Earlier in March, Tim Cook announced the company’s plan to launch its first brick and mortar store in India. The decision shows Apple’s commitment to the second-largest smartphone market in the world. However, if you were as naive as I was and thought that the Cupertino giant would also begin manufacturing its flagship iPhone models like the iPhone 11 in India, think again!
Why, you ask? The reason is two-fold but, before we get into all that, let’s backtrack a little.
Apple’s Position in India
Back in 2016, Apple started manufacturing select models in India. As Indians typically buy budget or mid-range smartphones, the company set up factories in Bengaluru and Chennai to cut down on import duties that increased its final price. Apple first began with assembling the iPhone SE and iPhone 6s models, then moved on to the production of iPhone 7 and iPhone XR models.
This strategy, plus the bank offers, gave a significant push to Apple’s sales and helped them ship nearly 1,95,000 iPhones in one quarter—a near 200% increase from the previous year’s quarter. The iPhone XR reportedly had over 46 million shipments, becoming the best-selling smartphone of 2019 and consequently getting the company’s sales back on track.
Naturally, you’d think if this strategy worked so well for the iPhone XR, Apple would want to do the same thing for its other flagship iPhone models. But as it turns out, that doesn’t seem to be the case.
Why does Apple keep clinging on to China?
Reason #1. According to The Wall Street Journal, long before the COVID-19 outbreak happened, Apple’s operations staff had raised concerns about the tech giant’s dependency on China and had repeatedly tried to move production elsewhere. However, the senior executives refuted the idea.
In 2019, the company had considered shifting production to India. But, the plan never saw daylight as Apple’s executives feared that doing so could lead to a significant blow to its sales in China, which alone generates a fifth of its revenue.
Reason #2. India’s labour situation is far from satisfactory. There is a lack of skilled labour and robust infrastructure in the country, which is not a problem in China. There, the company has access to affordable skilled labour for the production of its high-tech flagship iPhone models.
“Apple is unlikely to shift any of the production of its most expensive iPhones to India later this year,” a Foxconn executive told the Wall Street Journal. “The supply chain isn’t in place, and workers in India aren’t ready to produce the high-end, organic light-emitting diode models.“
I gotta say I’m a little disappointed, but I suppose whatever shall come will come and all that… Well, here’s wishing Apple and India both get their shit together soon. Who else is with me?