Was Your iPhone Made in India?

Notes: Was the iPhone you just bought made in India? Maybe not, but your next one very well could be. Apple recently announced that it will be increasing production in India. The company hopes the move will help it reduce its reliance on China. Like so many other companies that have established strong supply chain networks in China over the past couple of decades, Apple currently relies on China for almost all of its iPhone production. Now, it is looking to change that strategy. Is China losing its luster as a highly efficient global factor floor? Not really, but the COVID-19 pandemic highlighted the drawbacks of an overreliance on a single country, encouraging managers to look for ways to reduce that dependence. More recently, the conflict in Ukraine and China’s apparent willingness to overlook Russia’s actions have made many corporate leaders even more leery of relying too heavily on China.  

For its part, Apple is hoping that India will be part of the solution. The company is planning to expand existing production in India, where about 3 percent of its iPhones are already made. While the country cannot yet match China in terms of efficiency, cost, and quality, Apple is betting that it can close the gap. However, for India to truly take on China as an alternative world class manufacturing hub, the country will need to improve its logistics infrastructure, strengthen its domestic economy, and implement export-friendly policies, all changes that will take time. But, as Beijing announces yet more COVID lockdowns across China, disrupting once again, now fragile supply chains, Apple is moving ahead with its new strategy anyway, reflecting the urgency that companies are feeling about global production going forward. Despite its new focus on India however, China, which currently buys about 20 percent of iPhones sold, remains an important market for Apple, suggesting that China will continue to play a significant role in the company’s global strategy at least for now.    

Discussion Questions:

1. Why is India an attractive production option for Apple? What barriers, if any, do you see that could make it difficult for Apple to successfully expand its presence in the market? Why is it important for India to implement policies that facilitate foreign trade and investment? (Hint: think about economic growth and development potential in India).

2. Discuss the tradeoffs Apple is making as it shifts some production from China’s highly productive, established, and efficient factory floor to India’s less advanced production process. Is Apple making the right decision to reduce its dependency on a single nation even if its overall costs are higher in India? Why?

3. Perceptions of product quality can vary based on attributes such as production location, brand, and cost. Do you think buyers will view iPhones produced in India as being any different from those produced in China? Explain. Does your response change knowing that Apple will be working with its long-term partner, Taiwan’s Foxconn, at the supplier’s location in India?

Source| Reuters: Apple starts manufacturing iPhone 13 in India; WJS: Apple’s Big Bet on India Gets Bigger Still; Photo by Frankie on Unsplash