift to a protectionist model in the next few years.
Apple is hedging against the same prediction.
I predict a lot of production will move out of China because the USA will shift to a protectionist model in the next few years.
Apple is hedging against the same prediction.
> Production will be stepped up in phases and Apple may consider exporting the India-made iPhone 11, reducing its dependence on China, two senior industry executives said.
This is being done to satisfy India's government so Apple can sell phones in India.
The diversification away from China seems like a nice seide-effect, but it's not assured until the Chennai-region FoxConn factory is running at full speed. Last I heard the Wisconsin FoxConn factory didn't ever make it that far. It's TBD if FoxConn can manage Indian employees.
This is being done to satisfy India's government so Apple can sell phones in India.
The diversification away from China seems like a nice seide-effect, but it's not assured until the Chennai-region FoxConn factory is running at full speed. Last I heard the Wisconsin FoxConn factory didn't ever make it that far. It's TBD if FoxConn can manage Indian employees.
> This is being done to satisfy India's government so Apple can sell phones in India.
Nah, they were already doing that, and they seem to have acknowledged that they don't stand a chance against their competitors in a highly price-sensitive market as India. They've barely managed to capture a 2% share in smartphones after all these years and have only recently started to properly localize their offerings in the country. No one in India considers iPhones to be mainstream; they are almost always looked at as luxury smartphones.
I recall Apple India's CEO saying a few years ago that they more intended for India being an exporting hub for iPhones than a target market.
Nah, they were already doing that, and they seem to have acknowledged that they don't stand a chance against their competitors in a highly price-sensitive market as India. They've barely managed to capture a 2% share in smartphones after all these years and have only recently started to properly localize their offerings in the country. No one in India considers iPhones to be mainstream; they are almost always looked at as luxury smartphones.
I recall Apple India's CEO saying a few years ago that they more intended for India being an exporting hub for iPhones than a target market.
> This is being done to satisfy India's government so Apple can sell phones in India.
What do you mean? Apple has been selling phones in India for several years now.
What do you mean? Apple has been selling phones in India for several years now.
Apple has been selling phones in India through third-party retailers, not through Apple stores. They were recently permitted to open their own stores. The regulations involved take domestic production into account.
https://appleinsider.com/articles/20/02/26/apple-ceo-tim-coo...
https://appleinsider.com/articles/20/02/26/apple-ceo-tim-coo...
I’m having an extraordinarily difficult time finding articles about it since this news is dominating the headlines, but Apple has been under fire from Indian politicians for years because they have made cheaper iPhones in India but not flagship phones. You can buy an Indian-made iPhone 8 but not iPhone 11.
The big news is that the flagship iPhone 11 will be made in India. This removes a lot of political pressure from Apple.
The big news is that the flagship iPhone 11 will be made in India. This removes a lot of political pressure from Apple.
I know in Brazil, import taxes are extremely high which resulted in iPhones being double the price than elsewhere. I think india has a similar thing going on. [0]
0: https://www.zdnet.com/article/brazil-is-among-the-worlds-mos...
0: https://www.zdnet.com/article/brazil-is-among-the-worlds-mos...
Okay, that may be the case, but the principal contributor is surely tax and regulation incentives when you want to access the second biggest Asian market: in this case, the massive customs duty bypass by building in India.
Specifically: Local production saves Apple 22% import duty.
That's a huge savings! If "Made in India" is anything like "Made in China" then it just involves bringing parts from other countries for final assembly, not even necessarily the highest value-add part of manufacturing.
That's a huge savings! If "Made in India" is anything like "Made in China" then it just involves bringing parts from other countries for final assembly, not even necessarily the highest value-add part of manufacturing.
Biden will reverse course.
I’m not so sure. Public sentiment is against China right now among Republicans and Democrats. Also at their current growth rate their GDP will surpass the USA around 2025.
It would be a uniting thing across party lines to rally around hurting the Chinese economy.
It would be a uniting thing across party lines to rally around hurting the Chinese economy.
I agree - Biden is also launching his made in America campaign which will only push things further.
On your point of 2025 I don’t think that is quite right since they would need to grow by 150% in 5 years with the US not growing at all (both would be very unprecedented) but the overall point remains.
On your point of 2025 I don’t think that is quite right since they would need to grow by 150% in 5 years with the US not growing at all (both would be very unprecedented) but the overall point remains.
Is he really? That sounds hopeful. I'd perhaps wrongly assumed that the Democrats would undo Trump's efforts to create and keep jobs in the US and revert to unfettered globalism.
https://joebiden.com/madeinamerica/
Yeah, it should be interesting - Biden hasn’t traditionally been as protectionist but it looks like whoever gets elected, globalism has definitely past its peak
Yeah, it should be interesting - Biden hasn’t traditionally been as protectionist but it looks like whoever gets elected, globalism has definitely past its peak
I was downvoted for my original question for some reason but thanks for sharing this - I genuinely had no idea that the Democrats were on the same page here.
blisseyGo(1)
Further, I think it's likely that these are not empty campaign promises on Biden's part. From 2011:
https://www.caranddriver.com/features/a15124510/what-id-do-d...
JB: I would have, just because I don’t accept this proposition that somehow the U.S. cannot handle a heavy-duty manufacturing capacity, that we should shift our focus to service industries. Look at Japan and Germany—their labor costs are as high as ours. Big countries have to be able to make big things. Have to.
https://www.caranddriver.com/features/a15124510/what-id-do-d...
JB: I would have, just because I don’t accept this proposition that somehow the U.S. cannot handle a heavy-duty manufacturing capacity, that we should shift our focus to service industries. Look at Japan and Germany—their labor costs are as high as ours. Big countries have to be able to make big things. Have to.
Globalism will resume unfettered, just not to China.
protectionist - made in America;
anti-Communist - move to anywhere but not C countries (like Soviet Union era, kind of Cold War)
Now if it is protectionist, the jobs would NOT go to India but instead ship it from USA (practicality aside but theoretically that is what protectionist meant). Instead, it is Indian/Brazil protectionist plus anti-Communist that is the game here. China is a clear and present threat.
Now if it is protectionist, the jobs would NOT go to India but instead ship it from USA (practicality aside but theoretically that is what protectionist meant). Instead, it is Indian/Brazil protectionist plus anti-Communist that is the game here. China is a clear and present threat.
You think so? https://www.youtube.com/watch?v=PmieUrXwKCc
Are they actually selling the iPhone 11 in India? Last I read phone sales in India had a massive drop.
https://techcrunch.com/2020/07/17/india-smartphone-shipments...
Smartphone shipments in India fell 48% in the second quarter compared with the same period a year ago, the most drastic drop one of the rare growing markets has seen in a decade, research firm Canalys reported Friday evening.
About 17.3 million smartphone units shipped in Q2 2020, down from 33 million in Q2 2019 and 33.5 million in Q1 2020.
...
Apple, which commands only 1% of the Indian smartphone market, was the least impacted among the top 10 vendors as iPhone shipments fell just 20% year-on-year to over 250,000 in Q2 2020.
Smartphone shipments in India fell 48% in the second quarter compared with the same period a year ago, the most drastic drop one of the rare growing markets has seen in a decade, research firm Canalys reported Friday evening.
About 17.3 million smartphone units shipped in Q2 2020, down from 33 million in Q2 2019 and 33.5 million in Q1 2020.
...
Apple, which commands only 1% of the Indian smartphone market, was the least impacted among the top 10 vendors as iPhone shipments fell just 20% year-on-year to over 250,000 in Q2 2020.
India was in one of the strictest lockdown for a period of 2 months starting March 23rd.
The new Motorola Razr is also being assembled in India. Is this a trend?
Samsung has been assembling flagships in India for a couple years now. Certainly not new. New for Apple definitely.
Shouldn't it be "Foxconn started making iPhone 11 near Chennai"? Apple is not "making" anything in this case.
By that same reasoning you could also say ‘Foxconn is company and it doesn’t make anything, Indian people are making the iPhone 11 near Chennai’
It isn’t technically wrong but usually the inventor/creator is credited regardless of who they paid to assemble it.
It isn’t technically wrong but usually the inventor/creator is credited regardless of who they paid to assemble it.
It's like the RICO act or something.
The Indian people are doing this voluntarily at the direction of Foxconn who is doing this voluntarily at the direction of Apple.
I'm sure we can go higher than just Apple as well.
The Indian people are doing this voluntarily at the direction of Foxconn who is doing this voluntarily at the direction of Apple.
I'm sure we can go higher than just Apple as well.
Apple "makes" iPhones by contracting them out to Foxconn, so I wouldn't call the title inaccurate; it's just trying to appeal to more people.
Serious question, why not in the USA?
To the question in general: watch American Factory on Netflix for a good documentary on the efforts of spinning up a US based factory. Basically this company found that American workers were more expensive, had higher safety standards, and quality control was a struggle. In the end the company started to invest in industrial robots for automation.
To this specific case: it's probably to avoid the 22% import duty that India places on products not assembled locally. I suppose the US could pass a similar law.
To this specific case: it's probably to avoid the 22% import duty that India places on products not assembled locally. I suppose the US could pass a similar law.
Really? The message I got from American Factory was that there are stark cultural divides between Chinese and American manufacturing. It's been a while since I saw it, but they made a point to emphasize some of the poor financial decisions the Chinese bosses made during refurbishing (I think an overly expensive stage was built).
Yes, there's no one thing in that documentary but a collection of things which you could chalk up to "differing cultures":
* The scene where the plant operators from China dump a bunch of waste improperly
* The scene where the plant owner is worried about unionization (though the film contrasts this with the presence of unions in their Chinese plant)
* The scene where the plant operators are complaining that the american workers output with higher defect rate and lower speed
* The scene where the operators are complaining about the strict safety regulations and the fact that Americans like to take time off on weekends
That the plant owner spent tens of thousands of dollars to redo the factory layout is just one example, but it's not more than a few minutes of airtime compared to the quality control and union stories. If these can be put under the umbrella of "cultural differences" then I agree with your assessment.
* The scene where the plant operators from China dump a bunch of waste improperly
* The scene where the plant owner is worried about unionization (though the film contrasts this with the presence of unions in their Chinese plant)
* The scene where the plant operators are complaining that the american workers output with higher defect rate and lower speed
* The scene where the operators are complaining about the strict safety regulations and the fact that Americans like to take time off on weekends
That the plant owner spent tens of thousands of dollars to redo the factory layout is just one example, but it's not more than a few minutes of airtime compared to the quality control and union stories. If these can be put under the umbrella of "cultural differences" then I agree with your assessment.
Because India wants its people making the phones (and earning wages) that will be sold in their country.
I have just begun exploring this question in depth, I'll share my half-baked understanding here. Please provide corrections, new insights and alternate explanations - it'll help me learn.
A question that's asked very early when thinking about a new product is the average selling price for the product (ASP). I believe that there are teams who specialize in generating various permutations of brand, product name, feature sets and price. This is fed to a study group and the choices made by the study group can be analyzed to make accurate predictions like "We can sell 12% more units if we drop the ASP from 899 to 849".
Because the ASP constrained to a very narrow range early in the product development process, all other costs are also constrained to a very narrow range even before real development begins. Important to my answer are BOM (bill of materials) and assembly costs.
The assembly costs are easy to understand: because of minimum wage requirements, healthcare costs and all that (can someone please link me to a full list of costs?), American labor is several times more expensive than competing labor in China or India. However, in the context of assembling a phone, improved training/skills/language abilities in America does not make American labor that much more productive. American labor's productivity can also not benefit from better tooling/automation - China can easily replicate similar tooling/automation improvements and cancel out American labor's advantages.
The BOM costs are a little more interesting. A single factory in China is probably manufacturing products for several American firms simultaneously. Imagine a factory manufacturing various types of phone chargers. They all likely source the same components (screws, capacitors, glue, packaging materials) from the same vendors - so a screw manufacturer (for example) who has a factory 2 miles away can send a shipment of screws to this assembly plant every day, and the screws will get used by all the American brand products being manufactured in that factory. Chinese factories have built up an incredible network of such suppliers around them. Often, if you are manufacturing a product, you can go ask the Chinese factory who will assemble your product for advice on which suppliers/vendors to use to save on BOM costs. They are happy to help.
If Apple were to make iPhones in America, the first and second challenges they will face will be the cost of labor and having to build up a deep supply chain that will feed into their American factories.
At such high costs, apple (or anyone) will conclude that they can not meet their profit margins at the desired ASP and scrap the entire product.
A question that's asked very early when thinking about a new product is the average selling price for the product (ASP). I believe that there are teams who specialize in generating various permutations of brand, product name, feature sets and price. This is fed to a study group and the choices made by the study group can be analyzed to make accurate predictions like "We can sell 12% more units if we drop the ASP from 899 to 849".
Because the ASP constrained to a very narrow range early in the product development process, all other costs are also constrained to a very narrow range even before real development begins. Important to my answer are BOM (bill of materials) and assembly costs.
The assembly costs are easy to understand: because of minimum wage requirements, healthcare costs and all that (can someone please link me to a full list of costs?), American labor is several times more expensive than competing labor in China or India. However, in the context of assembling a phone, improved training/skills/language abilities in America does not make American labor that much more productive. American labor's productivity can also not benefit from better tooling/automation - China can easily replicate similar tooling/automation improvements and cancel out American labor's advantages.
The BOM costs are a little more interesting. A single factory in China is probably manufacturing products for several American firms simultaneously. Imagine a factory manufacturing various types of phone chargers. They all likely source the same components (screws, capacitors, glue, packaging materials) from the same vendors - so a screw manufacturer (for example) who has a factory 2 miles away can send a shipment of screws to this assembly plant every day, and the screws will get used by all the American brand products being manufactured in that factory. Chinese factories have built up an incredible network of such suppliers around them. Often, if you are manufacturing a product, you can go ask the Chinese factory who will assemble your product for advice on which suppliers/vendors to use to save on BOM costs. They are happy to help.
If Apple were to make iPhones in America, the first and second challenges they will face will be the cost of labor and having to build up a deep supply chain that will feed into their American factories.
At such high costs, apple (or anyone) will conclude that they can not meet their profit margins at the desired ASP and scrap the entire product.
One problem with using ASP and margin as the criteria for making decisions on manufacturing is that such a viewpoint gives an advantage to places with fewer worker protections.
A friend of mine made the point to me the other day, correctly I think, that it's very difficult to compete on price when your competitor is using slave labor. If I own a company that makes 5 products, and 1 of those 5 involves slave labor, I'm getting free work that I can amortize across all 5 products. So, even if a particular product does not involve slave labor, I can still sell it for cheaper if slave labor expands my margins somewhere else.
In a world where ASP and margins are the only criteria, forced labor camps like those found in Xinjiang make business sense. This suggests to me that maybe the "it's just business" mentality is neither ethical nor long-term sustainable, and can incentivize unlawful behavior.
A friend of mine made the point to me the other day, correctly I think, that it's very difficult to compete on price when your competitor is using slave labor. If I own a company that makes 5 products, and 1 of those 5 involves slave labor, I'm getting free work that I can amortize across all 5 products. So, even if a particular product does not involve slave labor, I can still sell it for cheaper if slave labor expands my margins somewhere else.
In a world where ASP and margins are the only criteria, forced labor camps like those found in Xinjiang make business sense. This suggests to me that maybe the "it's just business" mentality is neither ethical nor long-term sustainable, and can incentivize unlawful behavior.
avg hourly wage is .55/hr USD. That is why.
I wonder what it would add to the total cost of manufacturing a phone, to make it in the USA.
About double, from a couple of analysis I recall. Not sure how careful they were (note, this is not just for assembly, but for full supply chain).
Expensive.
Because people?
Or more than that?
Or more than that?
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regulations, cost of living, all the various lawsuit risks, taxes
This isn’t really much of a shift in Apple policy. They seem to be doing this to avoid import duties and take advantage of some other government incentive. I think they also assemble iPhones in Brazil for similar reasons (?)
This is really big deal IMO, but perhaps for a reason not directly mentioned in the article and for which you have to realize something about India. Progress in India is usually quite slow (and far slower if you compare to places like US or China). But once there is one shining example, then (partly because of the competition, partly because of the numbers of people) the momentum is strong and only gets larger.
This is potentially one of those events and has the potential to catalyze high end devices manufacturing in India leading to other second order effects of expertise in other hardware manufacturing. Looking forward to the innovation and confidence this unlocks.
This is potentially one of those events and has the potential to catalyze high end devices manufacturing in India leading to other second order effects of expertise in other hardware manufacturing. Looking forward to the innovation and confidence this unlocks.
The adage in India is that if you want to set up shop in china they roll out the red carpet. If you want to set up shop in India, they roll out the red tape.
why do you think this is?
The Jio piece posted here a few days ago (stratechery, I think) made a point of Indian national pride, control, and home-grown expertise playing a large role.
Is that the case with new businesses generally?
The Jio piece posted here a few days ago (stratechery, I think) made a point of Indian national pride, control, and home-grown expertise playing a large role.
Is that the case with new businesses generally?
>why do you think this is?
Vodafone knows something about this.
Vodafone knows something about this.
> why do you think this is?
Because the fundamental nature of Indian politicians is socialist and statist.
Because the fundamental nature of Indian politicians is socialist and statist.
> Because the fundamental nature of Indian politicians is socialist and statist.
That seems to have changed significantly now, after all a right-wing party has been in power since 2014. It seems to fit well with a lot of the private sector, and it did open up many entrepreneurship schemes too.
That seems to have changed significantly now, after all a right-wing party has been in power since 2014. It seems to fit well with a lot of the private sector, and it did open up many entrepreneurship schemes too.
Maybe because the history it has, once there was a company the East India Company, and it took them generations to get them out.
>But once there is one shining example, then (partly because of the competition, partly because of the numbers of people) the momentum is strong and only gets larger.
IT outsourcing giants are now obsolete - thanks to American recovery in software through cloud computing platform companies like AWS.
>This is potentially one of those events and has the potential to catalyze high end devices manufacturing in India leading to other second order effects of expertise in other hardware manufacturing
I don't think it will change much. All high level process engineers will be Chinese in foxcons new plant. Workers will learn a few process but foxconn factories usually have very high level of automation. I don't expect much technology transfer in this.
IT outsourcing giants are now obsolete - thanks to American recovery in software through cloud computing platform companies like AWS.
>This is potentially one of those events and has the potential to catalyze high end devices manufacturing in India leading to other second order effects of expertise in other hardware manufacturing
I don't think it will change much. All high level process engineers will be Chinese in foxcons new plant. Workers will learn a few process but foxconn factories usually have very high level of automation. I don't expect much technology transfer in this.
> I don't expect much technology transfer in this.
Well, Foxconn itself started as a backyard operation making injected plastic parts, so who knows.
Well, Foxconn itself started as a backyard operation making injected plastic parts, so who knows.
I have only one question: how much pollution these factory will bring to India? Look at China, these kind of factories made a huge negative impact to the environment.
Depends on the factory type and who is running it.
Considering that it’s run by Foxconn, who have significant experience in production and a reputation, i doubt there’s going to be much.
Also, as a phone assembly facility, it doesn’t make the same environmental damage that a coal fired power plant, or a steel manufacturing plant might have.
Considering that it’s run by Foxconn, who have significant experience in production and a reputation, i doubt there’s going to be much.
Also, as a phone assembly facility, it doesn’t make the same environmental damage that a coal fired power plant, or a steel manufacturing plant might have.
>I have only one question: how much pollution these factory will bring to India?
Largest Indian imports is petroleum and also India has largest petroleum refinieries, removing them will he help pollution.
India should focus on renewables and nuclear power and ban petroleum products before going after Chinese electronics. But I think they'll not do it because it will hurt oil companies which are biggest benefactors of political parties.
Largest Indian imports is petroleum and also India has largest petroleum refinieries, removing them will he help pollution.
India should focus on renewables and nuclear power and ban petroleum products before going after Chinese electronics. But I think they'll not do it because it will hurt oil companies which are biggest benefactors of political parties.
Tim Cook insisted for years that you just couldn't manufacture stuff outside of China because of the high level of manufacturing skill. [1] Looks like that wasn't really true and it just took a little effort to start up in a different country, all it took was a small increase in the cost of doing business in China.
[1] https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-...
[1] https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-...
we'll see what the defect rate is soon enough
People said the same about china when manufacturing was sent there.
This may come as a shock, but it was relevant then and it's relevant now. There's a perception that QA suffers when production is moved to an area where the manufacturing ecosystem is not as established, which is why people pay attention to defect rates and study process paradigms like Six Sigma.
that's what we'd be comparing it against, I think people say the same thing about any newly spun up factory on earth
They're still being made by Foxconn, so all that manufacturing expertise is still there. In the long run my guess is that this knowledge will start to trickle to more local manufacturers.
This seems like a great deal for India: threaten a 22% duty, and then you bring in jobs and know-how.
This seems like a great deal for India: threaten a 22% duty, and then you bring in jobs and know-how.
>This seems like a great deal for India: threaten a 22% duty, and then you bring in jobs and know-how.
Lots of products have very high duties but you'll not find a single manufacturers of those products within the country.
Those companies simply add import duty to their cost and increase the price of good in local market. This makes products/tool expensive for local people and they are not able to compete globally.
If an America can buy a CNC mill from china duty free and you charge duty which makes $4000 mill cost $7000. Due to higher costs, your local craftman is already rendered uncompetitive in global marketplace
Why not let them buy tools and machines duty free and let them learn skills like CNC machining or metal turning?
Lots of products have very high duties but you'll not find a single manufacturers of those products within the country.
Those companies simply add import duty to their cost and increase the price of good in local market. This makes products/tool expensive for local people and they are not able to compete globally.
If an America can buy a CNC mill from china duty free and you charge duty which makes $4000 mill cost $7000. Due to higher costs, your local craftman is already rendered uncompetitive in global marketplace
Why not let them buy tools and machines duty free and let them learn skills like CNC machining or metal turning?
It was true. This is bootstrapping you make it false.
The difference is that India has a very large population willing to train for the relevant skills. America does not.
India's population is larger but I see no reason to believe Indians are more willing to learn skills than Americans. Would you mind explaining your argument, or at least backing it up with some kind of evidence?
The US labor market has long exhibited massive demand for skilled labor, and that's part of the reason that two-thirds of high-school graduates immediately enroll in college. USN&WR lists the US as being perceived fifth in the world for producing skilled workers, behind Japan, Germany, South Korea, and China.
https://www.usnews.com/news/best-countries/slideshows/top-10...
https://nces.ed.gov/fastfacts/display.asp?id=51
The US labor market has long exhibited massive demand for skilled labor, and that's part of the reason that two-thirds of high-school graduates immediately enroll in college. USN&WR lists the US as being perceived fifth in the world for producing skilled workers, behind Japan, Germany, South Korea, and China.
https://www.usnews.com/news/best-countries/slideshows/top-10...
https://nces.ed.gov/fastfacts/display.asp?id=51
> The US labor market has long exhibited massive demand for skilled labor, and that's part of the reason that two-thirds of high-school graduates immediately enroll in college.
American college grads are not typically seeking to work as skilled assembly workers in factories. They might seek to be engineers or project and business managers in those factories, but not the people who assemble the devices.
That requires a large pool of skilled manual labor which the US doesn't produce as much anymore. By contrast, Germany produces a large number of highly skilled vocational workers who supply labor for its high-end manufacturing industry.
American college grads are not typically seeking to work as skilled assembly workers in factories. They might seek to be engineers or project and business managers in those factories, but not the people who assemble the devices.
That requires a large pool of skilled manual labor which the US doesn't produce as much anymore. By contrast, Germany produces a large number of highly skilled vocational workers who supply labor for its high-end manufacturing industry.
> American college grads are not typically seeking to work as skilled assembly workers in factories.
Certainly, and that is almost entirely reflective of labor market demand. Workers pursue skills that are pertinent to jobs for which there is labor demand.
Reflow soldering and other electronics manufacturing skills are not particularly grueling to learn, but they don't make as much sense in a diversified postindustrial economy where manufacturing is not the target sector for most workers.
The USA has a larger manufacturing sector than Germany, but manufacturing is a smaller proportion of the American economy (12%) than of the German economy (23%).
https://www.brookings.edu/research/global-manufacturing-scor...
Certainly, and that is almost entirely reflective of labor market demand. Workers pursue skills that are pertinent to jobs for which there is labor demand.
Reflow soldering and other electronics manufacturing skills are not particularly grueling to learn, but they don't make as much sense in a diversified postindustrial economy where manufacturing is not the target sector for most workers.
The USA has a larger manufacturing sector than Germany, but manufacturing is a smaller proportion of the American economy (12%) than of the German economy (23%).
https://www.brookings.edu/research/global-manufacturing-scor...
Or, maybe he was correct the whole time and it just took this many years to change.
Could shifting manufacturing to India also lead to fewer leaks?
> The company hasn’t cut prices as it also sells iPhone 11 handsets made in China in India but industry executives said that could be an option later on. Local production saves Apple 22% import duty.
Maybe they'll just keep the change instead.
Maybe they'll just keep the change instead.
That is like less than 1 pc of what is made in China. For all the make outside China hype I wonder how much serious effort will be needed to even make a dent in their current production.