Manufacturing in China – Why We Can’t Compete and Why We Probably Don’t Want To

Here is a LINK to an aerial map of the city of ZHENGZHOU in Henan Province in central China.

What is here? A lot. As you can see the area is impossibly dense with buildings etc. At the link you can use the birds eye view and zoom as you’d like.
The worlds largest contract maker, FOXCONN, of cell phones, computers etc is in the process of moving factories from coastal areas of China to several interior regions. The reason? Less cost and a huge labor pool. And just maybe, Global Warming. What is the initial major product they’ll produce? Apple iPhone 4.

Where do the workers live? Dormitories.
Bill of materials for the iPhone 4 is HERE
iPhone 4 Carries Bill of Materials cost of $187.51, According to iSuppli

A teardown of the iPhone4 is HERE

Pricing for this phone is in the $600-$800 range. Apple is noted for their very high margins on products.

Apple isn’t one of my favorite companies, but to be fair, all the major US manufacturers of these high tech products do pretty much the same. Apple is unique because of the persona they present to the public, the closed nature of the Apple platform and App Store and their over the top margins. The legions of young Americans who are attracted to these products would be seriously repulsed were they to have the slightest idea how that phone got into their uninformed hands.

These phones are every bit the ultimate commodity product but are being sold at stupidly premium prices. This is sick.

With margins running around 200% this is a racket. Conclusion. Americans are impossibly dumb.

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2 thoughts on “Manufacturing in China – Why We Can’t Compete and Why We Probably Don’t Want To

  1. cmaukonen

    About 8 years or so ago I remarked to a friend of mine that the country to keep an I on would be China. That Japan was old news. He ask why. I said that their culture is why they would be very successful in an open market.

    1. Yes. But only when coupled with the unchecked greed of US style capitalism with a ready market of idiot consumers. A marriage made in hell.

      This is beyond ugly. It’s been going on for over a decade already and is getting worse all the time. The overall Android based marketplace, phones / tablets, is the same but is comprised of many players. It dwarfs what Apple is doing in dollar volume but is more competitive. Still ugly though.

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