In early 2023, some Chinese engineers packed for a long journey.
They had never been to this country before. But they had agreed to the job.
After a long flight, they finally landed.
They had been briefed about their task before getting on the flight.
A few classes of English were given to them. Some cultural lessons were also given.
Once they settled in, they reported to their work – at the Foxconn factory, in Sunguvarchatram (Tamil Nadu, India).
These engineers had been selected from the Foxconn factory in China.
They had come to India to train Indian workers; to make them as efficient as Foxconn’s Chinese workers.
What were they making in this factory?
iPhones.
Apple does not make any iPhones.
They design it.
Then, they hire manufacturing companies to make the iPhones. Foxconn is one such company.
In 2017, the first ‘Made in India’ iPhone was manufactured by another iPhone manufacturer called Wistron. That was a lower model (iPhone SE).
During the pandemic, strict lockdowns in China disrupted the factories and supply chains.
Around that time, Apple decided to increase manufacturing in India.
The Chinese engineers who were visiting India in 2023 were a part of this expansion.
Around 35,000 workers now work in Foxconn’s iPhone factory in Sunguvarchatram.
Most workers are new and are still learning.
Clashes occur between the new Indian workers and their Chinese managers.
Large hostels have been built so workers can stay close to the factories. Buses move the workers as the shifts start and end.
The factories are being expanded with time.
Chinese managers often complain about how Indian workers are not efficient; that they’re slow and lazy.
This is a pattern seen whenever manufacturing starts in a new place.
There was a time when Korean and Chinese workers were called inefficient and lazy – when such factories first opened in those countries.
They had never been to this country before. But they had agreed to the job.
After a long flight, they finally landed.
They had been briefed about their task before getting on the flight.
A few classes of English were given to them. Some cultural lessons were also given.
Once they settled in, they reported to their work – at the Foxconn factory, in Sunguvarchatram (Tamil Nadu, India).
These engineers had been selected from the Foxconn factory in China.
They had come to India to train Indian workers; to make them as efficient as Foxconn’s Chinese workers.
What were they making in this factory?
iPhones.
Apple does not make any iPhones.
They design it.
Then, they hire manufacturing companies to make the iPhones. Foxconn is one such company.
In 2017, the first ‘Made in India’ iPhone was manufactured by another iPhone manufacturer called Wistron. That was a lower model (iPhone SE).
During the pandemic, strict lockdowns in China disrupted the factories and supply chains.
Around that time, Apple decided to increase manufacturing in India.
The Chinese engineers who were visiting India in 2023 were a part of this expansion.
Around 35,000 workers now work in Foxconn’s iPhone factory in Sunguvarchatram.
Most workers are new and are still learning.
Clashes occur between the new Indian workers and their Chinese managers.
Large hostels have been built so workers can stay close to the factories. Buses move the workers as the shifts start and end.
The factories are being expanded with time.
Chinese managers often complain about how Indian workers are not efficient; that they’re slow and lazy.
This is a pattern seen whenever manufacturing starts in a new place.
There was a time when Korean and Chinese workers were called inefficient and lazy – when such factories first opened in those countries.
The entire setup in a few Indian cities like Sunguvarchatram is a part of Apple’s push to make more iPhones in India.
Indian government wants this to happen – more manufacturers in India.
In 2022, around 5 to 7% of the world’s iPhones were being made in India. These were older models or lower models like the iPhone SE.
In 2023, under its expansion plan, Foxconn started making the iPhone 14 soon after it was launched.
In the near future, some indications say that up to 25% of all the iPhones in the world may be made in India.
Manufacturers like Foxconn, Wistron, and Pegatron are trying to make their Indian factories operate as efficiently as their Chinese factories.
This is why many Chinese engineers are visiting India – to train new workers, to establish processes – to make things work.
Life in Zhengzhou
The iPhone was never made in the USA – where Apple is from.
It was always made in China.
When Apple designed the first iPhone, Foxconn spent time looking for a place to set up a factory.
A giant factory.
A Chinese city called Zhengzhou was chosen.
The government officials wanted the plant to open in their city.
They rolled out excellent deals for Foxconn. They even built an airport close to the Foxconn plant.
Over the years, this plant grew to an incredible size – over 5 sq km.
This one city alone makes 50% of all the iPhones produced. It can produce up to 5 lakh iPhones – per day.
Over 2 lakh workers work here.
They have hostels to stay in, buses to ferry them to factories, and other facilities.
This city came to be known as the iPhone city.
People from rural areas travel to Zhengzhou to find work.
During peak seasons, Foxconn raises the salaries offered to workers. This attracts more workers to the city.
In a matter of days, they are able to hire thousands of extra workers – and increase the factory’s output.
The city is infamous too.
Workers’ conditions are sometimes questioned by the western media. There have been suicides by workers who were under pressure to work faster.
The area inside which the plant operates is called a ‘bonded zone’.
Whatever is made inside the bonded zone is taxed differently. It allows easy exports to all over the world.
Zhengzhou is a city that functions around the iPhone.
Parts that are needed can be sourced in hours. New workers can be hired in days – sometimes even in hours.
Entire factories can be updated to make newer models in weeks.
There is an unconfirmed story about the first iPhone. The story goes like this:
In 2007, ~1 month before the iPhone was about to be launched, CEO Steve Jobs had a problem.
His iPhone screen was getting scratched by the keys in his pocket.
He ordered the iPhone’s plastic screen be changed to scratchless glass.
Note, this is just ~1 month before the launch.
In Zhengzhou city, the manufacturer was able to source the glass within hours.
And in mere days, they were able to change the manufacturing lines and processes.
Soon, they were producing 10,000 iPhones per day – with updated scratchless glass screens!
Apple was able to launch the phone on time. It never sold a single iPhone with a plastic screen.
Ex-president of USA, Obama, asked Steve Jobs when iPhones would be made in the USA.
Steve said “those jobs are not coming back”.
That is how well Apple’s manufacturing ecosystem is in China. And now, they are trying to do that in India.
Manufacturing Moat
Why are we talking about this today?
Ask iPhone users why the iPhone is so successful.
They will tell you about the great design, the amazing experience, the cutting-edge technology, and so on.
We think about how Apple designs its products.
We think of what makes it such a difficult competitor. We think of its moat.
Yes, design, technology, experience – all of those are its moats.
But without Apple’s insane manufacturers’ network, most users would not have iPhones in their hands.
Not just Apple.
Tesla is not the world’s biggest electric car maker. Chinese company BYD is.
Why? Because they can manufacture a lot more cars. They have the capacity to do that.
Fashion brand Zara can make a new design, manufacture thousands of pieces, and make it available in its stores – in just 2 weeks.
A company can design a great product.
But can they make that product? Can they make as many units as their customers want? Can they quickly change their products?
Manufacturing is an underdog. It is a hidden moat. Many of us don’t talk about it.
We should.
Indian government wants this to happen – more manufacturers in India.
In 2022, around 5 to 7% of the world’s iPhones were being made in India. These were older models or lower models like the iPhone SE.
In 2023, under its expansion plan, Foxconn started making the iPhone 14 soon after it was launched.
In the near future, some indications say that up to 25% of all the iPhones in the world may be made in India.
Manufacturers like Foxconn, Wistron, and Pegatron are trying to make their Indian factories operate as efficiently as their Chinese factories.
This is why many Chinese engineers are visiting India – to train new workers, to establish processes – to make things work.
Life in Zhengzhou
The iPhone was never made in the USA – where Apple is from.
It was always made in China.
When Apple designed the first iPhone, Foxconn spent time looking for a place to set up a factory.
A giant factory.
A Chinese city called Zhengzhou was chosen.
The government officials wanted the plant to open in their city.
They rolled out excellent deals for Foxconn. They even built an airport close to the Foxconn plant.
Over the years, this plant grew to an incredible size – over 5 sq km.
This one city alone makes 50% of all the iPhones produced. It can produce up to 5 lakh iPhones – per day.
Over 2 lakh workers work here.
They have hostels to stay in, buses to ferry them to factories, and other facilities.
This city came to be known as the iPhone city.
People from rural areas travel to Zhengzhou to find work.
During peak seasons, Foxconn raises the salaries offered to workers. This attracts more workers to the city.
In a matter of days, they are able to hire thousands of extra workers – and increase the factory’s output.
The city is infamous too.
Workers’ conditions are sometimes questioned by the western media. There have been suicides by workers who were under pressure to work faster.
The area inside which the plant operates is called a ‘bonded zone’.
Whatever is made inside the bonded zone is taxed differently. It allows easy exports to all over the world.
Zhengzhou is a city that functions around the iPhone.
Parts that are needed can be sourced in hours. New workers can be hired in days – sometimes even in hours.
Entire factories can be updated to make newer models in weeks.
There is an unconfirmed story about the first iPhone. The story goes like this:
In 2007, ~1 month before the iPhone was about to be launched, CEO Steve Jobs had a problem.
His iPhone screen was getting scratched by the keys in his pocket.
He ordered the iPhone’s plastic screen be changed to scratchless glass.
Note, this is just ~1 month before the launch.
In Zhengzhou city, the manufacturer was able to source the glass within hours.
And in mere days, they were able to change the manufacturing lines and processes.
Soon, they were producing 10,000 iPhones per day – with updated scratchless glass screens!
Apple was able to launch the phone on time. It never sold a single iPhone with a plastic screen.
Ex-president of USA, Obama, asked Steve Jobs when iPhones would be made in the USA.
Steve said “those jobs are not coming back”.
That is how well Apple’s manufacturing ecosystem is in China. And now, they are trying to do that in India.
Manufacturing Moat
Why are we talking about this today?
Ask iPhone users why the iPhone is so successful.
They will tell you about the great design, the amazing experience, the cutting-edge technology, and so on.
We think about how Apple designs its products.
We think of what makes it such a difficult competitor. We think of its moat.
Yes, design, technology, experience – all of those are its moats.
But without Apple’s insane manufacturers’ network, most users would not have iPhones in their hands.
Not just Apple.
Tesla is not the world’s biggest electric car maker. Chinese company BYD is.
Why? Because they can manufacture a lot more cars. They have the capacity to do that.
Fashion brand Zara can make a new design, manufacture thousands of pieces, and make it available in its stores – in just 2 weeks.
A company can design a great product.
But can they make that product? Can they make as many units as their customers want? Can they quickly change their products?
Manufacturing is an underdog. It is a hidden moat. Many of us don’t talk about it.
We should.
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The study material for AMIE/Junior Engineer exams is available at https://amiestudycircle.com
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