There are many of you on here who understand production and manufacturing better than me, but why does Apple not invest as heavily in the U.S.? General curiosity here. If the Chinese and Indians can be trained to build iPhones, why can’t the U.S.?
It's a bit more involved than everyone is saying that it's just about the low wages. My family is originally form Madras (called Chennai in the article) and I grew up in Calcutta and it's fair thing to say that most things in India aren't always as they seem on the surface.
Business in India is complex, often corrupt and deeply inefficient. On the surface India has many we might say westernised elements - English speaking, at a high level something like the British legal system and it is democratic too. But the economy in particular is more controlled than it appears, the currency is controlled, this distorts a great deal and the government has to subsidise lots of things. Businesses can measure if you start with $100 to produce something by the time you sell it how much is left after you've had to pay (bribe?) the delivery firm, deal with random taxes, trumped up political costs etc and India routinely scores among the lowest. Moreover it is just a very difficult place to do business without local contacts and every firm who has come ends up having to adopt local attitudes in some senses especially when it comes to finding employees and understanding how they behave. There is a Marks & Spencers in Bombay for example, on the outside it looks like one in London but their attitude and practices are now local. This really will be a big issue for Apple which has long prided itself on maintaining the same high standards everywhere. Sadly, they will have to change if they want to sell from their own stores in India. Even McDonalds accepted they couldn't sell beef or pork in India. Western ideas for example about the role of the police and laws don't work in practice always there - if a local politician decides he wants you to do this or that you might find you simply have to.
This line:
However, according to industry watchers, Apple is said to be taking the long view and treating India "more as a production hub than a significant market" for device sales.
Is 100% pure marketing BS. Apple probably feels they have to say that or have been told to say that to placate the Indian government. If it really was the case many other firms would be doing it. If Apple could they would make the phones in China and ship into India to sell and keep themselves away from all the trouble - all Apple wants is to a)sell in India and b)keep a high cut of the profits. The desire to achieve this is what has driven all this. If they have to export them from there then they will do so, whatever it takes to get into such big market.
So what is it? In a nutshell, protectionism. India has opened up a lot since the 70s and is now planning to allow more foreign direct investment but it's a complex situation and also the government know there is a huge population there they can use to leverage their power, traditionally this has been done by forcing foreign companies to team up with local companies on the assumption this meant some of the benefits stayed in India. There is a big market and Modi can make others dance. So for example Apple was quick to join in the virtue signalling about the bathroom law in North Carolina. They are apparently unbothered about the treatment of Muslims, women, the poor in India. Why? Because there's more than a billion people and very few have iPhones and Tim Cook can't get over the thought of selling more there. The Indian government is certainly playing Apple quite well. First as the article noted it was them simply transporting a whole company to Bangalore to build phones. Now even exporting from there. Essentially Modi, a man if he was in the west Cook would be on twitter raging about as a fascist all day long, can say "jump" and Cook will ask "how high?"
One thing you won't realise unless you go to India is Apple is selling iPhones already at deep discounts but they hide it. They team up with banks to offer some pretty huge cash back deals. However it's going to be a very hard market for Apple to crack. Partly it's just price. But it's also a cultural thing, India is a swirling, fascinating, troubling place that just doesn't mesh at all with the Apple approach. "Simplicity", something at the heart of Apple, just doesn't have much hold over most Indians. For example it was probably down to India that Apple put in dual SIMs. Almost everyone I know in India, literally almost everyone, has an android phone with dual sims and simply will not buy a phone without dual sim. Why? The phone market is crazy - different companies will offer incredibly cheap rates for 3 months of unlimited data etc. So what happens is everyone has a "normal" number they want to keep on one sim and then they use the other one to dip into offers that are being used to hype up their deals. I can imagine Steve Jobs saying "I just don't care I want the simplicity of one number, one sim for one phone" but if you want to trade in India you have to take on local attitudes. Also so many Indians are desperate to leave and do so for the west, as my family did, so India is I expect the biggest market for international calls. Every auntie in India has a dual sim phone with one of the sims so she can call her relatives in Canada or Australia at a reduced rate.
My guess is this is just the start. Sooner or later you might find Tim Cook behaving like Chopra and cheering on India's military on twitter! Read up about the 2002 Gujurat pogrom where over 1000 people were killed and you'll understand why Modi was for example refused a US visa on the grounds of "violations of religious freedom". Well now he is in national power and politicians and businesses alike are finding it easier to forget about morality and deal with him. I took a sort of terrible pleasure seeing the photos of Cook meeting Modi, it was all so forced and fake and such a total climbdown from Cook's usual moral preening and totally undermined all the virtue signalling he does on twitter. Had Apple been around in the 1930s we can say with some certainty they would have been very happy to meet various fascists and sell phones in fascist countries.
Worth noting whenever I see a company like Apple going into India that last year Cook received $136 million. For all his tweeting about "equality" I expect he won't give a single cent to the poor there. I hope I am wrong.
