On September 26, 2022, the US company Apple said that it has started production of the iPhone 14 in India. The picture shows people passing an iPhone 14 billboard in Kolkata, India.
On September 26, 2022, the US technology giant Apple issued a statement saying that the company has started production of the newly released iPhone 14 in India, which is also the first time that the company will produce in India in the first year of the release of the new iPhone. . According to foreign media reports, from April to August 2022, the export value of "Indian" iPhone mobile phones has exceeded one billion US dollars. Doubled in one fiscal year. Against the background of the intensified competition between China and the United States and the global pandemic of the new crown epidemic, Apple's stepped-up bet on India is particularly conspicuous, and its impact on the economies of China and India is worth investigating.
Apple accelerates layout in India
Since 2017, Apple has accelerated the pace of entering the Indian market, mainly for three reasons.
One is to assemble the iPhone locally in India and shorten the time lag between shipments of iPhones made in China. In recent years, Apple has regarded India as an important production and export base, and has continuously promoted the expansion of local production capacity in India. According to Indian media reports, in the 2021-2022 fiscal year, the value of Apple mobile phones produced in India is about 100 billion rupees, and it is expected that this figure will climb to 470 billion rupees in the 2022-2023 fiscal year. According to JPMorgan Chase, a US financial services agency, by 2025, Apple may be able to transfer 25% of its iPhone production capacity to India to strengthen production in India. In addition, in the past, India produced more old models such as the iPhone SE, and its production of new iPhones usually lags six to nine months behind China, but this time the Indian factory delivered the iPhone 14 only about six weeks later than China. The iPhone 15, released in 2023, may be the first time that China and India will be produced and marketed at the same time.
Second, urge its suppliers and related industrial chains to speed up their transfer to India. Apple currently has three major foundries in India, namely Foxconn, Wistron and Pegatron. Among them, Wistron started to produce the iPhone SE in 2017, Foxconn produces the iPhone 11 to 14 in the southern Indian state of Tamil Nadu, and Pegatron mainly produces the iPhone 12 in Tamil Nadu. According to Reuters, the reason why Foxconn and other manufacturers have increased investment in India, expanded factories, and moved some production lines out of China, is mainly due to the "strong request" from Apple. This pressure is passed through Foxconn and other assembly manufacturers along the industrial chain. The transmission has driven more component suppliers to relocate their assembly lines to India.
The third is to deeply cultivate the Indian market. In September 2020, Apple also launched its online store Apple Store in India, and the company's first brick-and-mortar store in India, the Mumbai World Center store, is currently under construction and ranks among the world's largest physical stores of Apple products. front row. By launching an online store and providing services directly to users across third parties, Apple is trying to increase its revenue capacity in India and firmly grasp the initiative in its own hands. In addition, the company has also joined South Korea's Samsung, China's Xiaomi and other companies to lobby the Bureau of Standards of India, requiring it to greatly simplify the certification and testing process of electronic products, in order to speed up the pace of new products entering the Indian market.
Why India?
In the context of the global economic downturn, the growth potential of the Indian market has impressed Apple. Although the iPhone's share of the Indian market has always been limited, its annual sales in India increased tenfold from 2011 to 2015, which gave the company a lot of confidence in the Indian market. Entering 2020, Apple's market share of mobile phone products in India has risen to 4%. In the same year, iPhone sales in India exceeded 3.2 million units, a significant increase of 60% over the same period of the previous year. Judging from the company's global market structure, iPhone sales in developed countries in Europe and the United States and China have become saturated, and India is one of the few countries that can boost its market growth. At present, India has surpassed the United Kingdom to become the fifth largest economy in the world. In the second quarter of 2022, India's gross domestic product (GDP) increased by 13.5% compared with the same period in 2021. India's rapid economic growth will drive the country's growing smartphone user base, and digital transformation initiatives such as the rollout of 5G networks will further enhance the attractiveness of its smartphone market. At the same time, the cheap and abundant labor in the Indian market also helps Apple to reduce production costs. According to the forecast of the United Nations, by 2023, India will become the most populous country in the world, and its population structure is highly young. The working-age population aged 15-64 accounts for about 67.5% of the total population of India.
The Modi government's strong support for electronics manufacturing is also a key factor in attracting Apple's entry. One is to provide financial incentives. The Modi government has promoted the "Production-Linked Incentive Program" (PLI) in a high-profile manner, giving 4% to 6% of sales to companies that meet the government's investment and sales thresholds. In addition, the Indian government has also implemented "electronic components and semiconductor manufacturing" Industrial Incentives such as the Promotion Program” (SPECS) and the “Improved Electronics Manufacturing Cluster Program” (EMC 2.0). According to reports, India also plans to provide incentives of up to 550 million US dollars to attract US technology giants, such as Apple, Dell, Hewlett-Packard and other companies to open factories in India and expand local production capacity. The second is to improve infrastructure conditions. The Modi government has built a large-scale digital infrastructure for electronics manufacturing companies to facilitate their operations in India by implementing the "Digital India" initiative and accelerating the promotion of 5G network applications. The third is to break through the original policy framework in terms of retail and technical standards, expand the sales space of Apple, Samsung and other brands in India, and exchange market share for their production capacity investment.
Apple, once highly reliant on the Chinese market, is now also diversifying its supply chain. China is one of the company's most important markets in the world. In 2021, the Chinese market will contribute nearly one-fifth of Apple's annual revenue. In the same year, China produced and assembled a total of 230 million iPhones, accounting for about 98% of its total global production for the year. However, in recent years, the United States has frequently suppressed and curbed the development of China's science and technology field, and even introduced the "Chip and Science Act" that obstructed the development of China's semiconductor industry, which has seriously disrupted the smooth operation of the international market and global supply chain, and objectively accelerated Apple's efforts in Vietnam, The pace of shifting production capacity in places such as India.
Facing "Made in India"
For the Modi government, which advertises "Made in India", Apple's entry into the Indian market is a landmark event.
First of all, this will further drive the development of industrial chain clusters in India's mobile phone manufacturing industry. Since iPhone OEM manufacturers need to rely on complex suppliers and industrial support for production, and Apple is also known for its strict industrial ecological control, although the current "Indian" iPhone still needs to import a large number of components from China, Apple The assembly and production of mobile phones in India may drive the migration of its overall mobile phone production chain to India, which in turn will promote the strengthening of India's local mobile phone production, assembly and R&D capabilities.
Second, Apple's entry has a significant demonstration effect, which will encourage Modi's government to replicate industrial policies in other areas. The significant increase in the export value of "Indian" iPhone will strongly encourage India's confidence in becoming a "global manufacturing center", and promote the relevant government departments to more proficiently apply the three tools of "market potential, trade barriers, and financial incentives". Using the vast consumer market as bait, phased tariffs and non-tariff trade barriers are used to prevent imports. At the same time, fiscal incentives are used to attract foreign investment to set up factories, driving industrial chains in other fields to transfer to India.
For China, this may be telling us that it is time to take a serious look at the strength and prospects of "Made in India". But at the same time, the key to how much pressure "Made in India" can bring to "Made in China" lies within ourselves. In the past, the entry of overseas brands such as Apple into the Chinese market promoted the complete upgrading of China's industrial chain and supply chain development, but when these companies show signs of withdrawing, perhaps we need to start thinking about whether China's manufacturing industry has mastered the mid-to-high end of the global supply chain. The irreplaceable advantages in the field, whether my country's local brands are mature enough to effectively drive the survival and effective operation of the entire supply chain manufacturers.
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