It's not realistic for Apple to move its operations back to the U.S. because it would take a long time and be expensive for the company to build a complete supply chain in the country, experts said Monday. They also noted that China will continue to offer a level playing field for Apple amid escalating trade tension with the U.S.
The comments came after U.S. President Donald Trump tweeted on Saturday that "Apple prices may increase because of the massive Tariffs we may be imposing on China - but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the U.S. instead of China. Start building new plants now."
On Friday, Apple said that the proposed tariffs would affect prices for a series of Apple products, including Apple Watch, but it did not mention the iPhone.?
"It's kind of ridiculous to offer a solution like this, and it's impossible for Apple to move its plants to the U.S., where the labor cost would be too high," Wang Yanhui, head of the Shanghai-based Mobile China Alliance, told the Global Times.
It could take five years and cost $30 to $35 billion to move the supply chain to the U.S., which might raise the cost of phone production by 37 percent, according to a Goldman Sachs report.
"The whole industry chain in China is quite complete now, which no country could compete with in the short run, though some of Apple's plants have already been moved to India and other Southeast Asia countries to take advantage of low labor costs," Wang noted.
Wang also forecast the sales of the newly released Apple products would not be affected by the ongoing trade tensions between China and the U.S., since "there is a solid base of Apple fans in China." But Wang cautioned that there would not be many "surprises" in the new series.?
The new Apple devices are scheduled to be released on Wednesday (U.S. time).
Apple generated $9.6 billion in sales in China in the fiscal third quarter, accounting for 18 percent of its total revenue in the period.
Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, said that there is no need for Chinese people to boycott Apple's products amid the escalating China-U.S. trade tensions, since the two countries' inter-dependent trade relations could be fully expressed in the production of Apple products.
"Harm and benefits could be experienced by companies from both countries," Bai noted, adding that China will continue to offer a level playing field and favorable environment for Apple and other foreign companies.?
However, Bai cautioned that with a rising competition from domestic smartphone producers including Huawei, Apple has already lost some of its advantages. If the company's prices increase further because of the proposed tariff, it's unavoidable that some Chinese consumers might turn to more affordable brands.
