Apple’s turn away from China marks a big shift for the company, and is emblematic of an even bigger one for the world economy
stretch of the deafening road from Chennai to Bengaluru lie three colossal, anonymous buildings. Inside, away from the din of traffic, is a high-tech facility operated by Foxconn, a Taiwanese manufacturer. A short drive away Pegatron, another Taiwanese tech firm, has erected a vast new factory of its own. Salcomp, a Finnish gadget-maker, has set one up not far away. Farther west is a 500-acre campus run by Tata, an Indian conglomerate.
Now a change is under way. Mr Cook, who has not been seen in China since 2019, is wooing new partners. In May he entertained Vietnam’s prime minister, Pham Minh Chinh, at Apple’s futuristic Cupertino headquarters. Next year Apple is expected to open its first physical store in India . The most pressing reason for the scramble is the need to spread operational risk. Two decades ago the garment industry beefed up its operations outside China following themade it very clear to everyone operating in China that you needed a ‘China+1’ strategy,” says Dominic Scriven of Dragon Capital, an investment firm based in Vietnam. Covid taught tech firms the same lesson.
This is diminishing China’s relative importance as a consumer market. At its high point in 2015, China accounted for 25% of Apple’s annual revenues, more than all of Europe. Since then its share has steadily shrunk, to 19% so far this financial year . By the sounds of it Xi Jinping, China’s president, would like it to fall further.
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