iPhone maker Wistron quits, saying Apple didn't let it make a profit(9to5mac.com)
9to5mac.com
iPhone maker Wistron quits, saying Apple didn't let it make a profit
https://9to5mac.com/2023/05/22/iphone-maker-wistron-quits/
169 comments
> this is what apple does
This is what globalism does. Take the environmental destruction and shitty working conditions that would never be allowed in your own country to other countries and centralize the profits from doing so into the hands of a few.
This is what globalism does. Take the environmental destruction and shitty working conditions that would never be allowed in your own country to other countries and centralize the profits from doing so into the hands of a few.
Globalism prevent wars by making countries dependant to each others (Montesquieu Doux commerce theory).
Globalism permits to all countries around the globe to develop.
Nobody is preventing these countries to set laws about environment and working condition (which they actually do).
And by the way, I invite you to go to these countries and visit the factories there, and you will realize that western companies are raising standards (security and quality) on their suppliers.
Globalism permits to all countries around the globe to develop.
Nobody is preventing these countries to set laws about environment and working condition (which they actually do).
And by the way, I invite you to go to these countries and visit the factories there, and you will realize that western companies are raising standards (security and quality) on their suppliers.
No, it's a race to the bottom. It forces the countries to which manufacturing is outsourced to, to not have strict labour laws, low salaries, lenient pollution control and keep conditions generaly favourable for the company, at the cost of the people working there, or else the multi-billion dollar corpos will turn to another country to get the cheapest manufacturing possible
Unfortunately your theory falls apart once you read literally a single book on macroeconomics.
My theory that multi billion dollar companies base decisions like where to manufacture on costs? Or my theory that this set up forces lenient labour laws? I really do not know anything about economics, so would love to hear what you have to say. Would be helpful if you could link some things too
> would love to hear what you have to say
What he said, by implication, was "read a book on macroeconomics".
What he said, by implication, was "read a book on macroeconomics".
Coming from, let's say, 2nd-world-country that receives it's fair share of outsourcing...
There's absolutely a big push to keep employment laws as well as other laws „flexible“. And keep salaries as low as realistically possible. Otherwise MUH INVESTORS will go somewhere else. To be fair, it's not (just) foreign investors. Local elite is making $$$ providing support to incoming companies. Real estate moguls, construction companies, subcontractors etc.
Ultimately it is a race to the bottom to appease the sacred investor and let local elite enrich themselves.
There's absolutely a big push to keep employment laws as well as other laws „flexible“. And keep salaries as low as realistically possible. Otherwise MUH INVESTORS will go somewhere else. To be fair, it's not (just) foreign investors. Local elite is making $$$ providing support to incoming companies. Real estate moguls, construction companies, subcontractors etc.
Ultimately it is a race to the bottom to appease the sacred investor and let local elite enrich themselves.
> Globalism prevent wars by making countries dependant to each others (Montesquieu Doux commerce theory).
He was wrong though, it appears, no? I mean one could argue that there would be more wars without globalism (I'd counter argue there would be less weapons) but one cannot say "globalism prevents wars" in general.
He was wrong though, it appears, no? I mean one could argue that there would be more wars without globalism (I'd counter argue there would be less weapons) but one cannot say "globalism prevents wars" in general.
This is what capitalism does. Crossing borders might make things easier because laws and the cost of doing business will vary, but using your power to squeeze every cent you possibly can out of your business partners is a function of capitalism and not globalism.
No, mercantilist and imperialist societies (Roman Empire, British Empire) did this long before the modern era of private capital. Capitalism is just another in a long line of systems under which wealth and power concentrates into the hands of a few and the many are disadvantaged. The only new thing here is the degree to which technology can extend lines of communication and trade.
Except mercantilist and imperialist societies got their way through violence. They didn't really have "business partners" to squeeze in a modern sense. They had subjects they would steal from and oppress. Capitalism was supposed to be different. Apple notably doesn't have a standing army bigger than the US like the East India Company did in relation to England. If the results end up looking similar, that is a huge indictment of the system.
It's cheaper without having a standing army. I wouldn't say that capitalism is another system, i would just say it's an evolution of imperialistic society that reached the equilibrium of most profit and least resistance from the people
What do you suggest as an alternative to our imperfect capitalism?
This is the same playbook the auto industry has followed for the past 50 years or so.
> a sense of urgency
I've never heard this phrase from anyone that wasn't nakedly seeking power and compliance from others.
I've never heard this phrase from anyone that wasn't nakedly seeking power and compliance from others.
I first heard it from the military, where training seeks to recreate the stressful fast-pace conditions of an actual battle or war.
Years later I started hearing it in business too, as if management circles thought it would be useful in increasing production rates. Not accounting for the fact that levels of urgency similar to military training may not be sustainable in peacetime, and result in workforce burnout and other problems.
A better alternative I’ve seen in high-impact academic research groups is “focus”, rather than urgency. Focused effort produces research results, and can even be energizing rather than draining and burnout inducing. I would hope business circles would adopt that academic approach rather than the military one.
Years later I started hearing it in business too, as if management circles thought it would be useful in increasing production rates. Not accounting for the fact that levels of urgency similar to military training may not be sustainable in peacetime, and result in workforce burnout and other problems.
A better alternative I’ve seen in high-impact academic research groups is “focus”, rather than urgency. Focused effort produces research results, and can even be energizing rather than draining and burnout inducing. I would hope business circles would adopt that academic approach rather than the military one.
None of your statements disagree with the comment that you're replying to. All of those situations are ones in which people are nakedly demanding compliance
I didn’t say I disagreed.
That is not my experience at all. It's even used by sports announcers. As an example: "The offense needs to move with more sense of urgency given the clock."
In the workplace it's deployed against those with a blunted affect, ie on the autism or ADHD spectrum. If you're not visibly freaking out with everyone else, it's because you don't care. Sports probably doesn't have the same numbers of these populations as tech.
I've never seen it used in that kind of crude way. It is generally used when someone constantly is slow to respond or does not meet agreed milestones. In business, being late is much more noticeable in a negative way than being on the spectrum.
Your analogy is completely off base. There’s endurance sports and interval type of sports. The examples you provided are what seems to be interval type of sports.
High focus and high intensity is not sustainable over duration. Performance degrades over time without recovery.
High focus and high intensity is not sustainable over duration. Performance degrades over time without recovery.
> "There just isn't a sense of urgency," one Apple engineer remarked."
Apple meets India, nothing new. They'll just have to adapt.
https://youtu.be/BTd-PWYQy4Y
Apple meets India, nothing new. They'll just have to adapt.
https://youtu.be/BTd-PWYQy4Y
As an aside, it’s ridiculous that video got flagged as a video for kids and suggests downloading the YouTube Kids app.
It's a pirated video (but the original channel seems to be missing that video https://youtube.com/@selfhelpsingh)
And there's no way to give feedback that it's been miscategorised
FWIW I think the uploader sets this flag, not some algorithm.
It's not that simple, YouTube itself can also set it, and I'm not sure how that works, maybe it's algorithmic. Sometimes it's done manually.
> If you see lots of positive or misdrecting comments, it's not necessarily a coincidence (imo).
I like HN a lot but for this type of topic, its consistently, desperately, and annoyingly un-objective (if thats a word). I do get that we humans tend to form echo chambers by ourselves just to validate our viewpoints and decisions however subjective they may be, but I expect a bit more than what I see here from some of the smartest folks on Earth.
Their influence is very visible also in other places, ie otherwise great web for photography - dpreview.com is a pure echo chamber for Apple. Every apple product is discussed in details and glorified, any problems are completely ignored. Most competition is given almost 0 coverage, especially direct competitors or those that currently surpass some of their tech at given time. And we don't talk US-vs-China stuff, many phone manufacturers don't have any China ties at all, or are outright US companies.
There is no way in hell Apple is not pouring tons of cash into ironing their fuckups, or just errors in judgement, infrequent as they are, and HN is way too visible and important to not be part of such an operation. To skip it would be a very junior mistake, and there are no juniors in this space in 2023, not with richest company globally.
I like HN a lot but for this type of topic, its consistently, desperately, and annoyingly un-objective (if thats a word). I do get that we humans tend to form echo chambers by ourselves just to validate our viewpoints and decisions however subjective they may be, but I expect a bit more than what I see here from some of the smartest folks on Earth.
Their influence is very visible also in other places, ie otherwise great web for photography - dpreview.com is a pure echo chamber for Apple. Every apple product is discussed in details and glorified, any problems are completely ignored. Most competition is given almost 0 coverage, especially direct competitors or those that currently surpass some of their tech at given time. And we don't talk US-vs-China stuff, many phone manufacturers don't have any China ties at all, or are outright US companies.
There is no way in hell Apple is not pouring tons of cash into ironing their fuckups, or just errors in judgement, infrequent as they are, and HN is way too visible and important to not be part of such an operation. To skip it would be a very junior mistake, and there are no juniors in this space in 2023, not with richest company globally.
At least our current surface finishing technology has advanced so we no longer see the kid sized hand prints [1]. "Apple’s cobalt batteries are built on the backs of child labor in mines, causing severe physical harm to children and violating international standards of human rights." [2] Their PR: "Apple will use 100 percent recycled cobalt in batteries by 2025" [3].
[1] Kid sized hand prints on old victorian roof tiles, https://www.reddit.com/r/interestingasfuck/comments/13oser2/...
[2] 2022, Child Labor and the Human Rights Violations Embedded in Producing Technology, https://www.culawreview.org/journal/child-labor-and-the-huma...
[3] https://www.apple.com/newsroom/2023/04/apple-will-use-100-pe...
[1] Kid sized hand prints on old victorian roof tiles, https://www.reddit.com/r/interestingasfuck/comments/13oser2/...
[2] 2022, Child Labor and the Human Rights Violations Embedded in Producing Technology, https://www.culawreview.org/journal/child-labor-and-the-huma...
[3] https://www.apple.com/newsroom/2023/04/apple-will-use-100-pe...
You seem to be assuming that 3 is a lie, but I'm pretty sure someone would notice if Apple wasn't actually changing the sources of their rare earths.
Tracing the source of materials is very non-trivial. Even diamonds, where UUIDs are commonplace, still have to manage the influx of blood diamonds into the global supply chain.
Cobalt is not a rare earth. Changing sources happens gradually, mostly not overnight.
PR means Public Relations and I meant nothing more than the fact that it is an Apple official response. Certainly says something about our times when you directly expect PR to be lies.
They might just as well change their sources now, or after 2025. The trillions are already in their banks; the children that mined until now are dead or close to; we, the consuming public, have been compromised because we like shiny toys (I own quite a few Apple products, at least a dozen children, they are so frail, must have been murdered to manufacture them); all is great. All that's left is to think of a truly unimaginable science fiction story: a $2.7+ trillion company is found guilty for the death of one single child and the company is dissolved.
They might just as well change their sources now, or after 2025. The trillions are already in their banks; the children that mined until now are dead or close to; we, the consuming public, have been compromised because we like shiny toys (I own quite a few Apple products, at least a dozen children, they are so frail, must have been murdered to manufacture them); all is great. All that's left is to think of a truly unimaginable science fiction story: a $2.7+ trillion company is found guilty for the death of one single child and the company is dissolved.
> If you see lots of positive or misdrecting comments, it's not necessarily a coincidence (imo).
And right there the topic drowns in whataboutisms before it disappears from the frontpage.
And right there the topic drowns in whataboutisms before it disappears from the frontpage.
They're using the Walmart playbook
Some context may be needed. Walmart is known in MBA circles for being one of the first companies to have used detailed data on products to negotiate new terms with suppliers ( usually to suppliers detriment ). Information asymmetry with main goal to increase a chance for an increased leverage is what it is all about.
This is part of it, but a bigger part is simply that Walmart approached suppliers with a proposed volume that would require the company to rebuild themselves as an operation in order to meet that demand and the required service levels, at the price Walmart was willing to pay.
If they succeeded (many didn't, ending in bankruptcy), the supplier was now trapped: no one could offer Walmart levels of volume, which the supplier now had to operate at to make a profit. Walmart could come back next year and demand lower prices. They famously joked amongst themselves that their goal was to drive out all profit for their suppliers.
Vlassic Pickles is the classic example of a company that took the offer, rebuilt themselves, and became massively larger than they were before.
I worked at a manufacturer for several years in IT. Walmart was a customer, but only in a limited way (i.e., without requiring huge volumes and service levels[0]). Our main competitor, Rubbermaid, was a tier 1 supplier. When Rubbermaid's main factory in the segment burned down, Rubbermaid withdrew from Walmart as a supplier, citing low profit margins. We got the call to come to Bentonville, where they offered us the chance to replace Rubbermaid, which would mean a fundamental restructuring of our entire operation to service them. We (wisely) declined.
[0] An example of the service level required: Walmart would send an order by EDI that would include a two hour window for delivery, 24 hours out, for a store. That meant you had to have inventory and drivers within a certain distance from every Walmart location so that you could immediately pick the order, get it on a truck, and arrive at the store within that two hour window.
If they succeeded (many didn't, ending in bankruptcy), the supplier was now trapped: no one could offer Walmart levels of volume, which the supplier now had to operate at to make a profit. Walmart could come back next year and demand lower prices. They famously joked amongst themselves that their goal was to drive out all profit for their suppliers.
Vlassic Pickles is the classic example of a company that took the offer, rebuilt themselves, and became massively larger than they were before.
I worked at a manufacturer for several years in IT. Walmart was a customer, but only in a limited way (i.e., without requiring huge volumes and service levels[0]). Our main competitor, Rubbermaid, was a tier 1 supplier. When Rubbermaid's main factory in the segment burned down, Rubbermaid withdrew from Walmart as a supplier, citing low profit margins. We got the call to come to Bentonville, where they offered us the chance to replace Rubbermaid, which would mean a fundamental restructuring of our entire operation to service them. We (wisely) declined.
[0] An example of the service level required: Walmart would send an order by EDI that would include a two hour window for delivery, 24 hours out, for a store. That meant you had to have inventory and drivers within a certain distance from every Walmart location so that you could immediately pick the order, get it on a truck, and arrive at the store within that two hour window.
I remember a claim (from Vlassic itself?) also that Walmart pushed them into producing larger volume SKU's, against their (Vlassic's) detailed data on usage, shelf life, etc. Result: more mouldy pickles in peoples refrigerators. Hurt Vlassic as a brand, not really in consumer interest, but Walmart could advertize a $/volume nobody could match.
I met an independent trucker who said he sometimes did pressure relief for a large logistics company but would refuse any Walmart deliveries (not to the stores, to central warehouses). He claimed they gave you a 15 min delivery slot on a cross country route, they only way to avoid penalties was to aim to be there hours early and wait on your slot. He said it basically added 3-6 unpaid hours for every trip, and wasn't worth it.
I met an independent trucker who said he sometimes did pressure relief for a large logistics company but would refuse any Walmart deliveries (not to the stores, to central warehouses). He claimed they gave you a 15 min delivery slot on a cross country route, they only way to avoid penalties was to aim to be there hours early and wait on your slot. He said it basically added 3-6 unpaid hours for every trip, and wasn't worth it.
Wow, both examples of single metrics actually hurting the efficiency of the system as a whole.
Mouldy pickles aint good.
Underutilized trucks aint good either.
Remember that when somebody starts talking about how what we have is just a Free Market and the market forces make everything optimized and smooth.
Yes it does, but we don't have a perfect Free Market. It's as elusive as the the perfect Communism.
(Mother Nature is a neutral judge though and keeps score.)
Mouldy pickles aint good.
Underutilized trucks aint good either.
Remember that when somebody starts talking about how what we have is just a Free Market and the market forces make everything optimized and smooth.
Yes it does, but we don't have a perfect Free Market. It's as elusive as the the perfect Communism.
(Mother Nature is a neutral judge though and keeps score.)
I wonder if the supplier can similarly have the detailed data on the customer and how that helps in negotiating both ways.
It's asymmetrical for the most part on a lot of stuff
Was listening to Bloomberg the other day and they were talking about how Walmart is the biggest grocer in US. They have pricing power because for example they constitute something over 5% of all Heinz sales. Similar for paper products from one of the big companies like Procter & Gamble.
The inverse is not true, as you are unlikely to find any vendor who Walmart makes 5%+ of all their sales dollars off of.
So Walmart can generally turn to any of these vendors and say - we will evaporate 5% of your sales overnight if you don't give into demand, and send all our orders to some competitor.
The inverse is not true, as you are unlikely to find any vendor who Walmart makes 5%+ of all their sales dollars off of.
So Walmart can generally turn to any of these vendors and say - we will evaporate 5% of your sales overnight if you don't give into demand, and send all our orders to some competitor.
I've never understood this. If you're not making enough profit - or even loosing money - selling to a large client, you are better off without them. Profit should come before everything else, including growth.
Then you wouldn't exist. Even the smallest business goes through years of losses before it (hopefully) reaches profitability. Pay to sell is the only way nearly 100% of incumbents have to simply exist. If they don't do it, someone else will
Traditionally, businesses build a reputation and customers learn where to find them (a physical location). They then become and stay profitable. Anyone depending on a monopolist for its pay-to-sell strategy won't usually reach profitability. The monopolist might be as small as a greedy feudal lord in the middle ages. Today we have Apple/Google etc
Traditionally, businesses build a reputation and customers learn where to find them (a physical location). They then become and stay profitable. Anyone depending on a monopolist for its pay-to-sell strategy won't usually reach profitability. The monopolist might be as small as a greedy feudal lord in the middle ages. Today we have Apple/Google etc
There is a real difference between starting a business and running it at a loss before reaching profitability and consciously entering a contract, where you know you are producing at a loss ( and your contract partner benefits ) that only furthers your profitability gap. If this is the opening bid, it is highly unlikely it will get better. If anything, it will only get worse. You don't make it up in volume when you sell at a loss already.
<< If they don't do it, someone else will
That is the interesting part. The pressure is so high that people are willing to forego their own self-interest and basic critical thinking skills, because someone will do it at or below cost anyway. It is great for Walmart, but it would explain why so many businesses fail so hard. They are way too nice to the other party.
<< If they don't do it, someone else will
That is the interesting part. The pressure is so high that people are willing to forego their own self-interest and basic critical thinking skills, because someone will do it at or below cost anyway. It is great for Walmart, but it would explain why so many businesses fail so hard. They are way too nice to the other party.
Not enough profit is different from loosing money.
Here the vendors are simply making less money because their product is part of a highly competitive marketplace.
Here the vendors are simply making less money because their product is part of a highly competitive marketplace.
Not enough profit is the main reason to shut down a business, unless you have a good and realistic plan on how to reverse that. All that effort and all that risk can be put into more lucrative ventures.
Not enough profit is different from loosing money.
Here the vendors are simply making less money because their product is part of a highly competitive marketplace. Furthermore, their position is weakened because they are poorly differentiated from their competition.
Here the vendors are simply making less money because their product is part of a highly competitive marketplace. Furthermore, their position is weakened because they are poorly differentiated from their competition.
I suspect the information asymmetry is as big a factor as the scale difference. In most negotiations, Walmart can fundamentally affect the bottom line of the counter party in a way that just isn't true in the other direction. They are more than happy to use this to the counter party's detriment, and even sometimes the consumers.
Ok, so what do people expect the alternative route is? It's a known strategy, that works, and increases profit if implemented correctly.
The alternative route people would prefer is for people in charge of these companies to act ethically and not try to squeeze everyone around them for every cent of profit possible. Especially if you're already one of the richest companies to ever exist. That's not very realistic, though, since sociopathy is essentially taught in business schools now.
> people in charge of these companies to act ethically and not try to squeeze everyone around them for every cent of profit possible
That's our stock market though. If Walmart isn't squeezing on costs, then it needs to make that up in gross revenue otherwise the stock will suffer.
Is it possible to be "ethical" in how you define it, when the financial market performance of the company is largely dependent on this?
That's our stock market though. If Walmart isn't squeezing on costs, then it needs to make that up in gross revenue otherwise the stock will suffer.
Is it possible to be "ethical" in how you define it, when the financial market performance of the company is largely dependent on this?
If you work full time at federal minimum wage then you qualify for food stamps and other government assistance.
Walmart took it a step further - they have information for their employees on how to do that efficiently, rather than paying a living wage.
Walmart took it a step further - they have information for their employees on how to do that efficiently, rather than paying a living wage.
Ok, so I agree with any ethics around how people are treated, but a corporation? All this does is squashes Wistron potential profit, no? Are there ethics around how much companies should profit? Should all companies profits be equal?
> Especially if you're already one of the richest companies to ever exist.
How do you think they got there in the first place?
> Especially if you're already one of the richest companies to ever exist.
How do you think they got there in the first place?
Doesn't Toyota do something like that - from what I remember, they actually assist their partner-supplier-small-businesses to grow with soft loans, technical help and business advise?
Everyone is trying to squeeze everyone else, including you. This isn't about sociopathy, this is just the human condition.
And yet somehow, not too long ago before the sociopaths were allowed to squeeze people, it was possible to buy a house and have a family on one income and your local grocery store could make that happen for it's employees. Now Walmart will literally openly admit full time employees cannot make enough to survive and teach their own full time employees how to beg the government for enough resources to live.
Then we are just blind mice in the maze and can just as well stop talking now. Excuse me, I have some carbon to release into the atmosphere.
The book The United States of Wal-Mart by John Dicker laid this all out pretty clearly nearly 20 years ago.
* corrected spelling the author's name.
**https://www.amazon.com/United-States-Wal-Mart-John-Dicker/dp...
* corrected spelling the author's name.
**https://www.amazon.com/United-States-Wal-Mart-John-Dicker/dp...
also another story:
https://www.fastcompany.com/47593/wal-mart-you-dont-know-2
Wow that was a oldie. Great link.
Does this book really exist? Google search on Amazon shows no results for this.
I miss spelled the author's last name but the result still shows up:
https://www.amazon.com/United-States-Wal-Mart-John-Dicker/dp...
https://www.amazon.com/United-States-Wal-Mart-John-Dicker/dp...
[deleted]
Appears the author's last name was a typo. Its John Dicker[0] not Decker
[0]: https://www.goodreads.com/en/book/show/312990
[0]: https://www.goodreads.com/en/book/show/312990
Apple is so huge that they treat their manufacturers like a freelance design contracts... "We'll let you build our devices. We can't pay you, but think how amazing it will look to have Apple in your portfolio!"
“Oh, by the way, sign this NDA so you can’t even talk about it.”
Capitalism. If manufacturers can't count their beans, who'll do that for them? Of course same applies to actual freelance persons - where the dynamics is substantially different.
It might appears unfair from Apple's side to take advantage of their position. However, hardware manufacturers do not resemble naive and exploited children. Commoditized vendors experience pressure to zero their margins from their largest customers. Every big customer does this (Wallmart, Google, Amazon, etc.) It's textbook business strategy.
"We didn't understand our costs, so we underbid and now are blaming Apple." - Wistron
Yes, that's certainly a valid reaction, and is likely partially true. It's also true that Apple is very well known for very hard negotiation and squeezing their suppliers until there's only a few percent margin. You'd have to be insanely good at controlling all of your costs to make money all the time under that constraint. If yields change or component/material prices fluctuate the wrong way any predicted profit could disappear.
Apple also pays suppliers on net 90. With inflation the way it's been, any miscalculation there will sink things. Not all suppliers know how to be banks too. Considering how much cash Apple has, this is really reprehensible.
As a supplier to Apple, the gross numbers are so seductive since they are larger than just about anything else, but the net numbers are orders of magnitude less.
Apple also pays suppliers on net 90. With inflation the way it's been, any miscalculation there will sink things. Not all suppliers know how to be banks too. Considering how much cash Apple has, this is really reprehensible.
As a supplier to Apple, the gross numbers are so seductive since they are larger than just about anything else, but the net numbers are orders of magnitude less.
The way that China has handled this is that they view those razor thin margins as an opportunity to move up the value chain.
1) Foxconn opens an assembly plant
2) Supporting infrastructure is backfilled into the area
3) There’s now a geographic industrial concentration that can support domestic electronic designers
It's good to know the full story, but it's reprehensible? I don't want to cast stones but a really easy connection to make is that wistron took the contact knowing they could only "be profitable" by not paying their labor. So I'm supposed to hate Apple for doing what a business is supposed to do (and frankly being excellent at it). And I'm supposed to champion Wistron for what they did? That's reprehensible if we're throwing the term around.
>And I'm supposed to champion Wistron?
Why would you think that? There's no need to think that at all when considering the actions of Apple.
Why would you think that? There's no need to think that at all when considering the actions of Apple.
> Apple also pays suppliers on net 90.
I've always been surprised at how much of the business world runs on credit. You hear stories about how payments have been months-years delayed (or never show up).
I'd like to think if somebody got more than 100days behind I'd cut them off from the next shipment but never been in that spot.
I've always been surprised at how much of the business world runs on credit. You hear stories about how payments have been months-years delayed (or never show up).
I'd like to think if somebody got more than 100days behind I'd cut them off from the next shipment but never been in that spot.
Apparently, one of the reasons that RedHat survived the dotcom crash was that they were absolutely merciless about companies that didn't pay on time for RedHat's engineering/consulting services.
I recall someone who had several on-site RedHat engineers at his company, doing some kind of Linux work. The company missed one Friday payment to RedHat. Every single RedHat engineer was gone the following Monday, never to return.
I recall someone who had several on-site RedHat engineers at his company, doing some kind of Linux work. The company missed one Friday payment to RedHat. Every single RedHat engineer was gone the following Monday, never to return.
Any source? Looks like a very interesting story, would love to read more.
> It's also true that Apple is very well known for very hard negotiation…
No successful company is over-paying suppliers.
No successful company is over-paying suppliers.
There's a difference between over-paying suppliers and being literally the best in the world at squeezing suppliers, which Apple is IMO.
You can argue (and I will argue) that Apple's skill at squeezing their suppliers while still maintaining reliable supply chains is a huge part of why they're the biggest company in the world (and also why Tim Cook and not Scott Forstall or Jony Ive succeeded Jobs). That squeezing has real human costs, which Apple is insulated from.
They've outsourced the majority of their labor (and related liability) to a global cadre of high-volume, low margin suppliers, while capturing most of the value created by that labor by owning the Apple brand and maintaining tight control of information, resulting in an asymmetric risk/reward profile for Apple inc.
You can argue (and I will argue) that Apple's skill at squeezing their suppliers while still maintaining reliable supply chains is a huge part of why they're the biggest company in the world (and also why Tim Cook and not Scott Forstall or Jony Ive succeeded Jobs). That squeezing has real human costs, which Apple is insulated from.
They've outsourced the majority of their labor (and related liability) to a global cadre of high-volume, low margin suppliers, while capturing most of the value created by that labor by owning the Apple brand and maintaining tight control of information, resulting in an asymmetric risk/reward profile for Apple inc.
"those who do business with Dell, go out of business"
I fail to understand the negative votes (above), Dell did and does exactly what is attributed to Walmart and others in this thread. It is known among manufacturers but held in secrecy like so much in that business. Source: multiple years in used computer industry in California
Successful companies overpay suppliers all the time - especially if they're growing very fast and are focused on scaling growth over cost efficiencies.
Large companies who've already scaled up their products are more incentivized to focus on cost cutting.
Large companies who've already scaled up their products are more incentivized to focus on cost cutting.
Send this list of overpayers to Wistron. Please help them make some money.
> No successful company is over-paying suppliers.
If Apple did not over-pay their suppliers, the M1 would not have been manufactured on the 5nm node.
If Apple did not over-pay their suppliers, the M1 would not have been manufactured on the 5nm node.
That isn't over-paying. That's paying what they need to get the best. Unless you have some evidence that they paid X for 5nm when they could have paid less.
> You'd have to be insanely good at controlling all of your costs to make money all the time
But to be fair, that's what hardware manufacturers are supposed to be good at.
The whole point is that the ones who are good at it make money, the ones who aren't go out of business. That's capitalism in a nutshell at every level, and manufacturing especially.
But to be fair, that's what hardware manufacturers are supposed to be good at.
The whole point is that the ones who are good at it make money, the ones who aren't go out of business. That's capitalism in a nutshell at every level, and manufacturing especially.
Or perhaps even more damning (as the article also mentions):
"We expected to get away with paying our workers lower than the legal minimum"
It does seem likely that this is a case of a bit of column A, a bit of column B.
Apple very well may have unrealistic demands, but I believe it's also likely that Wistron may not have dealt with the level of QC, precision, and consistency that is expected of Apple products and based their estimates on experiences of working with more typical hardware companies.
Apple very well may have unrealistic demands, but I believe it's also likely that Wistron may not have dealt with the level of QC, precision, and consistency that is expected of Apple products and based their estimates on experiences of working with more typical hardware companies.
Wistron is large part of the reason why IBM/Lenovo ThinkPads are regarded as some kind of etalon of quality and repairability. I assume that most of the issue there is misunderstanding of how to run a factory in India and how is that different from both Far East and Europe.
you really think apple gives a detailed build instruction on the bid war moment?
it probably is a room full of parts and to win you have to commit to the non present parts too.
just like fashion production bids btw
it probably is a room full of parts and to win you have to commit to the non present parts too.
just like fashion production bids btw
Apple does help its suppliers to make a profit -- but the amount of profit that sustains a healthy set of vendors for Apple, at quality levels and corporate practice levels that Apple evaluates as "fair".
Now, you may criticize that this holds vendors over a barrel and squeezes them to narrow margins, etc. But at least give Apple credit for having a view to the long run and trying to create a pool of vendors that it can rely on in a sustainable way, and not just some surge capacity for the next quarter only to drop them. Apple thinks longer than that. Their procurement function is quite skilled.
And it's not like the vendors would magically have some source of business at better terms than Apple that would be good for them in the long run either. You want suppliers to somehow be raking in great margins in excess of what was "fair"? You want an employer who's more clueless and lets you make lots of extra on the top?
A successful supplier to Apple knows what it's capable of and what its costs are, signs on to grow with Apple and become successful, and share in the practices that make a company efficient, skilled, productive. They can choose to join this train. Or not. It's voluntary.
Now, you may criticize that this holds vendors over a barrel and squeezes them to narrow margins, etc. But at least give Apple credit for having a view to the long run and trying to create a pool of vendors that it can rely on in a sustainable way, and not just some surge capacity for the next quarter only to drop them. Apple thinks longer than that. Their procurement function is quite skilled.
And it's not like the vendors would magically have some source of business at better terms than Apple that would be good for them in the long run either. You want suppliers to somehow be raking in great margins in excess of what was "fair"? You want an employer who's more clueless and lets you make lots of extra on the top?
A successful supplier to Apple knows what it's capable of and what its costs are, signs on to grow with Apple and become successful, and share in the practices that make a company efficient, skilled, productive. They can choose to join this train. Or not. It's voluntary.
Vendor says they can't make profit. Wall-of-texter on HN says they can.. So hard to know who to believe..
Given that Apple has delivered tons of devices into people’s hands for well over a decade and continues to do so, I am going to go with the common sense that Apple’s suppliers must be earning a profit, otherwise they would not be doing charity work for Apple.
> Back in 2020, there was a major riot at its Bangalore plant over underpaid wages, with millions of dollars’ worth of damage done. Both the Indian government and Apple investigated, and both found that Wistron was indeed guilty of serious labor law violations, including underpayment of its workers.
I’m not sure either are a great source to be honest.
I’m not sure either are a great source to be honest.
Not just Apple manufacturing, seems like they're divesting from India in general after 10 years, also killing their plans to make laptops and EV components. My understanding is they were barely making money throughout their time in India. Wonder if Tata takeover of iphone assembly going to do better? Kind of expected outcome for TWnese companies known to treat their labourers like shit and India gov unable to manage their population from breaking things after being treated like shit. Which has caused problems for more than just Wistron. Yes it's good workers standing up for themselves, but smart thing is to do that after you've proven indispensible, otherwise reinforces India being difficult place to do business in.
Winstron's divestment to Tata was honestly a good move.
A big reason Foxconn, Winstron, and other Taiwanese/Malaysian/Singaporean assemblers were able to succeed in Mainland China was due to cultural competency within the existing Chinese diaspora (eg. knowing how to communicate to who, how to manage workers, etc).
Foxconn, Winstron, and co would just straight up have Taiwanese/Malaysian/Singaporean/Thai Chinese move to Mainland China (in reality mostly Guangdong, Fujian, and Zhejiang due to cultural and familial connections plus the easy commute from Hong Kong or Shanghai) to help manage operations.
Taiwanese companies don't have that kind of advantage within South Asia. At that point, it makes sense just to work directly with Indian conglomerates like Tata, who already have in house domain experience manufacturing everything due to India's Chaebol-esque corporate culture, or Japanese+Korean companies that are open to training from scratch.
I've seen first hand how South Korean and Japanese companies managed their assembly plants in my dad's village in India (they manfuacture the electronics and computers for Wind Turbines) and it was a night and day difference to a similar attempted Taiwanese operation there.
The difference was SK+JP companies would actually try to hire management locally, and if there wasn't anyone qualified, then invest in actually training from scratch, or alternatively, make a partnership with an existing company in India to help manage the local operation.
Meanwhile, the attempted Taiwanese operation underbid severely, saw significant timeline overruns, tried to manage everything in-house, and the project was eventually scrapped and given to a private sector South Korean-Indian consortium. There was also a bit of corruption/malfeasance with the Taiwanese operation which pissed people off in the district.
All this happened in the 2009-2012 timeframe
A big reason Foxconn, Winstron, and other Taiwanese/Malaysian/Singaporean assemblers were able to succeed in Mainland China was due to cultural competency within the existing Chinese diaspora (eg. knowing how to communicate to who, how to manage workers, etc).
Foxconn, Winstron, and co would just straight up have Taiwanese/Malaysian/Singaporean/Thai Chinese move to Mainland China (in reality mostly Guangdong, Fujian, and Zhejiang due to cultural and familial connections plus the easy commute from Hong Kong or Shanghai) to help manage operations.
Taiwanese companies don't have that kind of advantage within South Asia. At that point, it makes sense just to work directly with Indian conglomerates like Tata, who already have in house domain experience manufacturing everything due to India's Chaebol-esque corporate culture, or Japanese+Korean companies that are open to training from scratch.
I've seen first hand how South Korean and Japanese companies managed their assembly plants in my dad's village in India (they manfuacture the electronics and computers for Wind Turbines) and it was a night and day difference to a similar attempted Taiwanese operation there.
The difference was SK+JP companies would actually try to hire management locally, and if there wasn't anyone qualified, then invest in actually training from scratch, or alternatively, make a partnership with an existing company in India to help manage the local operation.
Meanwhile, the attempted Taiwanese operation underbid severely, saw significant timeline overruns, tried to manage everything in-house, and the project was eventually scrapped and given to a private sector South Korean-Indian consortium. There was also a bit of corruption/malfeasance with the Taiwanese operation which pissed people off in the district.
All this happened in the 2009-2012 timeframe
I rememeber in 90s, local mid-level managers who worked for MNC in PRC tend to like their SKR bosses and frequently hated TW bosses simply because cultural overlap allowed them to push harder. With SKR they could at least feign ignorance with language barrier but TBH still got their work done. I can imagine shitshow of having language barrier and still not meeting KPIs because they're not cross culture competent.
Anyway Tata feels like a good fit, always felt like matter of time before audit/tax or political shenanigans drive foreign electronics assemblers out and eventually consolidate under India champions. Still seems a little premature, but I remember numbers last year that 2500/12000 registered forreign companies closed Indian operations since mid 10s, so maybe it's time for India chaebols to take over.
Anyway Tata feels like a good fit, always felt like matter of time before audit/tax or political shenanigans drive foreign electronics assemblers out and eventually consolidate under India champions. Still seems a little premature, but I remember numbers last year that 2500/12000 registered forreign companies closed Indian operations since mid 10s, so maybe it's time for India chaebols to take over.
> worked for MNC in PRC tend to like their SKR bosses and frequently hated TW bosses simply because cultural overlap allowed them to push harder. With SKR they could at least feign ignorance with language barrier but TBH still got their work done
Haha yep, I've heard similar stories in Vietnam as well. Idk why but Taiwanese/Malaysian/Singaporean management culture is absolutely atrocious compared to Japanese+SK management culture. All of them share equally shitty work cultures, but at least the Japanese+SK ones actually tried to train people from scratch. I really don't know why Taiwanese/Malaysian/Singaporean companies don't do that as well.
> always felt like matter of time before audit/tax or political shenanigans drive foreign electronics assemblers out and eventually consolidate under India champions
Ehn, India's a federal system so financial+political shenanigans are highly dependent on the state's political and business culture.
It's the same in PRC ofc, with the administration in Guangdong/Zhejiang/Fujian being much more competent than the administration in Yunnan, Hunan, or Hubei.
That said, knowing about these intricacies requires cultural domain experience, which can only be acquired by training+hiring locally, or working with local players.
> I remember numbers last year that 2500/12000 registered forreign companies closed Indian operations since mid 10s, so maybe it's time for India chaebols to take over
I'd be curious about the breakdown by nationality.
After the Doklam standoff in 2017, Indian Federal Regulators began cracking down on Chinese FDI severely (which before 2018 was one of the largest FDI inflows India received), which lead those firms to divest their operations to Indian, Korean, Taiwanese or Japanese corporations.
For example, Xiaomi India's operation was originally run from Mainland China itself, but they were forced to sell their India operation to a Taiwanese-Indian consortium, so the only Chinese thing left of Xiaomi India is just the name.
Haha yep, I've heard similar stories in Vietnam as well. Idk why but Taiwanese/Malaysian/Singaporean management culture is absolutely atrocious compared to Japanese+SK management culture. All of them share equally shitty work cultures, but at least the Japanese+SK ones actually tried to train people from scratch. I really don't know why Taiwanese/Malaysian/Singaporean companies don't do that as well.
> always felt like matter of time before audit/tax or political shenanigans drive foreign electronics assemblers out and eventually consolidate under India champions
Ehn, India's a federal system so financial+political shenanigans are highly dependent on the state's political and business culture.
It's the same in PRC ofc, with the administration in Guangdong/Zhejiang/Fujian being much more competent than the administration in Yunnan, Hunan, or Hubei.
That said, knowing about these intricacies requires cultural domain experience, which can only be acquired by training+hiring locally, or working with local players.
> I remember numbers last year that 2500/12000 registered forreign companies closed Indian operations since mid 10s, so maybe it's time for India chaebols to take over
I'd be curious about the breakdown by nationality.
After the Doklam standoff in 2017, Indian Federal Regulators began cracking down on Chinese FDI severely (which before 2018 was one of the largest FDI inflows India received), which lead those firms to divest their operations to Indian, Korean, Taiwanese or Japanese corporations.
For example, Xiaomi India's operation was originally run from Mainland China itself, but they were forced to sell their India operation to a Taiwanese-Indian consortium, so the only Chinese thing left of Xiaomi India is just the name.
I use to think it was narcissism of small differences, Sino-sphere cultures hating on each other but from what I hear in Vietnam, they're jerks to everyone. Even PRC firms in Viet did not seem to have _that_ bad of reputation to work for.
> India System
Does lobbying power from Tata or Adani influence over said politics? Seems like they have competence and connections to take over failed foreign ventures. Not implying it's coordinated, but domestic players have a lot to gain. And probably better cultural experience to run these operations after capital is setup in country. I imagine Indian chaebols have more ability to control unrest, vs in PRC tight relationship with Foxconn essentially delegates crowd control to compliant local govs.
>breakdown by nationality
This is first article I found: https://www.deccanherald.com/business/business-news/why-mncs...
>A slew of big names including German retailer Metro AG, Swiss building-materials firm Holcim, US automaker Ford, UK banking major Royal Bank of Scotland, US bikemaker Harley-Davidson and US banking behemoth Citibank have chosen to pull the plug their operations in India or downsize their presence here in recent years.
I think SKR took over the GM plant. I'm pretty sure JP expansion in India stalled last few years during covid but reporting last few months seems like SKR + JP is going to give it another go. If they can make it work long term, and hopefully they can, good on them.
> India System
Does lobbying power from Tata or Adani influence over said politics? Seems like they have competence and connections to take over failed foreign ventures. Not implying it's coordinated, but domestic players have a lot to gain. And probably better cultural experience to run these operations after capital is setup in country. I imagine Indian chaebols have more ability to control unrest, vs in PRC tight relationship with Foxconn essentially delegates crowd control to compliant local govs.
>breakdown by nationality
This is first article I found: https://www.deccanherald.com/business/business-news/why-mncs...
>A slew of big names including German retailer Metro AG, Swiss building-materials firm Holcim, US automaker Ford, UK banking major Royal Bank of Scotland, US bikemaker Harley-Davidson and US banking behemoth Citibank have chosen to pull the plug their operations in India or downsize their presence here in recent years.
I think SKR took over the GM plant. I'm pretty sure JP expansion in India stalled last few years during covid but reporting last few months seems like SKR + JP is going to give it another go. If they can make it work long term, and hopefully they can, good on them.
> from what I hear in Vietnam, they're jerks to everyone.
It seems like the older generation of Taiwanese who came to age in the 70s and 80s have a bit of a superiority complex over the rest of poor Asia.
Tbf, Koreans and Japanese do as well (Korean and Japanese investors in ASEAN are total sleezeballs in my experience), but due to manpower constraints they at least try to develop local institutional capacity, while Taiwanese companies could always resort to hiring from within the PRC or the ASEAN Chinese diaspora.
> Does lobbying power from Tata or Adani influence over said politics?
Business lobbying within India is similar to that which happens in PRC. The same way you'd have local companies that are indirectly connected to local prefecture leaders (eg. The entire Construction industry within China), a similar thing exists in India.
That said, a lot of this is highly dependent on industry. High Value Sectors such as Pharmaceuticals, ICT, Petrochemicals, Automotive, Banking, and Green Technology can largely bypass all the local lobbying bullshit because the state and federal regulators for those tend to have domain experience because of 40-50 years of regulatory harmonization thanks to guidance from Japan (via the ADB), US (via the WB and Diaspora Academics), SK (via Look South), Israel (mostly under the radar but Israeli advisors are pretty prominent within Indian policymaking circles), and Australia (Australia 2035). That said, the industries listed above tend to not hire as much.
In labor heavy industries such as low skilled manufacturing, assembly, agriculture, construction, mining, etc you will face an extreme amount of lobbying and backroom dealing due to how heavily dependent such industries are to local laws and regulations, and also because they directly impact actual voters, plus direct action is a very common occurrence (often with tacit support from the local opposition - could be from any party be it BJP, INC, AAP, etc).
That said, this happens A LOT in China as well, it just isn't noticed in English media because any coverage of such events would be in Mandarin and on Chinese platforms such as Weibo, WeChat, Douyin, etc, while Indian coverage surrounding labor strife will occur in English on western platforms like FB, IG, etc.
Tl;dr - in my experience institutional and business norms in the PRC and India are actually pretty similar. In some cases, Chinese regulation is better than Indian ones but in other cases Indian regulations trump Chinese ones (VERY industry dependent)
> US automaker Ford, UK banking major Royal Bank of Scotland, US bikemaker Harley-Davidson and US banking behemoth Citibank have chosen to pull the plug their operations in India or downsize their presence here in recent years.
The US companies mentioned are divesting because there's an ongoing trade war between India and US (US wants India to open the agriculture sector to American imports, Indian politicians obviously don't want that as it undermines a critical voting block). This has lead to "India applied retaliatory tariffs of an additional 10% to 25%" on American goods [0]. There is a similar trade war going on with the UK as well.
Japan, South Korea, Australia, and Singapore on the other hand have implemented free trade agreements with India years ago and Israel+France have had economic pacts since the early 2000s, so unsurprisingly it's MNCs from these countries that tend to have an oversized impact in India (though within the ICT sector American companies still remain strong because of the point I made above).
In my experience, Japanese involvement hasn't really stopped in India (in fact it seems to keep growing). It's just not visible if you don't work in infrastructure - Japanese MNCs tend to dominate in Green Tech and Infrastructure projects such as the highway system, hydrogen cell R&D, automotive, and the train electrification project (already at 80% due to Pandemic era construction).
Whenever I'd visit India, I'd often see highways with signs saying "Built courtesy of grants from the Government of Japan".
This isn't to say that doing business as an MNC in India is easy - it isn't - but if you follow the right path (for example, make a Singapore, Mauritius, or UAE based corporation that has a majority ownership stake of the Indian subsidiary) it's not as difficult. Most Asian countries have done that for FDI within India, but less adept American companies seemed to have a preference and more experience with running operations from HK instead of SG.
What HK is to PRC, that's what SG, Marutius, and UAE are to India.
[0] - https://sgp.fas.org/crs/row/IF10384.pdf
It seems like the older generation of Taiwanese who came to age in the 70s and 80s have a bit of a superiority complex over the rest of poor Asia.
Tbf, Koreans and Japanese do as well (Korean and Japanese investors in ASEAN are total sleezeballs in my experience), but due to manpower constraints they at least try to develop local institutional capacity, while Taiwanese companies could always resort to hiring from within the PRC or the ASEAN Chinese diaspora.
> Does lobbying power from Tata or Adani influence over said politics?
Business lobbying within India is similar to that which happens in PRC. The same way you'd have local companies that are indirectly connected to local prefecture leaders (eg. The entire Construction industry within China), a similar thing exists in India.
That said, a lot of this is highly dependent on industry. High Value Sectors such as Pharmaceuticals, ICT, Petrochemicals, Automotive, Banking, and Green Technology can largely bypass all the local lobbying bullshit because the state and federal regulators for those tend to have domain experience because of 40-50 years of regulatory harmonization thanks to guidance from Japan (via the ADB), US (via the WB and Diaspora Academics), SK (via Look South), Israel (mostly under the radar but Israeli advisors are pretty prominent within Indian policymaking circles), and Australia (Australia 2035). That said, the industries listed above tend to not hire as much.
In labor heavy industries such as low skilled manufacturing, assembly, agriculture, construction, mining, etc you will face an extreme amount of lobbying and backroom dealing due to how heavily dependent such industries are to local laws and regulations, and also because they directly impact actual voters, plus direct action is a very common occurrence (often with tacit support from the local opposition - could be from any party be it BJP, INC, AAP, etc).
That said, this happens A LOT in China as well, it just isn't noticed in English media because any coverage of such events would be in Mandarin and on Chinese platforms such as Weibo, WeChat, Douyin, etc, while Indian coverage surrounding labor strife will occur in English on western platforms like FB, IG, etc.
Tl;dr - in my experience institutional and business norms in the PRC and India are actually pretty similar. In some cases, Chinese regulation is better than Indian ones but in other cases Indian regulations trump Chinese ones (VERY industry dependent)
> US automaker Ford, UK banking major Royal Bank of Scotland, US bikemaker Harley-Davidson and US banking behemoth Citibank have chosen to pull the plug their operations in India or downsize their presence here in recent years.
The US companies mentioned are divesting because there's an ongoing trade war between India and US (US wants India to open the agriculture sector to American imports, Indian politicians obviously don't want that as it undermines a critical voting block). This has lead to "India applied retaliatory tariffs of an additional 10% to 25%" on American goods [0]. There is a similar trade war going on with the UK as well.
Japan, South Korea, Australia, and Singapore on the other hand have implemented free trade agreements with India years ago and Israel+France have had economic pacts since the early 2000s, so unsurprisingly it's MNCs from these countries that tend to have an oversized impact in India (though within the ICT sector American companies still remain strong because of the point I made above).
In my experience, Japanese involvement hasn't really stopped in India (in fact it seems to keep growing). It's just not visible if you don't work in infrastructure - Japanese MNCs tend to dominate in Green Tech and Infrastructure projects such as the highway system, hydrogen cell R&D, automotive, and the train electrification project (already at 80% due to Pandemic era construction).
Whenever I'd visit India, I'd often see highways with signs saying "Built courtesy of grants from the Government of Japan".
This isn't to say that doing business as an MNC in India is easy - it isn't - but if you follow the right path (for example, make a Singapore, Mauritius, or UAE based corporation that has a majority ownership stake of the Indian subsidiary) it's not as difficult. Most Asian countries have done that for FDI within India, but less adept American companies seemed to have a preference and more experience with running operations from HK instead of SG.
What HK is to PRC, that's what SG, Marutius, and UAE are to India.
[0] - https://sgp.fas.org/crs/row/IF10384.pdf
Thanks for the insightful write up. I was aware of the IN-US trade war, but I thought American companies would ultimately suck it up like they did in PRC where US goods like vehicles got slapped by heavy duties. PRC agri sector is also protected for national security and to keep 100s millions employed, not a voting block, but similar political considerations. Also won't buy US modified seeds. But they do buy a ton of bulk agri products, and farm equipment... when not sanctioned. Seems weird so many divested from India under similar circumstances. Mom and pop India farmers not buying enough John Deere or something? Indian consumers not projected to eat enough meat / buy enough US animal feed? New American attitude to trade? Or US lack of adeptness you mentioned?
> but I thought American companies would ultimately suck it up like they did in PRC where US goods like vehicles got slapped by heavy duties
The ones with an actual India thesis+strategy have a Singapore subsidiary that owns the India operation, hire local operations, and also have some sort of a competitive edge.
The companies listed in the article such as Harley-Davidson and Citibank were very late entries (late 2000s and early 2010s) in very competitive and mature industries (Motorbikes and Banking), and had negative reputations (bad quality at the price point w/ Harley-Davidson and Ford, part of banking scandals w/ regards to Citibank ans RBS
A good example of a foreign company actually succeeding is John Deere India - they worked on building a strong local operation with local staff and training in the 1990s, and now John Deere is one of the major agtech brands in India, and the India operation is used in turn to export John Deere products to other parts of South Asia, ASEAN, MENA, and East Africa.
In India, being an American brand isn't enough of a differentiator, simply because by the time American companies began entering the India market in the late 90s/early 2000s, Japanese, Korean, and European (French+Italian) corporations such as Suzuki, Daewoo, Honda, Unilever, etc had an established presence and 30-50 years of India operations knowledge.
When India forced American companies to divest in the late 1970s, the Indian government invited Japanese, Korean, Italian, and French companies to help manage those nationalized companies and make 50-50 Foreign-Local partnerships. (Btw, those same American companies that were kicked out of India in the 1970s moved operations to a newly opening developing market called the People's Republic of China).
That's why you companies like Honda, Suzuki, Daewoo, Fiat have/had a massive presence in India but American companies outside of High Value industries don't.
In China in the same period on the other hand, American brands were invited with open arms so it was much easier for them to establish a presence as there wasn't as much competition, whereas India in the 70s/80s/90s already had established European, Japanese, and Korean competitors. This is starting to change since the 2010s, but will take some time as you need a Singapore operation, and most junior American companies have used a HK one.
> they do buy a ton of bulk agri products, and farm equipment... when not sanctioned
A lot of American agtechs entering the Indian market are competing with Israeli, French, Italian, Japanese, and Indigenous companies.
Israeli, French, Japanese, and Italian agtech R&D is quite strong, especially when dealing with water constrained agriculture (like a large portion of India is) plus companies in those countries are fine knowledge transferring to India (Indian corporations will manufacture and repair the previous generation model, while the French/Israeli/Italian/Japanese company sells the latest and greatest). And India has always had a strong indigenous Agtech R&D capacity, which has allowed Indian companies to become competitors of American companies as well.
For example, in Ethiopia 70% of all land acquired by Foreigners since 2008 was by Indian corporations [0] until Ethiopia nationalized Indian companies land grants in 2017. Similar stories exist across Eastern Africa such as Tanzania, Mozambique, Kenya, etc.
Also, American trade relations with India have grown leaps and bounds better since 2019, due to regulatory harmonization as well as American companies increasingly leaving China due to similar pressures that American companies faced in India in the 70s and 80s.
[0] - https://theconversation.com/the-lesser-known-story-of-indias...
The ones with an actual India thesis+strategy have a Singapore subsidiary that owns the India operation, hire local operations, and also have some sort of a competitive edge.
The companies listed in the article such as Harley-Davidson and Citibank were very late entries (late 2000s and early 2010s) in very competitive and mature industries (Motorbikes and Banking), and had negative reputations (bad quality at the price point w/ Harley-Davidson and Ford, part of banking scandals w/ regards to Citibank ans RBS
A good example of a foreign company actually succeeding is John Deere India - they worked on building a strong local operation with local staff and training in the 1990s, and now John Deere is one of the major agtech brands in India, and the India operation is used in turn to export John Deere products to other parts of South Asia, ASEAN, MENA, and East Africa.
In India, being an American brand isn't enough of a differentiator, simply because by the time American companies began entering the India market in the late 90s/early 2000s, Japanese, Korean, and European (French+Italian) corporations such as Suzuki, Daewoo, Honda, Unilever, etc had an established presence and 30-50 years of India operations knowledge.
When India forced American companies to divest in the late 1970s, the Indian government invited Japanese, Korean, Italian, and French companies to help manage those nationalized companies and make 50-50 Foreign-Local partnerships. (Btw, those same American companies that were kicked out of India in the 1970s moved operations to a newly opening developing market called the People's Republic of China).
That's why you companies like Honda, Suzuki, Daewoo, Fiat have/had a massive presence in India but American companies outside of High Value industries don't.
In China in the same period on the other hand, American brands were invited with open arms so it was much easier for them to establish a presence as there wasn't as much competition, whereas India in the 70s/80s/90s already had established European, Japanese, and Korean competitors. This is starting to change since the 2010s, but will take some time as you need a Singapore operation, and most junior American companies have used a HK one.
> they do buy a ton of bulk agri products, and farm equipment... when not sanctioned
A lot of American agtechs entering the Indian market are competing with Israeli, French, Italian, Japanese, and Indigenous companies.
Israeli, French, Japanese, and Italian agtech R&D is quite strong, especially when dealing with water constrained agriculture (like a large portion of India is) plus companies in those countries are fine knowledge transferring to India (Indian corporations will manufacture and repair the previous generation model, while the French/Israeli/Italian/Japanese company sells the latest and greatest). And India has always had a strong indigenous Agtech R&D capacity, which has allowed Indian companies to become competitors of American companies as well.
For example, in Ethiopia 70% of all land acquired by Foreigners since 2008 was by Indian corporations [0] until Ethiopia nationalized Indian companies land grants in 2017. Similar stories exist across Eastern Africa such as Tanzania, Mozambique, Kenya, etc.
Also, American trade relations with India have grown leaps and bounds better since 2019, due to regulatory harmonization as well as American companies increasingly leaving China due to similar pressures that American companies faced in India in the 70s and 80s.
[0] - https://theconversation.com/the-lesser-known-story-of-indias...
Again thanks for taking the time. No follow up questions!
After 15 years they are not planning on exiting India, just the iPhone aspect.
"Wistron entered India in 2008 with a repair facility servicing PCs, laptops, servers and other devices it manufactured. In 2017, it started making iPhones for Apple and now makes the iPhone 14, iPhone 13, iPhone 12 and the iPhone SE. The company will continue with its repair facility."
https://economictimes.indiatimes.com/tech/technology/wistron...
"Wistron entered India in 2008 with a repair facility servicing PCs, laptops, servers and other devices it manufactured. In 2017, it started making iPhones for Apple and now makes the iPhone 14, iPhone 13, iPhone 12 and the iPhone SE. The company will continue with its repair facility."
https://economictimes.indiatimes.com/tech/technology/wistron...
They were hoping to expand to manufacturing laptops, IoT and EV components a few years after they spung up iphone assembly. Some of the reporting suggest this won't happen anymore. An established electronics manufacturer stuck with repair depot work, i.e. the portfolio they entered country with, after 10 or 15 years is not a good look.
a similar situation just happened between Nvidia and EVGA.
NVidia makes the chips, And So, holds all the bargaining chips so to speak, and EVGA is just the board partner that has to find some way to make the price work. At some point it becomes impossible and they have to actually walk away in order to not be taken advantage of.
We know this much, and I'm going to assume the situation was similar here with Apple and Wistron.
I think the Nvidia/EVGA situation might be a little different in that it looks like Nvidia is intentionally trying to squeeze out board partners like EVGA in favor of self-branded cards. The closer parallel is probably when Apple killed the Mac clone program by making it extremely difficult for clone makers to compete.
Nvidia still doesn't sell their FE so much outside of US, so I don't think their intension is to selling more FEs.
What I read is that Wistron didn’t have a good strategy getting in India, and that cost them Apple’s business.
Didn't they also have some issues with payments and working conditions for their factory employees?
Correct. Story seems to be, Wistron was screwing over employees to save costs, and used those low-costs to secure a deal with Apple. Then they got caught by the government, and now have to play by the rules. Because of this, they asked Apple for more money, and Apple said no. So now the deal is done.
The deal really shouldn’t have happened in the first place, had Wistron played fair from day one.
The deal really shouldn’t have happened in the first place, had Wistron played fair from day one.
Pretty sure Apple is partly guilty as well. I really doubt they didn’t know exactly how Wistron was bidding so low.
They might have suspected, but I doubt they formally knew. I would guess it was a type of "don't tell me, I don't want to know, plausible deniability and all".
> I would guess it was a type of "don't tell me, I don't want to know, plausible deniability and all".
Imagine something like due diligence laws for making business contracts, so you can't really blame plausible deniability anymore.
Imagine something like due diligence laws for making business contracts, so you can't really blame plausible deniability anymore.
That's the core idea behind the EU's supply chain laws. No matter what, anyone on the upper levels can get busted - it's a massive incentive for everyone to make sure their supply chain is not skirting around or openly sharting on laws. And it's also an incentive to not look the other way when you know that a vendor's bid is very very low.
They probably didn’t tell bc they wouldn’t get the deal.
Simple story. Just some more Apple bashing like always.
Simple story. Just some more Apple bashing like always.
I would assume that Apple looked into it a little bit. US companies can get in trouble if their contractors abroad use slave labor, buy parts from the wrong country, or divert part of the contract to use as bribes. So I doubt this is a case where everyone at Apple laughed about how it was too good to be true, CC'd the lawyers, and the lawyers wrote back "yeah hahah".
At the end of the day, you can't always find everything even if you try really hard.
At the end of the day, you can't always find everything even if you try really hard.
Why would it be too good to be true? They might have simply won the deal but a small margin against a competitor.
They also might have hidden this info, or even fraudes their way through.
They also might have hidden this info, or even fraudes their way through.
You can make it yourself if it is important enough.
Only suckers formally know anything.
There be dragons.
Better a high trust society with some checks and balances than one ruled by "don't write down anything" sociopaths.
Better a high trust society with some checks and balances than one ruled by "don't write down anything" sociopaths.
Which one do you think you currently live in?
Regardless when it's in my power I'd rather encourage a high trust society.
tell that to the lawyers who make a living defending corporations and putting up legal firewalls of plausible deniability
If only incompetence was a crime.
To be clear, I don't like how it is. But if corporations have a personality, they either verge on or go full hog on sociopathic. Any corporate lawyer will tell management to not write down potentially incriminating.
The better among corporations actually try to do the right thing, most of the time. But of course, if there's some kind of incident, there's still a lockdown mentality.
The better among corporations actually try to do the right thing, most of the time. But of course, if there's some kind of incident, there's still a lockdown mentality.
This sounds like a case of Apple not doing due diligence on their subcontractors.
From TFA:
> Back in 2020, there was a major riot at its Bangalore plant over underpaid wages, with millions of dollars’ worth of damage done. Both the Indian government and Apple investigated, and both found that Wistron was indeed guilty of serious labor law violations, including underpayment of its workers.
> Back in 2020, there was a major riot at its Bangalore plant over underpaid wages, with millions of dollars’ worth of damage done. Both the Indian government and Apple investigated, and both found that Wistron was indeed guilty of serious labor law violations, including underpayment of its workers.
Yes, that's how Apple outsources those unsavory problems.
The original news article from [Wistron exits Apple India business after tripping over scale, work culture](https://economictimes.indiatimes.com/tech/technology/wistron...) from The Economic Times (referenced in the article) seems like a better submission.
If Wistron was having quality problems, as has been rumored about iPhone production in India [1], this could have been the sort of deal where both sides lost.
[1] https://www.theapplepost.com/2023/02/26/apple-disappointed-w...
[1] https://www.theapplepost.com/2023/02/26/apple-disappointed-w...
Wistron exit from India
https://economictimes.indiatimes.com/tech/technology/wistron...
what portion of apple assembly for things like macbook/watch/iphone aren't 100% done by machine, and if they aren't 100% done by machine (which they aren't), it sounds extremely not easy to do by hand (especially at scale, for "low wages")
what parts can't they automate?
what parts can't they automate?
Automation doesn't guarantee quality, and it is hard to do at a high quality level, at scale, also.
Most of the final assembly is done by hand. Hence why so many people are needed in the final assembly factories of Foxconn, Wistron, etc.
Does relying on Chinese companies in India really accomplish the goal of independence from China? If there's some kind of political conflict, isn't it likely that China can shut those down using leverage at home?
Isn't wistron literally a taiwanese company?
I don't know, but they're exiting the business anyway. The article also mentions Foxconn and Luxshare, which are Chinese.
Foxconn is also a Taiwanese company (though its CEO is familiar with PRC)
More info from Wikipedia: "While headquartered in Taiwan, the company earns the majority of its revenue from assets in mainland China and is one of the largest employers worldwide."
Interestingly, it seems first mover advantage backfired on this company. Due to lack of margins and vendor lock in.
Foxconn somehow made $137m profit in the past 12m.
You mean by installing the suicidal protection net, Foxconn barely makes it? Foxconn has 1m3 employees. If they made just 137m in profit - that's just $8 profit per employee a month.
"just" 8$ per employee/m versus which similar industry's standard?
$8 per employee per month is ridiculously low, no matter the industry standard.
I think those numbers are Taiwan dollars, and "m" is for billions i.e. milliards. So closer to $300 USD per employee per month. For fun, compare to McDonald's.
Wistron (Taiwan based) sold plants to Luxshare (PRC based) - so is Apple failing moving from China?
Flagship customers often do this to vendors. They know that "Apple is our customer" is a big selling point, so they turn the screws tight and make the vendor serve them for no margin.
I guess that's how you get to be a trillion dollar company.
I’m surprised Wistron gave comment on Apple allegedly pushing them around, it makes them sound weak (which companies usually avoid doing).
You can hear the western executive think: India has lots of people and poor people specifically, so let's just roll out the China model there.
They're going to be in for a shock. India does not have the "submissive communist" mindset where the individual sacrifices everything for the greater good of society, tolerating near-infinite abuse and exploitation.
That loyalty model breaks much sooner. And whilst it incidentally breaks in disruptive ways (riots), more often than not it manifests as silent sabotage. There will be instability and if there's anything fatal to manufacturing...
They're going to be in for a shock. India does not have the "submissive communist" mindset where the individual sacrifices everything for the greater good of society, tolerating near-infinite abuse and exploitation.
That loyalty model breaks much sooner. And whilst it incidentally breaks in disruptive ways (riots), more often than not it manifests as silent sabotage. There will be instability and if there's anything fatal to manufacturing...
So... is it possible to make iPhones outside of China or not?
Yes, iPhones are also manufactured in Brazil and India. This is largely due to trade barriers in those countries.
Yea, I think it started with trade barriers, but I think Apple likely wants to increase non-China manufacturing to reduce their risk a bit. Tensions with China have been a bit high and when you're Apple's size, it can be good to lessen the risk there. Even if it's unlikely that something would cause a disruption, when you're a nearly $3T company it's probably wise to diversify that risk. Apple's annual revenue is greater than the GDP of many countries like Finland or New Zealand. Ramping up manufacturing in India could be a good hedge against China or the US doing something that might impact their exports from China.
Wistron has has a rough history, including underpaying/withholding pay from employees[1]. Good riddance.
[1] https://www.businessinsider.com/apple-says-wistron-on-probat...
[1] https://www.businessinsider.com/apple-says-wistron-on-probat...
While Foxconn has... good history?
Foxconn offers robust safety net for its employees…
(I’ll walk myself out now).
(I’ll walk myself out now).
Literally literally.
Only if they are lucky, retaining limbs is not a contractual obligation for Foxconn.
this is what apple does. they use their clout, then they turn their back and play ignorant whilst placing unrealistic demands on the subcontractors who then place those demand on the labour.
from: https://www.macrumors.com/2023/02/14/only-half-of-indian-iph...
> "Apple engineers told that Chinese iPhone suppliers and government officials have a "whatever it takes" approach to win iPhone orders, work was often completed weeks ahead of schedule at "inexplicable speed". In India, [we] are not running at this pace. "There just isn't a sense of urgency," one Apple engineer remarked."
Remember, this is a $3 trillion company, with resources greater than most countries. A company built on tight control of information. If you see lots of positive or misdrecting comments, it's not necessarily a coincidence (imo).