Transcript Ipad
How does Apple Company Affect East Asian Economy ? Group Members Chong Han Fei Sun Yan Chen Brief Introduction Established on April 1, 1976 in California American multinational corporation 357 retail stores in ten countries (July, 2011) Core Products 2010 iPod MacBook iPad iMac iPhone Apple’s Growth Data achieved from Yahoo Finance Stock Price Date Stock Price November,17 2008 $82.58 August, 3 2009 $165.51 June, 28 2010 $246.94 March, 28 2012 $617.62 Data achieved from Yahoo Finance Sales Growth Sales Growth Growth Model Neo-Classic Economics tells us the Economics growth = increase in aggregate output 𝑌 = 𝑓(𝐾, 𝐿; 𝑇) 𝑌 = 𝐴𝐾 𝛼 𝐿1−𝛼 Outline Capital Labor Technology Institutions, Human resource, Culture Example: Foxconn Capital Apple Inc. invest its partners in Asia Similar enterprises in Asia Development of Related industry in Asia Supply Distribution In 2011, 70 million Iphone 30 million Ipad 59 million Other products were manufactured overseas, mainly in Asia Supply Distribution Investment Samsung Electronics (1999, $100million, LCD factory) Hynix Semiconductor Inc. (new memory- chip factories) Some small companies in Asia. Effects to the similar companies Negative Effect Grab market share in Asia Positive Effect Encourage those companies increase their capital Market Share Market share gain / loss (Q1 09-Q2 11) Apple +3.9% HTC +2.1% ZTE +1.2% RIM +0.3% Samsung +0.2% LG -2.5% Motorola -3% Sony Ericsson -3.9% Nokia -14.2% Investment Samsung Group raises costs for investment in 2012 to 41.4billion Boao Forum for Asia 2012 : Strategic Breakthrough of Asian manufacturing Related Industry Small commodity Yi Wu – the largest commodity center in China E-commerce Taobao(淘宝） — A Chinese online shopping website. Labor Apple employs 43,000 people in the United States But, there are 700,000 people work for Apple’s contractors Labor “Why can’t that jobs come home?” “Those jobs aren’t coming back！” Why? workers are cheaper abroad The vast scale of overseas factories the flexibility, diligence and industrial skills of foreign workers Labor Cost According to The Boston Consulting Group, the Wage of labor per hour is shown in the following table. Year China U.S. 2000 ₡54 $16.61 2015 $4.41 $26.05 Apple Suppliers 2011 Speed and Flexibility A story told by one former executive: weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. In a Chinese plant, 8,000 workers were roused In Midnight They were guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day. Stimulation Lenovo IdeaPad Dell Streak 10 Pro iPad Samsung P6800 Asus EeePad TF101 Technology Technology is the driving force of economic growth How Apple Company influences the Asian market? Technology Stimulate the development of the world IT industry, including Asia. eg. Multi-touch Technology Technology Provide a broader flat for those who are interested in software developing. Give the IT industry new blood Stimulate the innovation in IT in industry. Other Factors Human capital, culture and institution Profit distribution for iPad and iPhone Distribution of value for iPhone Distribution of value for iPad Profit Distribution The first assignment of profits (which exclude wages paid) to first-tier suppliers is based on the location of their corporate headquarters. There are no known Chinese suppliers to the iPhone or iPad. That means that the main financial benefit to China takes the form of wages paid for the assembly of the product or for manufacturing of some of the inputs. Only $10 or less in direct labor wages that go into an iPhone or iPad is paid to China workers. the portion retained in China's economy is a tiny fraction of total profit Human Capital Capital Compared with Japan and Korea, Chinese workers’ education level is usually a little bit lower. Apple Company may not be confident to let them be responsible for the high-skilled job. Productivity is lower, compared with Japan and Korea. Culture Chinese people usually think that knowledge is a public good. They like to share knowledge, and they think that there is no need to keep others from knowing it. Eg. The happiness from enjoying something yourself is not as much as sharing it with other people. (独乐乐不如众乐乐) Apple company may not feel safe to let China know the important technology, for fear that China will not keep the technology as a secret Institution There is no proper law to protect intellectual property rights. Investors are not very comfortable. Example：Foxconn Not long ago, Apple boasted that its products were made in America . 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas. Example：Foxconn Demand for glass screen. Required precision in cutting and grinding that was extremely difficult to achieve Corning Inc. Example：Foxconn A warehouse filled with glass samples. Engineers available at almost no cost On-site dormitories, 24 hours available workers. Foxconn City Eight-hour drive from that glass factory 230,000 employees, many working six days a week, often spending up to 12 hours at the plant Many workers earn less than $17 a day Why choose Foxconn Cheaper labor flexibility , diligence , industrial skills Lack of mid-level workers in U.S. Conclusion Apple Company is influencing Asian economy in three ways: Innovation Competition Promotion Question How to attract more investments from overseas to Asia? Reference 2011 Apple Inc. Annual Report Duhigg, C. and Bradsher. K. (2012) How the U.S. Lost Out on iPhone Work. The New York Times. No author (2011). The mobile handset ‘long-tail’ Kraemer, K. L., Linden, G., & Dedrick, J. Capturing Value in Global Networks: Apple’s iPad and iPhone. University of California, Irvine, University of California, Berkeley and Syracuse University Kraemer. K.L., Linden. G. & Dedick. J. (2011) Capturing Value in Global Networks: Apple’s iPad and iPhone Kazuyuki. M. (2006) Benchmarking Industrial Competitiveness by International Comparison of Productivity. url: http://www.rieti.go.jp/en/columns/a01_0206.html Viswanathan, p. (2011). Steve Jobs’ Demise – Impact on Asian Tech Firms Xinhua (2012). Boao Forum for Asia 2012 concludes. Xiaowu, (2012). How can Yiwu make difference. Thanks for listening