Donald Trump tried, but he failed. Despite his lengthy trade war with China and sanctions on Chinese firms, Apple – surely one of America’s most prominent firms – has become even more reliant on the Asian country’s suppliers.
According to a Nikkei Asia analysis of Apple’s latest Supplier List, 51 of the company’s top 200 suppliers last year were based in China (including Hong Kong) – more than any other country. Taiwan, which usually occupies the top spot, has been knocked down a peg to 2nd place with 48 suppliers.
And why do Chinese suppliers continue to be so popular with Apple? The answer won’t surprise you at all – they’re cheap.
An Apple supply chain manager told Nikkei Asia that most Chinese suppliers take a similar approach. “They are willing to take low-margin businesses that other suppliers are reluctant to pick up. This way, they could gradually level up by working with Apple and can later bid for more business the next time,” the manager said.
Growing hostility towards China in American political circles has so far not dissuaded Apple for alluring cost savings. But some view the dependence of US companies on China as a national security risk. Paypal co-founder Peter Thiel, for example, wants Washington to apply pressure on Apple over its iPhone supply chain in China.
Ironically, Chinese suppliers have also been helping Apple diversify its supply chain and build production capacity in other Asian countries like Vietnam. Apple suppliers in Vietnam increased to 21 last year, but seven of them are owned by Chinese- or Hong Kong-based firms.
(Source: Nikkei Asia. Text image: Gaston Laborde / Pixabay.)
