Apple CEO says it has ‘symbiotic’ relationship with China

Posted by Sino SCS

Apple CEO Tim Cook outlined the importance of China in the firm’s supply chains in a meeting with Chinese government ministers. 

Cook met with government officials in China to underline Apple’s supply chain relationship with the country, despite Apple’s much-discussed plans to diversify manufacturing for some of its flagship products to countries including India.

“Apple and China… grew together and so this has been a symbiotic kind of relationship,” Cook said at the China Development Forum in Beijing, according to the FT .

Cook further met with Chinese commerce minister Wang Wentao to discuss “views on issues such as Apple’s development in China and the stabilisation of the industrial and supply chains,” the ministry said in a statement.

Wang reportedly told Cook that China planned to continue to open up its economy to attract the business of global firms like Apple.

Cook’s visit comes against a backdrop of rising tensions around trade and Taiwan between the US and China, as well as residual frustration among global manufacturers over China’s former hardline policies on Covid-19.

Beijing’s zero-Covid policies led to disrupted production and even demonstrations by workers at the world’s largest iPhone factory run by Apple supplier Foxconn, the so-called iPhone City in Zhengzhou.

But reports indicate that Cook has steered clear of such topics on his visit to China – the first since the pandemic.

Apple started assembling its flagship iPhone 14 in India in September 2022. The company said at the time: “The new iPhone 14 lineup introduces groundbreaking new technologies and important safety capabilities. We’re excited to be manufacturing iPhone 14 in India.”

Yet some reports indicate that efforts to diversify sourcing and manufacturing to India have been less successful than expected.

Only 50% of components made by certain Apple suppliers in India are meeting quality control standards, according to FT.

The story contrasted Apple’s experience in China, where suppliers and government officials took a “whatever it takes” approach to production, while a former Apple engineer in India said: “There just isn’t a sense of urgency.”

The article also said Apple was experiencing difficulties with logistics, tariffs and regulations in India. It underlined, however, that sources believed that India would eventually become an important sourcing destination for the firm.

The concerns underline the potential problems of implementing policies such as reshoring production or China plus one sourcing strategies. 

Vietnam, where Apple is moving production of its MacBooks from China, is also experiencing teething problems as it seeks to scale up manufacturing.

Economist Su Dinh Thanh, who serves as the rector of the University of Economics in Ho Chi Minh City, has called for increased investment in logistics in the country’s key Southeastern production hub.

This area – which encompasses Ho Chi Minh City, as well as the provinces of Dong Nai, Binh Duong, Ba Ria-Vung Tau, Binh Phuoc, and Tay Ninh – has played a crucial role in the growth of the country’s economy.

Despite having only 23% of the population, the Southeastern region contributed more than 30% of Vietnam’s GDP, but Thanh said that the region’s inadequate road infrastructure is leading to heightened freight costs.

Author Sino SCS
中品供应链-Sino Supply Chain Service