There’s a reason China is the manufacturing hub. There’s a reason why everybody from WalMart to Apple love China. And that reason is very simple. If you want to make truck loads of money then make your stuff in China and sell it in the US and other rich markets. While everyone keeps a reasonable profit margin, Apple has kept itself a healthy profit margin per device and thus has leapt past everyone else.
As per Sina Tech’s report cited by Penn-Olson, Apple makes $150 in profits for every iPad sold. How much does the country which manufactures the product makes? A measly $8. Korea which supplies hardware components to iPad makes $34 for every device sold. And this seems to surprise everyone around the world. I wonder why.
Though iPhone is expensive everywhere in the world, it’s actually quite cheap for a product of its stature and quality. Every iPhone sold so far has been quite far ahead of its competition either in hardware or in the integration of hardware and software. Apple has kept its product cost high, but not so high. This was achieved because Apple has outsourced its manufacturing to China and streamlined critical parts of the supply chain.
No body builds a war chest in excess of $80 billion dollars by selling the devices cheap. Apple has done two things with its China outsourcing : It has kept its manufacturing costs low, very low. It has kept its product cost high, but not that high. The third thing Apple has done is it made its products very desirable across the world.
Yet another point everyone’s missing is Apple doesn’t sell it cheap nor does it sell cheap devices. Everybody knows that Apple makes money. Putting the things in perspective with Apple vs China dollar figures has given the commenter’s much needed epiphany.
When it comes to labor conditions and Foxconn, Apple could care less. When the time has come to care about the conditions, Apple has already moved on to a stronger position where it can afford to reduce its profit margin a bit, if it comes to that.
Next time you see iPhone owners protesting the conditions of how it was made, ask them this question : Dude, why do you think your iPhone is so cheap?
