China's manufacturing industry is facing the challenge of “with no products in the industry”

In a way, Apple is China's industry, but it is not China's product.

Environmental pressure pushes out Apple's industrial chain

Each Apple mobile phone product is green and non-polluting. However, during the production process, certain parts of the mobile phone may cause huge pollution to the environment in the production area.

The madness of Chinese consumers over Apple products also surprised Apple CEO Cook. However, on the other side of China's land, the crazy pursuit is the sweat of China's cheap labor. A glamorous apple product is behind Apple's harsh crush on Chinese foundry profits. The contrasts Apple has brought are all thought-provoking.

What Apple took from China:

China's fastest growing market for Apple

The enthusiasm of Chinese consumers for Apple products was once more noticeable when the iPhone 4S was on sale. The Apple store in Sanlitun was once again smashed by buying. Apple CEO Cook told the financial report on Tuesday that the demand for iPhone in the world’s largest mobile phone market is amazing.

Undoubtedly, the importance of the Chinese market to Apple is increasing. Last fall, Apple stated that China has become its fastest growing market with annual sales of approximately US$13 billion. Demand for iPhones, iPads and Macs soared in 2011, with approximately 40,000 daily visits to apple stores in Beijing and Shanghai.

As Apple’s second-largest market, China contributed $4.5 billion in revenue to Apple in the fourth quarter of last year, an increase of 270% year-on-year, and accounted for 16% of Apple’s total revenue. In comparison, China accounted for only 2% of Apple's 2009 fiscal year revenue.

iPad, iPhone and other apple products swept the world at the same time, but also brought Shenzhen's apple industry. At present, Shenzhen has formed an industry that provides leather accessories, films, data cables and other accessory products for Apple, including more than 1,500 large and small manufacturers, with an annual output value of more than 100 billion yuan. Companies that are licensed to operate Apple accessories must pay Apple the relevant costs. Take the data cable as an example. Each data line must pay Apple 5-6 USD.

In addition to the one-time high profit of traditional terminal sales, Apple’s extraordinary advantage lies in the abundant revenue generated by its repeated application downloads. This is no exception in China, and China even has a latecomer to the top of the list. .

According to a new study, during the Christmas week, mobile and tablet apps downloaded more than 1.2 billion apps, setting a record of one billion apps for the first time in a week. The majority of downloads came from the United States, accounting for 42.3% of the total 509 million downloads, followed by 99 million from China.

It is such a huge market that has repeatedly been "discriminatory" by Apple. As in the case of the iPhone 4 release, in this iPhone 4S release, China is still regarded by Apple as the third and fourth-tier markets alongside the British Virgin Islands and the Cayman Islands. This is in stark contrast to China’s position as Apple’s second largest market. Apple's attitude toward the Chinese market has long been considered as deliberately neglected: Almost all Apple's new products have never been associated with Chinese consumers when they were first listed; Jobs has never been to China to promote its new products for a long time. Since then, only a large number of parallel and Shanzhai products have been distributed throughout China.

What Apple has left for China:

Pollution, explosion and illegal employment

Contrary to Apple’s high profits in China, it is a series of explosive accidents in the mainland's foundries, pollution poisons, and a meager profit in the industrial chain.

If it is not driven by multiple forces, Apple, which has the world's largest market capitalization, is still keeping its secret general industrial chain list.

Five months after the "Poisonous Apple" incident broke out, Apple finally made a public response for the first time in the form of a supplier audit report. Apple announced a 27-page "Supplier Social Responsibility Progress Report" for the first time, which disclosed the list of global suppliers for the first time and promised to investigate illegal employment practices.

According to the report, nearly one-third of Apple's suppliers did not follow Apple's salary and welfare standards, and even five factories hired underage workers. Western and Asian human rights organizations criticized Apple Asia’s suppliers for their harsh labor practices. Apple said that it is currently adopting new strategies to better monitor and improve factory conditions, including increasing the assessment of factories in Malaysia and Singapore and expanding the education and training of its workers.

This is also the first time that Apple, which has remained silent on environmental issues, has made public statements. Prior to this, the environmental pollution generated by Apple's foundries was also cited by Apple as "these pollutions will also cover commercial secrets," not to disclose the list of suppliers, and rejected NGO supervision.

Each Apple phone's finished product is green and non-polluting. However, during the entire production process, some parts of the mobile phone may cause huge pollution to the environment. For example, aluminum powder used in mobile phones with aluminum shells may cause explosions and generate dust pollution. In 2011, the explosion happened at the Foxconn Chengdu plant of Apple Inc. and the factory floor of RiTeng Computer Accessories Shanghai Co., Ltd..

As early as January 2011, Ma Jun, director of the Public Environmental Research Center, released a pollution report on “The Other Side of Apple.” The report listed 11 cases of foundry workers who were seriously ill due to toxic materials. Some of the workers who were identified as "Class 10 in occupational disability" eventually received compensation of 89,000 yuan. Ma Jun told the media that the hospitalization fees for these patients come from social security, and a large amount of money is finally paid by taxpayers.

However, under the pressure from many parties, Apple’s first list of suppliers was generally not fully reflected in the industry and has not been recognized by environmental protection organizations. Ma Jun pointed out that these lists only disclose the company's name and cannot be used to make a one-to-one correspondence with the factory. In previous reports released by environmental groups, environmental issues all pointed to specific factories.

And the industry has also questioned that Apple’s supplier of multiple violations in the report more than just correct its violations, indicating that Apple passed social responsibility to manufacturers in developing countries.

Unbalanced profit distribution:

China's labor force only benefits about 2%

The weakness of the mainland representative factories in the apple industry chain is the root cause of all problems. In an interview with a Securities Daily reporter, iSuppli Senior Analyst Gu Wenjun pointed out that because of Apple’s current high-tech industry’s leading position and the company’s current influence in consumers and society, everyone’s requirements for their social responsibility are justified. , but Apple's strong position determines its control over the supplier and the right to speak.

For the income of mainland companies in Apple's industry chain, Tim Worthow wrote in the online edition of Forbes magazine that China has not been able to obtain much benefit from assembling iPads and iPhones due to the design and development of Apple products. Important links are mainly conducted in the United States, and the U.S. economy is still the biggest beneficiary.

According to the iPad's value composition chart, the two biggest costs are the profitability of raw materials and Apple itself. Although the iPad was assembled in the Mainland, the value of the workforce is still extremely small: only about 2% of the cost. While Apple's profits from the iPhone are higher, the Chinese labor force only benefits from the iPhone by 1.8%.

For the pain behind this data, Apple's Foxconn, one of China's two largest representative companies, has a deep understanding. Relevant data show that Apple's operating profit margin has exceeded 30%. However, Foxconn’s parent company and Taiwan’s Hong Hai’s profit margin fell from 5.9% in 2006 to 2.0%. This downward trend was even more serious after Apple launched the iPhone and iPad series in 2007. Now Hon Hai’s precision operating margin has dropped to 1.5%. According to the financial report from 2008 to 2010, Hon Hai has been reducing labor costs for three years. For example, the number of employees in 2009 increased by 9.7% year-on-year, while the total staff cost expenditure decreased by 28% year-on-year, and the per capita cost decreased by 34% year-on-year. The contradiction between labor and capital caused by low-cost and large-scale employees of the OEM companies will continue to haunt Terry Gou in 2012.

Other more powerful and weaker mainland foundries are making it harder for them to work under Apple’s strength.

Some commentators pointed out that it was precisely because Apple wanted to obtain price competitiveness in the product market, and repeatedly lowered the purchase price of suppliers to reduce the cost of its supply chain. As a result, suppliers had to work overtime, employ child labor, and withhold workers’ sweat for a long period of time. Money, environmental pollution and a series of problems. After all, the initiator of the vicious cycle is still an international company like Apple. Ma Jun also believes that if Apple only pays attention to the price of its products, each time the price is very low, it will induce these suppliers to lower environmental standards.

related business:

An Jie Technology: Nearly half of revenue for Apple foundry

The list of suppliers released by Apple under pressure from environmental protection and other aspects fell into the eyes of investors and became a search for treasure. Previously, because of Apple's always-secret style, some companies in the Apple industrial chain also had to keep a low profile. The announcement of the list of suppliers allowed these companies to once again wear Apple's halo station to investors.

Nearly half of the income is related to Apple

Among the 156 suppliers, A-share listed companies ranked among them are Anjie Technology 002635 and BYD 002594. For the relationship with Apple, Anjie Technology describes it in its prospectus: In recent years, Apple's products have swept the world, and the company has seized the opportunity to deepen and expand its cooperation with them and maintain the relationship with other existing customers. Next, try to tilt production capacity to Apple-related products.

In an interview with a reporter from Securities Daily, Li Jie, an assistant secretary of Anjie Technology, also stated that Apple is indeed a major customer of the company. Basically, Apple's product line, Anjie Technology, is involved. Apple's contribution to the company's profit and turnover should be the same ratio. The situation in 2011 matches the disclosure of the prospectus. According to the company's prospectus, during the reporting period, the top five customers of Anjie Technology ranked first in Futaihua Industry Shenzhen Co., Ltd., which is affiliated with Hon Hai Technology Group. Due to changes in the Foxconn Group's internal systems, Hongfu Jin changed its business from Futaihua to Anjie Technology since 2009. Foxconn is one of Apple's two largest foundries in China. According to the combination of the customers controlled by the same actual person, the total sales of the top five customers of the company accounted for 78.75%, 65.73%, 56.37% and 54.86%, respectively. In 2010, Apple accounted for 48% of company revenue. In 2011, this proportion should also increase.

The company also realized that the resulting high concentration of customers, its prospectus said that the tilt to Apple's products, enhance the company's dependence on large customers the risk. In the future, with the changes in the market competition, the company may also provide more supporting production for other industry leaders. The company will target customers in the world's leading consumer electronics brand manufacturers and on behalf of industry and commerce, such as Apple, HP Weibo, Motorola Weibo, Asus, Sony, Dell Weibo, RIM, Foxconn and so on.

Industry experience supports high value-added development

In addition to operating income, Apple has undoubtedly brought Agilent Technologies a reputation for aura and industry recognition. However, the fact that the overall value-added of China's foundries is low has also become a problem that the entire industry has to face.

In response, industry insiders told this reporter that parts manufacturing is not technically intensive or requires a very deep theoretical foundation. Even if the company is already involved in the research and development of the next generation of products, more technological content is still accumulating industry experience in materials and processes.

Li Ling told reporters that the company is a relatively typical type of Chinese manufacturing company, has changed from a simple map processing to participate in R & D in the next generation of new products, can provide solutions for customer demands. This type of manufacturing enterprise is more representative of the future of China's economy than a company that relies solely on labor and price to obtain orders.

“Because manufacturing in China cannot always stay at the stage of selling people. In industry, in terms of raw materials, due to the weakness of our basic disciplines, we may not have a way to break through foreign monopolies and technical barriers in a short period of time to create sophisticated products. The product, but in some manufacturing industries relying on industry experience and precipitation to participate in the development of new Apple products, China still hopes to develop to the high value-added end of the smile curve of the industry chain,” said Li Ling.

According to public information, the value or business model of the company is to provide personal services throughout the entire process, including the introduction of new product concepts, research and development, testing, trial production, and mass production. More than 90% of the company's business volume is based on this model.

The company is not simply doing insulation

As for the outside world, it is mistaken for An Jie Technology to provide insulation material die-cutting and other products. The company’s prospectus has a clear discussion. The company is not simply doing insulation. However, because the company entered the Apple industrial chain very early, when the company did not have a share reform, it was also called Suzhou Taihu Resort Anjie Insulation Materials Co., Ltd., so the company's name released by Apple is still An Jie insulation materials.

For the company’s main business, Li Ling used an analogy for reporters to help investors understand: A plastic shell or a metal shell outside an electronic product is regarded as a rough house, and the circuit boards inside include electronic components. Addition of furniture, home appliances, but in the middle of the two, there needs to be a functional reinforcement, just like fine decoration, some places need insulation, some places need heat dissipation, some places need electromagnetic shielding, and some Places to backlight and so on. The company's business is to use some functional materials to make up the wall. The company is doing functional materials, not die-cutting. However, because electronic products are becoming lighter and thinner, the most used manufacturing process in this process is die-cutting, that is, thin-film materials, coils, and sheets are used for die-cutting. Therefore, the outside world has such misunderstandings.

BYD mobile phone battery income far more than cars and Apple have a marriage trail

After a wave of "Apple" fever, BYD once again maintained a low profile in the recent push to the cusp of wind. Apple released the 2012 "Supplier Social Responsibility Progress Report" in mid-January and announced its list of 156 suppliers and production partners for the first time. HK and BYD Electronics 00285. HK rose 5.96% and 7.98% against the market on January 17 respectively. Since then, two stocks over the past few days have also come out of a wave of relatively small market.

According to sources close to BYD, BYD has been supplying parts for Apple, and it has not only recently started. It has only always adhered to the confidentiality principle of both parties and has not announced it to the public. "Although Apple has announced its list of suppliers, according to our previous agreement with Apple, we still cannot disclose what parts we provide for Apple," BYD stakeholders said in an interview with the "Securities Daily" reporter.

Cinda International analyst pointed out that this is the first time that the market has learned that BYD is Apple's supplier. Apple’s quality requirements for parts and components have always been extremely stringent and do not tolerate a few flaws. Therefore, many suppliers that can become their suppliers are international companies. BYD can be a finalist, reflecting the fact that the technology has reached a level that meets Apple’s requirements and helps to “sweep”. Cottage image.

Cell phone and battery revenue far exceeds the car

Although BYD said that it is inconvenient to disclose the range of parts it provides for Apple, an IT source revealed to this reporter that “according to the circle, Apple's battery supplier should be between BYD and Foxconn.” And from the financial reports previously disclosed by BYD, there are also hints to be found.

In 2007, BYD Electronics, a subsidiary of BYD that splits production of mobile phone housings and keyboards, was independently listed in Hong Kong, but the parent company still retains the most critical mobile phone battery business. In the first half of 2011, BYD mobile phone and battery business revenue was RMB 11.9 billion, which was 25% higher than the RMB 9.5 billion revenue of the automotive business. BYD disclosed in its interim report that mobile phone customers include Nokia Weibo, Huawei Weibo, and ZTE, but did not mention Apple.

Rising from lithium batteries

In recent years, BYD, which started with mobile phone batteries, seems to have been under the limelight of its auto business and is not concerned by the outside world. Until a few days ago, Apple was exposed as a supplier. BYD's mobile phone business was once again placed under the spotlight.

In fact, as early as February 10, 1995, Wang Chuanfu, who was aware of the vast market of rechargeable batteries, established BYD Industrial Co., Ltd., which mainly develops nickel-cadmium and nickel-metal hydride batteries. At that time, the rechargeable battery market was almost monopolized by Japanese companies, and Japanese manufacturers such as Sanyo, Sony, Toshiba Weibo, Panasonic and so on accounted for nearly 90% of the global battery market share.

Wang Chuanfu, a battery expert, quickly broke the monopoly of Japanese companies and ended the previous low-profit model in which mainland manufacturers could only purchase batteries from upstream raw material suppliers and combine assembly with other components. However, Wang Chuanfu still did not get the right to speak in the battery industry.

However, in the three or four years after the establishment of BYD, the battery industry revolution gave BYD an opportunity to restart. At that time, the evolution of the mobile phone of the Big Brother analog signal to the mobile phone digital signal mobile phone of the second generation was greatly reduced, making the lithium battery jump out and the replacement between the nickel battery and the lithium battery occurred. Wang Chuanfu, who is quite a bit legendary, once again discovered business opportunities and started the research and development of lithium-ion batteries, and became the first Chinese lithium battery company to enter the field. With the capture of key technologies such as high-temperature baking, BYD is proud to occupy a dominant position in the new domestic lithium battery industry.

Right now, BYD has been engaged in the mobile phone business for nearly 20 years. In BYD's Shenzhen mobile phone accessories business showroom, it displays all mobile phone accessories produced by BYD, including cell phone batteries, housings, flexible circuit boards (FPCs), and LCD screens. , camera, motor, keyboard, etc. everything. Perhaps in the eyes of the outside world, BYD's exposure to Apple's suppliers is no small surprise, but it is not difficult to see BYD's mobile journey, and BYD's marriage to Apple is not accidental.

Comments: Apple in China and Apple in the United States

Walking on today’s street and subway, if you suddenly hear the word “apple” in your ear, I believe your first reaction is definitely not that Apple that the Red Dragonfly can take a sip, but the iPod, iPad, iPhone from the United States... Yes, unless it is in the food market, the first point of the "Apple" pronunciation has become the electronic devices that people love to find hot.

A company's LOGO has almost replaced the ontology. This has never happened in the past. This cannot but make one wonder that "Apple" is powerful.

In fact, "Apple" is not only the United States, in China, there are thousands of Apple companies, they grow and sell real apples. While people in the United States know the "Apple" in the United States, not many people will know that China's apple planting area and production have consistently ranked first in the world. China is the world's largest "Apple" country. When the United States is not as arrogant as it is now, China, the "big apple" country, does not need quotation marks.

However, the two apple powers are indeed "different from each other". What Apple's Chinese producers are thinking about all day is how to buy the apples as soon as possible, even if the price is reduced. What the United States's apple producers think all day is how to raise Apple's output as quickly as possible, and how to increase prices to make more money.

In 2011, China’s apple production exceeded 35 million tons, while Apple’s distributors in Yantai, Shandong’s main producing area, are losing their sales at 10 yuan and 3 pounds, and dealers are losing millions. Tens of millions are not rare. At the Beijing Xinfadi Market, where Apple's main sales center is located, hundreds of trucks carrying Apple are lined up. However, Apple hasn't sold apples yet.

Look at American apples. When China's apple industry chain encounters a bitter winter, the apple industry chain in the United States is springing up. On January 25, the third day of the lunar month of the Chinese lunar calendar, Apple Inc. of the United States released its financial report for the first quarter of fiscal year 2012. The financial report shows that Apple's first-quarter revenue was 46.333 billion US dollars, an increase of 73% over the same period last year, 26.741 billion US dollars, net profit was 13.064 billion US dollars, an increase of 118% over the same period last year's 60.04 billion US dollars; gross margin was 44.7% , higher than the 38.5% in the same period last year. It is worth mentioning that the iPhone sold 37 million units. Apple CEO Tim. Cooke said excitedly at the earnings conference call that "Apple has underestimated the extent of iPhone 4S sales in China."

China’s apple production is 35 million “tons” and none of the dealer’s lost money has been sold. The sales volume of Apple iPhone in the United States is 37 million "Taiwanese".

One is “Ton”, one is “Taiwan”, and one is to lose money and earn money. One is to make a profit and sell it. This is a comparison between Chinese apple and American apple. Is it not a comparison between Chinese industry and U.S. industry?

Taking a step back, in fact, those American apples are, to a large extent, "Made in China." On January 16th, the United States Apple Corporation disclosed for the first time a list of 156 major suppliers, mainly in mainland China, Taiwan, Singapore, Malaysia, Thailand, the Czech Republic, and the United States, and most of the products were assembled in mainland China. Completed, in other words, Apple's industry chain in China.

However, Apple left the assembly with little profit. Take the profit distribution of iPhone as an example. Apple has a 58.5% profit. Other companies such as South Korea and the United States respectively accounted for 4.7% and 2.4% of the profits, while labor costs in mainland China accounted for only 1.8%.

Moreover, although Apple is produced on China's land, Chinese consumers are often the last to see it. They must be ranked after consumers in other countries and regions.