Lessons in diversification.

[El Presidente]

....be it China manufacturing or Habanos. 

Diversify....diversify...diversify 

Apple partner faces $7.4 billion disaster as factory chaos sparks sales plunge

Apple’s top manufacturing partner has suffered a crushing, multibillion-dollar blow after weeks of turmoil at a major Chinese factory led to a significant shortfall in iPhones.

Foxconn, Apple’s main subcontractor, locked down its huge factory in Zhengzhou, China in October as a result of surging Covid cases, in line with President Xi Jinping’s controversial zero-Covid policy.

Since then, the factory – which is the world’s largest producer of iPhones, and is widely known as “iPhone City” with a workforce of 200,000 – has also been hit by further mayhem after violent protests broke out over the lockdown, pay and living conditions, which saw employees clashing with security at the plant.

Footage also emerged last month showing panicked workers fleeing the factory on foot over allegedly poor conditions, while videos of the protests also went viral, leaving the international community shocked.

https://www.news.com.au/finance/business/manufacturing/apple-partner-faces-74-billion-disaster-as-factory-chaos-sparks-sales-plunge/news-story/dfd233228352f8cbdce92e0d51ecc011

[NSXCIGAR]

Or, don't locate your $1 trillion company's entire manufacturing hub in an aggressive communist regime. 

Apple should have been moving their manufacturing out of China 10 years ago. They got a little too greedy. And their management is probably a little too idealistic and thinks Jeffersonian democracy is going to break out there any day now. 

[anacostiakat]

47 minutes ago, NSXCIGAR said:

Or, don't locate your $1 trillion company's entire manufacturing hub in an aggressive communist regime. 

Apple should have been moving their manufacturing out of China 10 years ago. They got a little too greedy. And their management is probably a little too idealistic and thinks Jeffersonian democracy is going to break out there any day now. 

I am with you.  The theory was that globalization would bring China towards democracy and capitalism.  Pipe dream.

[El Presidente]

5 hours ago, NSXCIGAR said:

Or, don't locate your $1 trillion company's entire manufacturing hub in an aggressive communist regime. 

 

But they were so cuddly at the time....just like those cute Panda's.Prices were so cheap and we could transfer price around the globe. 

Who would have guessed this 

 

Would have turned into this

 

It is indeed hard to feel sorry for them. 

 

 

[PuroDiario]

On 12/5/2022 at 6:45 PM, anacostiakat said:

I am with you.  The theory was that globalization would bring China towards democracy and capitalism.  Pipe dream.

Hasn’t it? It may not resemble our idealistic view of capitalistic market economy democracy, but they have gotten closer to our KPIs (note I am not an advocate of China at all, and I feel horrified by the lack of liberties, rights, freedom, etc) by every single metric on top of having their own Marshall plan with belt and road, being largest world creditor, largest trade partner to US, etc. meaning they are following the historical playbook of western come to dominance past powers. I think the Pipe dream was that they would get here and also play the game they were asked to by the rules of others. They have this “consultative” Marxism/ Leninism in which the people trade freedom for prosperity, and once a certain level of prosperity achieved they want to play by their rules.
 

China is a serious issue. The redomiciliation of factories and trade to places like Mexico and domestically in the US should create some balance onwards. Curtailing Huawei expansion by the past administration was probably one of the most sound decisions in recent geopolítics (just my opinion on). This Foxconn situation could be interesting long term. 

this is a topic that is fairly worrisome over all. Not sure we will get to see it play out fully.
 

[SCgarman]

I refuse to drink the Apple Kool-Aid. Don't buy none of their stuff. My Samsung phones are made in South Korea.  Apple phones are made by child slave labor. Just like Habanos, the young people that assemble Apple phones are not paid enough wage to even buy one. Tim Cook should be ashamed of himself, but of course he's not. He is a lowlife in my humble opinion.

[Arabian]

8 hours ago, SCgarman said:

I refuse to drink the Apple Kool-Aid. Don't buy none of their stuff. My Samsung phones are made in South Korea.  Apple phones are made by child slave labor. Just like Habanos, the young people that assemble Apple phones are not paid enough wage to even buy one. Tim Cook should be ashamed of himself, but of course he's not. He is a lowlife in my humble opinion.

I think Samsung outsourced those phones to Vietnam and India. I think Apple is considering shifting its operation to India. I believe we reached a point where we just can't avoid China one way or another, from electronics, to car manufacturing, heck even food. Check those garlic country of origin once you visit your nearest grocery store. 

[NSXCIGAR]

On 12/9/2022 at 7:50 PM, PuroDiario said:

It may not resemble our idealistic view of capitalistic market economy democracy,

It's not a free market or capitalist economy in any way, let alone resembles one. 

What little entrepreneurship there is is totally controlled by the government. Virtually all domestic capital investment is controlled by the government in one way or another. There's virtually no innovation there--it's really nothing more than a big factory. If the west pulls out China is royally screwed. They do not innovate. They manufacture. That's it. What communist countries don't understand is that in order for an economy to grow you need private capital investment. 

Foreign capital and manufacturing has provided reasonably paying jobs for the average Chinese worker but they're close to becoming uncompetitive. There are other countries that can now provide cheaper labor like Pakistan, India, Cambodia and Laos. 

The idea was that a growing economy would create a true middle class, or in Marx's language, a bourgeoisie that would have the lion's share of society's wealth and therefore act to protect it on a political level, thus changing the regime to one that protects private property and individual liberty. 

This was nothing more than a theory without basis cooked up by the idealistic post-war ivy-league intellectuals. The regime would never let a bourgeoisie develop. A middle class hasn't been created at all. It's basically welfare-- sprinkled crumbs from the enormous profit being generated by these factories which are controlled ultimately by the CCP. They've had to consistently sprinkle more crumbs to keep the west from seeing people living in poverty. It would be hard to explain if everyone lived like Cubans despite the west pumping trillions in. But the majority of the wealth in China is still concentrated in a relatively few number of hands.