Relocating the iPhone supply chain—as promised—is beyond even a president’s powers.
“We’re going to get Apple to start building their damn computers and things in this country instead of in other countries,” said candidate Trump last January, displaying in one soundbite the depth of his ignorance in several fields—among them computers, trade policy and the Asian electronics supply chain. See What Donald Trump Doesn’t Know About Apple Could Fill a Stadium.
Did the President elect read the New York Times’ 2013 Pulitzer-prize winning series on Apple? Did he get briefed on it? Just in case, the Times today gave him—and his advisors—another chance to get up to speed.
In a front page story titled How China Built ‘iPhone City’ With Billions in Perks for Apple’s Partner, the Times’ David Barboza takes a fresh look at Foxconn’s massive iPhone factory in Zhengzhou, China, how it came to be built there, and what it might take to bring those jobs back home. In the process Barboza shares for the first time the contents of a trove of confidential Chinese government records.
It’s a fascinating read. Among its findings:
- Zhengzhou city officials lavished money and favorable investment terms on Foxconn. They promised discounted energy and transportation costs, lower social insurance payments, and more than $1.5 billion in grants for the construction of factories and dormitories that could house hundreds of thousands of workers.
- The city government eliminated corporate taxes and value-added taxes that Foxconn pays for the first five years of production; they are half the usual rate for the next five.
- The city also lowered Foxconn’s social insurance and other payments for workers, by up to $100 million a year.
- Foxconn receives a bonus when it meets targets for exports. Those subsidies, according to the government records, totaled $56 million in the first two years of production, when the factory was exclusively dedicated to the iPhone. Today Foxconn’s factory, at peak production, employs 350,000 workers and turns out up to 350 iPhones a minute.
My favorite bit: The old Hong Kong U-turn, where, to comply with outdated Chinese export rules, cargo ships full of iPods for sale on the mainland would sail to Hong Kong, get cleared through customs, turn around and sail right back.
This is good reporting. I hope it gets read by someone with the President elect’s ear.