Case Study: Who Makes the Apple iPhone?
The outsourcing of the assembly of iPhone gadgets by Apple to China is based on economic reasons. Apple’s outsourcing of the assembly of the iPhone to China presents it with an opportunity to save millions of dollars in terms of manufacturing costs. The minimum wage in China is way below that of America and therefore the general costs of assembling are way cheaper in China. Moreover, the costs of importing the numerous equipment used in the manufacture and assembly of the iPhone are way lower in China compared to America due to the variance in tax tariffs imposed on imports by the two countries.
The primary benefactors from Apple’s decision to outsource the assembly of the iPhone to China are the company itself and the Chinese economy. The outsourcing arrangement enables Apple to save millions of dollars in terms of manufacturing costs, therefore, raising its revenue levels. Apple’s outsourcing to China benefits the Chinese economy in terms of the creation of employment as numerous Chinese nationals are employed in the Foxconn Company where the iPhone is assembled (Barboza, 2016). The loser in this scenario is the American government and economy. The outsourcing arrangement denies the American people viable employment opportunities and the government also loses on the revenues imposed on the importation of the numerous components needed for the manufacture of the iPhone.
The ethical problems are the poor working conditions Chinese workers are subjected to in the iPhone assembly plant in China, Foxconn. The Chinese workers are overworked as they are forced to work overtime without proper remuneration. Also, the workers are exposed to various industry-related injuries as most of them are not equipped with safety gear while at work in the Foxconn plant (Barboza, 2016). Moreover, the fact that the iPhone is an American innovation, yet it is outsourced to Chinese workers then sold to Americans in itself poses a major ethical question.
Outsourcing of the assembly of the iPhone in China spells doom for the American economy. Outsourcing denies the average American worker jobs and denies the American government revenue. When big companies such as Apple opt for the outsourcing route America loses thousands of potential jobs and this negatively impacts its economy.
Barboza, D. (2016, December 29). An iPhone’s Journey, From the Factory Floor to the Retail Store. Retrieved from https://www.nytimes.com/2016/12/29/technology/iphone-china-apple-stores.html