Source: Times Weekly Author: Ma Huan
In the southern Indian city of Chennai, Foxconn ships components from abroad every day and assembles the latest version of the iPhone 14 at a factory outside the city.
Apple has also sent a number of product designers and engineers from the United States and China here to train and assist in production. The engineers live in a hotel in downtown Chennai, about 2 hours from the factory, and it takes more than 4 hours a day to commute to work, with poor internet signals along the way.
Two Indian government officials told the media that Foxconn plans to increase the number of employees in its iPhone factories in India from the current 17,000 to 70,000 in the next two years.
In addition to Foxconn, there are at least two of Apple's global suppliers assembling iPhones in India, including Wistron and Pegatron. Apple said it aims to produce more than 25 percent of the iPhone in India by 2025. The Indian media is more optimistic, hoping that after 2025, India can produce more than 50% of the iPhone.
It seems that Apple is determined to expand production in India.
But the plump ideal was still poured cold water by reality.
Apple's progress in India is not as rapid as expected, and the expansion plan has encountered many stumbling blocks: low yield, work efficiency, and many labor disputes, supply chain and other problems.
Silicon Valley entrepreneur Vivek Wadwa said the Indian government is doing everything it can to bring in industry and they will follow China's lead, "but these are still in their infancy."
Foxconn's factory in India (Source: gadgets360 social media)
Low yield
According to British media reports, India's Titana Group cooperates with Apple to produce parts at a factory in the south, but the yield rate of shell parts produced by India is only 50%.
At the factory, only one out of every two components coming off the production line is of good enough quality to be sent to Apple assembler Foxconn, according to people familiar with the matter. "This is too far from Apple's advertised goal of 'zero defective products'."
The person also revealed that the factory has plans to improve proficiency, but this will take a lot of time.
One former Apple employee cited as an example that in China, suppliers are almost always taking a "whatever it takes" approach to winning speed and orders. They had encountered situations that could take weeks to complete, but by the time they came to work the next morning, the task had been completed at an incredible pace.
Netizens show iPhones made in India (Source: Social media)
Apple's business in India, by contrast, isn't running at that pace: "there's just a lack of urgency." ”
Mark Zeit, president of an electronics foundry consultancy, said this inertia has been a problem in India for years. Indian manufacturers always claim that they can meet "any need" of their customers, but in reality, after signing agreements, they are often slow to respond and lack flexibility.
Wadhwa also acknowledged that foreign companies need to adapt to the loose and bureaucratic nature of the Indian government. "Because in India, everything is an obstacle."
"We are still in the stage of learning, learning what works and what doesn't." Wadwa said, but he is optimistic, "In another 3 years, you will see it change." ”
The process is slow
According to US media reports, in fact, as early as 2020, Apple has begun to look for opportunities to build factories.
However, the condition of the Indian factory did not meet their requirements: some Indian suppliers could not meet Apple's environmental, health and safety standards; It was hard to find a company that could produce power adapters or packaging, but none that could make telephone speakers, headphones, or small mechanical parts; In addition, Apple once went to visit a potential partner, but caught up with a large number of Indian workers strike...
In the eyes of many companies, India's labor environment and safety standards need to be improved, and if they are not improved, they may bring great obstacles to production.
Foxconn's India factory (Source: Social media)
On December 17, 2021, more than 1,000 workers at a Foxconn factory in Chennai that manufactures Apple began protesting, leading to the closure of the factory. The protests were caused by contaminated food in the company cafeteria, where the local government said at least 159 young women had been hospitalized for food poisoning and 256 had been treated for symptoms such as vomiting, diarrhoea and dizziness.
Workers here complain that living conditions are "similar to those of 19th-century labor."
In December 2020, Wistron, another supplier to Apple, also faced labor disputes at its assembly plant in India: more than 2,000 workers smashed production line equipment and vehicles in the factory, and thousands of new iPhones were stolen, resulting in losses of up to $7.12 million.
The workers involved in the dispute claimed that their wages were lower than promised when they were hired.
While India has become aware of the problem and has embarked on revising its labour laws to include provisions for occupational safety, health and working conditions, there are still concerns that compliance standards have been lowered.
A person involved in Apple's operations said Apple's expansion into India has been slow, partly because of logistics, tariffs and infrastructure. In addition, India's volatile investment environment and imperfect regulation are also a headache.
In the eyes of many companies, India is not well integrated into the world's major supply chains.
In 2019, India withdrew from the Regional Comprehensive Economic Partnership (RCEP) negotiations, which comprises 12 Asian countries. This decision makes it difficult for Indian exporters to profit from entering markets that are duty-free with other countries and to provide reciprocity to trading partners.
Parag Connor, author of The Future is Asian, argues that regional integration is particularly important because global trade follows a "sell-in-place" model, where companies produce close to raw materials rather than outsource, and where production is brought closer to the region where product is needed.
"Why should I make in India what I want to sell to Singapore? Maintaining trade deals with other countries is as important as getting good prices. He said.
Netizens show iPhones made in India (Source: Social media)
Indian official: It's long overdue
Despite its problems, Apple's expansion in India is a general trend.
In this year's latest Apple earnings call, Apple CEO Tim Cook said that he is very optimistic about the Indian market, and Apple also plans to open its first flagship store in India and expand recruitment in India to serve future factories and emerging businesses.
Finance Minister Nirmala Sitharaman said India intends to provide tariff relief on imports of certain parts and assemblies used in mobile phones to "defend the domestic value added of mobile phone manufacturing."
It is reported that India's Tata Group and Apple foundry Wistron are discussing a joint venture to assemble iPhones in India. Another Apple supplier, Hon Hai, also plans to quadruple the manpower of its iPhone factory in India in the next two years.
One Indian official said Apple came too late, "They should have started doing this five years ago so they could benefit at this moment." ”
Optimistic, consultancy Bain estimates that India's manufacturing exports could more than double, from $418 billion in 2022 to more than $1 trillion by 2028, driven by policy support and lower costs, with electronics exports alone growing at an annual rate of up to 40 percent.
But at present, India's manufacturing industry is still far from the "Make in India" strategic target (25%) set by Indian Prime Minister Narendra Modi since he took office in 2014. According to World Bank data, the added value of India's manufacturing industry has accounted for about 13%~17% of GDP in the past 10 years.
Including Swiss building materials company Holcino, Royal Bank of Scotland, motorcycle company Harley-Davidson, Citibank of the United States, many foreign companies have announced plans to lay off employees or leave India.
Obviously, whether it is India or Apple, there is still a long way to go.