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Mass Production of iPhones to Start in India

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Re: Mass Production of iPhones to Start in India

#31

Post by arcticbull »

finebalance wrote: post #16
hodder wrote: post #14

Earlier quoted context omitted.

What makes you think you will not pay a premium for iPhones in India in the future? Apple prices based on demand curves, not supply costs.

India has a really high import tax on electronic items. Even if Apple charges a slight premium over its US prices, it's still going to be significantly cheaper than what it currently is. For example: a 64 GB iPhone X is currently selling for around 1100 dollars.

Or they keep them the same price and make even more impressive margins. There's a reason they have 87% of the world smartphone profit share [1] and it's not because they're giving them away or passing on the cost savings to their customers.

Import duty on iPhones is 18% and 28% on iPads as of 2015. [2] Wealth inequality in India is pretty high (not as high as in the US, though, GINI 35.6 vs 40.4), and it's GDP per capita is just $1,939. Per your data, they're currently charging $1,100 which is a whopping 57% of GDP per capita.

My gut tells me reducing the price of a super-luxury good by 18% won't increase demand enough to make up for pocketing the 18% savings. That would be like pricing an iPhone at $33,000 in America. I can't imagine reducing the price to $27,000 would dramatically increase the number of buyers. Or a Rolex from $100K to $82K.

I guess we'll see!

[1] https://www.forbes.com/sites/chuckjones/2018/03/02/apple-con...

[2] https://www.labnol.org/india/custom-import-duties/19306/

Re: Mass Production of iPhones to Start in India

#32

Post by itissid »

Ayesh wrote: post #15
NTDF9 wrote: post #5

Earlier quoted context omitted.

It's a logistics/risk balancing/new demand move. 1. Logistics: Cheaper to ship to rich Middle east and maybe even Europe 2. Risk balancing: With uncertainty at political levels about tariffs and trade rules, it makes sense to distribute production to multiple places in the world. 3. New demand: Lower cost of production == lower prices in India. Apple has negligible penetration in the largest fastest growing market. T…

I think Apple is pretty late at this point. Xiaomi and Oppo have figured out the distribution, localization, and a sizeable user base already there, and a decent smart phone now costs $150-200. They are quite good phones and from what I understand, price is the biggest driver for sales.

But apple is a luxury brand. You can't say that with Xiaomi or Oppo. With luxury brand the price is not a bug but a feature for the people that swear by them.

And Rich people don't even care about the money. the 50-100 million rich people in india are least bothered about the price tag as long as it signifies luxury and status.

Re: Mass Production of iPhones to Start in India

#33

Post by shripadk »

supernova87a wrote: post #18

I agree with an above poster, this seems to me like a political or legal concession just for Apple to be able to sell in India more easily (or maybe at all?). The infrastructure and political circumstances in India are just laughable. Read all the articles about the manufacturing ecosystem around Apple factories in China, the special bonded customs zones the regional governments set up, the incentives, and workers th…

> Read all the articles about the manufacturing ecosystem around Apple factories in China, the special bonded customs zones the regional governments set up, the incentives, and workers they help recruit

It is called SEZ or Special Economic Zones in India. Take some time and read up on it first before coming to wrong conclusions: https://en.wikipedia.org/wiki/Special_economic_zone#India. It has been around for multiple decades now. It isn't some new concept. All MNCs are situated in SEZs be it Google, Facebook, Microsoft or now Apple. Apple is the latest entrant and not first by any means.

> India by comparison is a disaster. You don't even know which official to bribe to get the power to stay on properly. Almost more trouble than it's worth to enter that market.

This is a ridiculous assertion based on heresy with no evidence to back it up. Ease of doing business has increased drastically in the past few years. Multiple foreign companies have setup shop in India and some have been in India for decades now (Microsoft, Google etc). I can understand if you had compared India to a Western country but comparing it to China? Are you serious?

If India was really such a "disaster" compared to China why did Google quit China and not India? Does that in itself not invalidate all your points?

Also, coming to your "bribe" issue: do you mean to say "lobbying"? Because bribing is almost non-existent in India when it comes to operations of MNCs. You need to "lobby" for laws that favour MNCs. That has been the case for a long time in India now. But lobbying is also dying since Modi took over. You now have to come through the "Make in India" route. All foreign players are actually happy with it because there is zero red tape and all processes are fast-tracked. No need to lobby with anyone anymore and just focus on building and expanding your business. The issue for India was that it took this route too late (after many decades of extreme protectionism).

I don't know where you get your information from but it is high time you change your source.

Re: Mass Production of iPhones to Start in India

#34

Post by iguy »

arcticbull wrote: post #31
finebalance wrote: post #16

Earlier quoted context omitted.

India has a really high import tax on electronic items. Even if Apple charges a slight premium over its US prices, it's still going to be significantly cheaper than what it currently is. For example: a 64 GB iPhone X is currently selling for around 1100 dollars.

Or they keep them the same price and make even more impressive margins. There's a reason they have 87% of the world smartphone profit share [1] and it's not because they're giving them away or passing on the cost savings to their customers. Import duty on iPhones is 18% and 28% on iPads as of 2015. [2] Wealth inequality in India is pretty high (not as high as in the US, though, GINI 35.6 vs 40.4), and it's GDP per ca…

Or else the cost of producing a relatively small number of phones inside India won't be as cheap as the global HQ operation. If import taxes were the only consideration, you might expect them to open a new small factory when the extra cost of running it was about equal to the taxes.

Quite a few countries have car industries which work roughly like this -- the local VW plant will cost twice as much to run (per car) as the mothership, roughy matching a 100% import tax. (Although in reality there is often more to the story, like producing exactly one model there & exporting those for credit against imports...)

Re: Mass Production of iPhones to Start in India

#35

Post by vijaybritto »

deepGem wrote: post #8

Man, finally this came along. Apple had been negotiating for almost 3 years to setup manufacturing in India. Foxconn got a start in the outskirts of Bangalore where they manufacture iPhone SEs. I as a customer am super glad this is coming along. Tired of paying a premium for Apple products in India. In addition to iPhones I seriously hope they start iPad manufacturing as well. IMHO iPads will probably have a better s…

The glory days of iPhones are over.Its gonna be 10k less than the existing one and it's still for top 1 or 2 %

Re: Mass Production of iPhones to Start in India

#36

Post by seanmcdirmid »

arcticbull wrote: post #31
finebalance wrote: post #16

Earlier quoted context omitted.

India has a really high import tax on electronic items. Even if Apple charges a slight premium over its US prices, it's still going to be significantly cheaper than what it currently is. For example: a 64 GB iPhone X is currently selling for around 1100 dollars.

Or they keep them the same price and make even more impressive margins. There's a reason they have 87% of the world smartphone profit share [1] and it's not because they're giving them away or passing on the cost savings to their customers. Import duty on iPhones is 18% and 28% on iPads as of 2015. [2] Wealth inequality in India is pretty high (not as high as in the US, though, GINI 35.6 vs 40.4), and it's GDP per ca…

India raised it to 20% in 2018. https://money.cnn.com/2018/02/01/technology/india-iphone-tar...

Then there is 12% tax on top of that.

Re: Mass Production of iPhones to Start in India

#37

Post by vijaybritto »

tiuPapa wrote: post #22
xbmcuser wrote: post #19

Earlier quoted context omitted.

Gdp per capita for India is around ~$2000. India does not have much of a market for +$500 phones nor does it have a contract system where the +$500 can be paid over time. So I don't see it help Apple much in gaining market share. At the current Apple prices I have seen multiple long time Apple users leave Apple. Unless Apple is willing to cut its margins dramatically I don't see them getting much of a foot hold in In…

You are forgetting India is a land of 1.3 billion people. There are at least 50 - 100 million people who are willing to spend more than 500$ on a phone. That's a big enough market for Apple to consider.

No. The sale of 500$+ phones in only in a few million.

Re: Mass Production of iPhones to Start in India

#38

Post by [deleted] »

seanmcdirmid wrote: post #36
arcticbull wrote: post #31

Earlier quoted context omitted.

Or they keep them the same price and make even more impressive margins. There's a reason they have 87% of the world smartphone profit share [1] and it's not because they're giving them away or passing on the cost savings to their customers. Import duty on iPhones is 18% and 28% on iPads as of 2015. [2] Wealth inequality in India is pretty high (not as high as in the US, though, GINI 35.6 vs 40.4), and it's GDP per ca…

India raised it to 20% in 2018. https://money.cnn.com/2018/02/01/technology/india-iphone-tar... Then there is 12% tax on top of that.

[deleted]

Re: Mass Production of iPhones to Start in India

#39

Post by gnopgnip »

acchow wrote: post #21
CPLX wrote: post #9

Earlier quoted context omitted.

It’s not “just” that, it’s actially the desired result of the protectionist policy, which appears to have been effective.

Why don't other large, developing countries adopt similar policies? What are the downsides?

Many others do, but usually on a more limited basis to protect certain industries. Brazil does for virtually all electronics.

Re: Mass Production of iPhones to Start in India

#40

Post by ulfw »

This is so against globalisation and global trade it‘s not even funny. Totally cool if Apple did this voluntarily, but the only reason they‘re doing it is to prevent high import taxes.

India is a huge market. So it‘s all good. Brazil is a good deal smaller and requires the same thing. So does Argentina (and is even smaller). Now imagine every country would do this.

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