Ap­ple seeks tar­iff waivers amid trade war ten­sions

Move shows dif­fi­cul­ties of mov­ing pro­duc­tion out of China

Global Times US Edition - - BIZUPDATE - By Huang Ge

Ap­ple’s re­quest for a waiver of US im­port tar­iffs on Chi­na­made com­po­nents in­di­cates in­creased pres­sure from the on­go­ing China-us trade dis­putes and its strong de­pen­dence on Chi­nese sup­pli­ers, who have made it hard for the US com­pany to move some pro­duc­tion out of the coun­try, ex­perts said.

Ap­ple has asked the US government to waive im­port tar­iffs for 15 com­po­nents for the Mac Pro, a high-end desk­top that re­port­edly will be on sale later this year, CNBC re­ported on Wed­nes­day.

The Chi­nese-made com­po­nents in­clude such items as a power sup­ply unit and stain­less-steel struc­tural en­clo­sure, ac­cord­ing to the re­port.

The re­quest showed Ap­ple’s con­cerns about on­go­ing prob­lems since the US im­port tar­iff of 25 per­cent on elec­tron­ics will lead to a hike in the prices of the prod­ucts, which would af­fect sales in the Amer­i­can mar­ket, said Sun Yan­biao, head of Shen­zhen-based re­search com­pany N1­mo­bile.

The re­quest came amid re­cent me­dia re­ports that Ap­ple has asked sup­pli­ers to study shift­ing fi­nal as­sem­bly of some prod­ucts out of China.

Sun told the Global Times on Wed­nes­day that Chi­nese sup­pli­ers are pri­mary sources of com­po­nents for Ap­ple, ac­count­ing for more than 90 per­cent, in­clud­ing core chips and cam­era lenses.

Most of Ap­ple’s prod­ucts are as­sem­bled in China, although the de­sign and tech­nol­ogy come from the US, said Li Yi, a se­nior re­search fel­low at the In­ter­net Re­search Cen­ter af­fil­i­ated to the Shang­hai Academy of So­cial Sciences.

Chi­nese sup­pli­ers are fully in­volved in Ap­ple pro­duc­tion as they not only con­duct as­sem­bly but also fo­cus on some parts and crafts, said Li.

It’s quite hard for Ap­ple to move pro­duc­tion out of China be­cause of high costs and low fea­si­bil­ity, ex­perts said.

“Ap­ple prod­ucts can­not be made with­out Chi­nese sup­pli­ers,” Sun noted.

Among Ap­ple’s top 200 world sup­pli­ers, 86 are from China, and 46 of them are Tai­wanese sup­pli­ers, 30 from the Chi­nese main­land and 10 from Hong Kong, ac­cord­ing to Ap­ple’s 2019 sup­plier list. Other sup­pli­ers come from coun­tries in­clud­ing the US (40), Ja­pan (39), South Korea (14), Ger­many (six) and Sin­ga­pore (three).

For in­stance, Jilin Liyuan Pre­ci­sion Man­u­fac­tur­ing Co, which was newly added to Ap­ple’s sup­plier list in 2019, pro­vides shells for Ap­ple’s lap­tops, ac­cord­ing to me­dia re­ports.

Thanks to com­pre­hen­sive ad­van­tages, Chi­nese in­dus­try chains re­main at­trac­tive and can­not be re­placed by those in other coun­tries, Chu Shi­jia, an of­fi­cial from the Min­istry of Com­merce, said in early July.

China has a com­plete range of in­dus­tries and ma­ture in­fra­struc­ture and there are 170 mil­lion work­ers with higher ed­u­ca­tion or pro­fes­sional skills. It also has a mar­ket of 1.4 bil­lion peo­ple, and 400 mil­lion of them are ranked as mid­dle­class con­sumers, Chu said.

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