An article published by VentureBeat earlier today made the claim that Apple should move its manufacturing jobs back to the United States from China. Normally, if one site made this claim, it’d be natural to let it slide. However, this is an attitude that has steadily encroached upon the public mindset in the last year, especially following the increased scrutiny that Apple and Foxconn have faced in the last few months.
In light of this increase of attention, it’s apparent that the record needs correcting and that someone needs to show that while jingoistic posts may be enticing, they aren’t based in reality.
First off, let’s go with VentureBeat’s assertion that shipping costs are high for Apple, and that it would be easier and cheaper to ship products to consumers if the factories were in the United States, where the customers are located. Right now, the US is responsible for around 30% of all iPhone sales worldwide. This means that not only does the rest of the world provide a larger marketplace for Apple than the United States, but that going forward the US will be an even small slice of the pie for Apple.
In fact, with a theoretical future addressable market of nearly three times the addressable market of the United States, China will eventually become one of the primary marketplaces for Apple to focus on. Lest anyone say that this is unlikely due to the wealth disparity between the two countries, keep in mind that while Android currently controls the low-end market, Apple is quickly making inroads there. This includes a fully subsidized phone in the form of the iPhone 3GS, as well as full subsidization by carriers in China of the iPhone 4S. These phones are at the top of the market right now, and free with a contract.
These changes mean that, while right now the factories may be far away from a large concentration of customers, in the future they will be right in the back yard of the largest marketplace in the world. Moving the factories now would be an incredibly short-sighted move for Apple to make.
Secondly, let’s address the claim that Apple doesn’t need to pinch pennies, because it already has so much money. This is downright absurd, and shows a clear misunderstanding of how business works. Apple may have a dragon’s hoard of cash right now, but if it begins to act recklessly with its money and profit margins for devices, this will quickly diminish. Profit margins are where they are for a reason, and monkeying about with the system that set them is the first step on a path to disaster.
Third, VentureBeat also makes the assertion that Apple employees, designers, and engineers would have an easier life, if they didn’t have to fly to China to oversee manufacturing, and it would be a far better quality of life if they only had to drive a few hours to a local factory. While it’s true that it would be more convenient, Apple pays more than enough money to keep engineers satisfied. Not to mention the fact that Apple doesn’t cater to the least common denominator of employee, but only the ones that truly strive to do incredible work, which sometimes could mean flying to China on a whim.
Finally, there’s the jingoistic nature of the claim that Apple should do it because it is an American company, a thought not exclusive to the linked article. This is a more subjective claim, and therefore can be argued ad infinitum, but for the sake of clarity, here’s what Apple’s responsibilities are. The company and its executives are required to turn a profit to the best of their abilities, to assuage the concerns of shareholders. That is the legal responsibility of the company, but more importantly, Apple has a self-applied responsibility to make good products and to innovate, something Steve Jobs set up.
Between the two of those responsibilities, there is no reasoning that shows that moving factories from China to the United States or anywhere else in the world would be a guaranteed way to improve the chances of meeting those obligations. This means the factories are staying in China, where — from an objective marketplace point of view — they should remain.