On the second presidential debate, CNN’s Candy Crowley asked both candidates “How do you convince a greater American company to bring that manufacturing back here?” President Obama said it is impossible to bring the jobs back because of its low-wage and low-skill. I agree with him.
According to the latest news, Apple opened
up its latest Chinese retail store in the capital. The new store is the largest one in Asia, as it is three-stories, which is located at the Wangfujing shopping
district, near the Forbidden City in the middle of Beijing. This latest one is
the third retail store in Beijing, its sixth one in China. This new store employs 300 staff. Now Apple’s total retail store employees in
Beijing is 800.
However, this is just part of employment.
In the article we can know that Apple “directly employs thousands of its own
workers in China, and about 700,000 assembly workers at manufacturing
contractors like Foxcoon put together Apple products.”
The main reason Apple choose China is large labor force and cheap labor. Apple former global supply manager Jennifer Rigoni said that Foxconn can recruit 3,000 people one night. It is impossible in the U.S. Foxconn workers live in dormitories and suffer tough working conditions including cheap labor. People can't image that how cheap it is. According to the New York Times reported in Jan, 2012, workers in Foxconn factories earn less than $18 daily, working 6 days, 10 to 12 hours a day. Sometimes they work overtime without paying extra salary. In the article, a typical salary is U.S. $400. Its parent company Hon Hai Precision minimum wage is only $138 in Oct 2010.
Another surprising reason I know from this article is that China has many more skilled engineers than the U.S. does because of education system. They can't hire 30,000 industrial engineers needed in the U.S. I don't know why this happen because of education system. However it is true that engineers in China are more efficiency, skillful and work harder.
The third reason is China's relatively weak environmental regulation. China ranked 116 among 132 countries in the 2012 Environmental Performance Index ranking, published by Yale University. According to the U.S. technology website iFixit wrote recently, the other important reason except cheap labor is China has mastered the 95% to 97% of the world's rare earth supply. The iPad manufacturing process need to use a large number of rare earths. Rare earths will result in serious environmental consequences if it is not properly managed. Apple never said what kind of rare earth they used in their products.
As Job Steven said to Obama, "Those jobs are't coming back." Now President Obama said he want high-wage, high skilled jobs.The main reason Apple choose China is large labor force and cheap labor. Apple former global supply manager Jennifer Rigoni said that Foxconn can recruit 3,000 people one night. It is impossible in the U.S. Foxconn workers live in dormitories and suffer tough working conditions including cheap labor. People can't image that how cheap it is. According to the New York Times reported in Jan, 2012, workers in Foxconn factories earn less than $18 daily, working 6 days, 10 to 12 hours a day. Sometimes they work overtime without paying extra salary. In the article, a typical salary is U.S. $400. Its parent company Hon Hai Precision minimum wage is only $138 in Oct 2010.
Another surprising reason I know from this article is that China has many more skilled engineers than the U.S. does because of education system. They can't hire 30,000 industrial engineers needed in the U.S. I don't know why this happen because of education system. However it is true that engineers in China are more efficiency, skillful and work harder.
The third reason is China's relatively weak environmental regulation. China ranked 116 among 132 countries in the 2012 Environmental Performance Index ranking, published by Yale University. According to the U.S. technology website iFixit wrote recently, the other important reason except cheap labor is China has mastered the 95% to 97% of the world's rare earth supply. The iPad manufacturing process need to use a large number of rare earths. Rare earths will result in serious environmental consequences if it is not properly managed. Apple never said what kind of rare earth they used in their products.
By David Goldman @CNNMoneyTech October 17, 2012: 2:27 PM ET
I agree with you and President Obama in that these jobs will not be coming back to the United States. In relation to what we’ve discusses in class, China is relatively well-endowed with labor resources in which it can produce/assemble Apple products at a lower relative price compared to the U.S. This is why I believe Obama stated “…some jobs that are not going to come back, because they’re low-wage, low-skilled job.” Moreover, with an incredible amount of labor, wages are usually lower because MPL is lower since labor in abundant. This is one way I believe China has secured Apple’s business. Moreover, it clearly makes sense that Apple would engage in offshoring with China (investing in Foxconn). In doing this, Apple has increase the MPL of workers because of an increase in capital so in the short run I would expect production to increase and Apple to benefit. This amount of low-skilled labor and industrial engineers in the U.S. is in no comparison to China; therefore, the U.S. would incur a higher relative price or higher opportunity cost in producing Apple products domestically (as affirmed by an estimate price increase of $65-$100 if U.S. produced it)
ReplyDeleteI also agree that the jobs Apple took to China won’t come back. I also think we shouldn’t want them back. China has a cheaper labor force relative to the US so producing using that labor would provide a cheaper cost of production which would typically result in a lower price to consumers. If those jobs were brought back, that would decrease the manufacturing wage in the US, which would still be higher than the wage in China, but the price of Apple products would greatly increase. The jobs are better off staying in China for both countries.
ReplyDeleteI was just wondering if the United States imposed duties or tariffs on these imported Apple products from China do you think that some jobs might make it back to the U.S.? Similarly, do you think this would increase demand for domestic products especially for Apple's competitors who keep their manufacturing within the U.S.?
DeleteI only bring these questions up because it reminds me of the auto industry at the end of the last year. At the end of 2011 China imposed a hefty tariff on U.S. auto imports because they thought it was unfair that our government was subsidizing our own auto industry becuase of the recession. When our government did this it increase the demand of U.S. cars here and in China because cars were cheaper. As of 2009, China has had the largest auto market in the world, but their domestic car industry was severely stuggling. So with the tariff in place China was allowed to grow domestic demand for their own cars. So if China wants to implement large tariffs on our imported products to increase demand for their domestic goods, why shouldn't we? Is this fair?
You noticed a significantly point--Car industry.
DeleteWhy China implemented large tariff on auto from the US?
It seems to be irrational just as we learned that high tariffs do harm to both export and import countries.
But things like cars are not primary goods.We should consider the political situation into account.China need to develope domestic car industry.So we want citizens by our own products.
Assume that China import cars without tariff.Citizens can get car for low price and foreign counties also benefit.With weak domestic cars industry there will be high potential and danger that other countries put trade sanctions into effect China .Nobody wants that happen and nobody can predict this situation will not happen.
Obviously,America can implement high tariff towards China and take some jobs back.But at the same time,this action also rises price.So in term of trade,America may gain nothing.You can get cheap products from China.SO I think nobody wanna get jobs back with high price.
I also agree that the Apple jobs will remain in China because of their abundances of labor resources. They can pay those engineers at a lower wage then what we can in the US. I sometimes wonder if the reason that their engineers perform more efficiently is because they are happier with their jobs. I think sometimes here in the US we are so focused on the dollar amount that we make that we don't like the job particularly but it pays the bills and the money is good so we stay in that position. However when you are unhappy you don't work as efficiently.
ReplyDeleteAgree. America is a capital abundance country. Generally speaking, the capital intensive sector become better off while labor intensive sector become worse off under the free trade condition. With limited resources in a country, U.S. should focus on developing its capital intensive industries and let China provide the labor intensive products since its lower cost and higher efficiency.
ReplyDeleteApple should certainly not bring its manufacturing back to the U.S simply because it is already beneficial for both parties. If Apple did bring it back here, then the products would be more expensive to make and they would charge higher prices which people wouldn't want to buy then they would loose money. So by leaving it abroad makes it profitable for all parties involved
ReplyDeleteRecently Apple announced it may move some of its operations from China to the US. The new iMac is the product in question and California is where they may be moving it to. I can think two reasons Apple did this. One its consumers insisted on US made and the second is that Apple thought it China lost its cost advantage compared to the US.
ReplyDelete