That Was the iPhone Event that Wasn't

Reactions to the new iPhone have been lukewarm at best.  In America, it was a bit ho-hum, and Chinese netizens wanted to tear Tim Cook a new asshole when they found out how much the phone would cost.  The new handset, hyped up beyond recognition as the "cheap one" that would go up against Xiaomi's 1999rmb smartphone is only marginally cheaper than previous versions, attracting a large number of negative comments on microblogs across China.

"I thought the cheap 5C version would be priced at one thousand or two (yuan)... I can't sell my kidney for this much," said one poster on Sina Weibo, China's hugely popular Twitter equivalent, referring to a teenager who sold a kidney to buy an iPhone and iPad last year.

"So this is the so-called cheap version? The 5C starts at 4,488 yuan in China. Haha, they treat the Chinese as peasants," said another.

Boasting support for China's TD-LTE, a deal with China Mobile is possible, but hasn't been sealed yet.  With a four thousand kuai price tag, Apple seems hell bent on shutting out a large number of CM's subscribers, giving added impetus for consumers to spend their cash on the local boy made good, the Mi-3.

The only silver lining on this particularly grey and uninspiring cloud is that with the rollout happening in China and the US, Hong Kong, UK and other countries on September 20th there'll be fewer shady characters skulking outside of universities offering foreigners clammy grey-import iPhones.  So yay for that.  Kinda.

Related articles

• China web users say new iPhone 5C is too expensive


• Unannounced China version of the iPhone 5S and 5C will support TD-LTE


• Apple's no-news Beijing event leaves it adrift in China


• Apple goes for higher margins with iPhone 5C, but may miss the mark in China


• Five million iPhones to return, or stay rather, home

CLW Gets a New Dead Horse and a New Stick to Beat it With

Apple bashing from China continues as China Labor Watch releases more accusations of worker exploitation at one of it's factories.  Amongst the heinous crimes mentioned, student workers haven't been paid, their rights have been violated.  The report details the shocking working conditions that the students are forced to endure.

"As of September 9, 2013, about 100 student workers have already confirmed with CLW that while working at Pegatron Shanghai, they were not paid for 20 to 30 minutes of daily mandatory overtime meetings, had wages deducted, or only received 80 percent of the wages of normal workers despite doing the same work," the report says. "Many other student workers, who have not yet been reached, likely have suffered the same unfair treatment."

20 or 30 minutes?  That is a major violation of their rights?  Seems like even in one paragraph we're pretty unsure about what we're actually talking about, but let's continue.

Buried at the bottom of the report is the admission that Pegatron did actually pay back some of the 600rmb deposits that had been collected when the students signed up.  Also, students don't have the most committed work ethic (like most students) taking a deposit sounds like rather a sensible thing to do.  Since more than a few students change their majors in the first or second year of university, have multiple email addresses because of China's shaky Internet, and often have cell phone numbers that only work in the province that they're bought in, it's not a huge surprise that some student workers can't be contacted easily.

Accusing the factory of pulling a fast one by deducting wages because the students can't complete three month probation period because the summer breaks are only two months long, the report bemoans the "inhumane treatment" of the student workers.

The report that had been released earlier this year on July 29th had similar horrific stories of disgusting abuse.  Among the infractions that Apple was found guilty of, a 17 year old worker got his wages 5 days late and the number of showers available to workers wasn't quite up to the investigators standards - there were 10 shower heads per 120 workers.

CLW also accused  Pegatron of paying Shanghai's minimum wage of 1650rmb per month.  Rather than including in a report that purportedly details abuse of Chinese worker's rights, this is surely an issue that should be taken up with Shanghai's municipal government.

Since their founding in 2002, the organization has been headquartered in New York, where CLW's program director Kevin Slaten is based.  Obviously the workers at the Pegatron factory live quite different lives to the new media set in Manhatten.

Related articles

• Apple investigates new claims of China factory staff mistreatment


• China Labor Watch says Pegatron student workers violated and unpaid


• Apple to Probe Claims of Labor Violations at Supplier Pegatron


• Undercover Report: Apple Faces Fresh Criticism of Factories


• Pegatron: Second Apple Firm Slammed In China


• Rights group accuses Pegatron of violating labor, safety laws

Moto X Costs $4 More to Be Made in the US

Google won praise for moving it's manufacturing plant from China to Texas, but there won't be a Made in America revolution anytime soon.

The extra cost of making the Moto X is a mere $4, but there are other reasons why tech companies won't be in a hurry to move their production bases from Asia back to the US.  The first thing to remember is that the costs of production that have been bandied about on the Intertubes are just estimates, Google hasn't officially commented on the costs (yet).

According to industry experts, the Moto X cost $12 per phone to make the phone in America, whereas it costs Apple $8 per phone to make their iPhones in China, and 50 cents more for Samsung to have it's Galaxy S assembled China-side too.  While a difference of four measly dollars might not look that much, per unit, it adds up to a hell of a difference - $550 million worth of a difference if you believe unofficial figures.

It's true that Apple is shifting it's production of the Macbook to the US, but the Macbook represents a minor product line compared with sales of iPads and iPhones.

The way that Chinese companies house their workers on-site in dorms improves effeciency, especially when last minute design changes are made.  Larger pools of labour and technicians are available in China compared to the US - Apple has 300,000 technical staff supporting it's assembly line workers at their plant in China.

Related articles

• America Is Cheap, Made In America.


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Change in China: Mindboggling Stats

China Skinny has gathered together an impressive page of stats just in case you didn't quite get how much China has changed (and how fast).

In 1990, China had a total of 5.4 million vehicles on the road.  Fast forward 22 years, and 19 million cars and trucks were sold in China in 2012 alone.   As recently as 2010, Nokia had a 70% share of China's smartphone market.  In the first six months of 2013, 150 million smartphones sold in China and less than 5% of them were Nokias. Even with all the food scandals, Chinese consumers are eating almost three times more meat than they were in 1990, including 1.7 million pigs a day.  But it is urban migration that's really changing consumer habits.  Since 1990, China's urbanisation rate has more than doubled to 53% and there are now more than 123 Chinese cities with more people than Barcelona.

Consumer spending still lags behind the US, but that's all set to change in 2018, barring any apocalyptic showdowns with Japan, or a nationwide bird flu epidemic, that is.

Related articles

• How Nokia Totally Missed Out on China's Economic Miracle


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More iPhone 5C Photos

 



Not content with an moronic celebrity leaking pictures of the new Apple device, another photo of the iPhone 5C was posted on Weibo, along with the message :

"The low-end iPhone 5C to be launched for Chinese consumers in September doesn't look much different than the Xiaomi Phone 2, right?"

 

Allegedly taken by an employee at the Pegatron factory, the batch is more than likely a test batch to confirm that the devices are working before they are boxed up for retailers.

Could Apple Succeed Where Google Failed?

Doing business in China isn't exactly easy.  With the protectionism, lack of any kind of copyright law adherence, and rabid, disgruntled Weibo users who take to the Interwebs every time a warranty isn't honored, you'd think that international brands would steer clear of trying to sell anything to anybody in China.

Since Google's unceremonious exit from the country in 2010, western brands have been having one hell of a tough time.  The Chinese government would rather see Chinese brands being sold to the Chinese, mostly because it bolsters their image of driving the economy to greater and greater heights, and not many of the people who control the real money have enough foreign business experience to make deals with the tech giants of Silicon Valley.

Apple has been having a hard time of late, with a laughable attack from the National Consumer Day Gala, and a number of anti-Apple editorials in state-media, USA Today examines if the  grovelling apology from CEO TIm Cook will be  just enough to shore up Apples sales for the foreseeable future.

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In China, Cheap Phones Rule, Apple Suffers

The smartest move by made in China by any phone company was by Nokia.

Trying to sell their phones to the Chinese for five times what Chinese consumers could afford at the time crippled sales, and Chinese companies were more than willing to crank out cheap, ripped off designs.  Nokia responded by dropping the price of their flagship handset to the same as the price of the shanzhai units.

In the last 15 years, the Chinese are no longer stealing designs, but making their own, and still managing to undercut the competition.  Android's open source nature has created a virtuous circle, giving phone manufacturers the software they need to power the phones, but leaving it up to the makers to source the hardware.

Attempting to figure out the smartphone market in China isn't easy.  Despite higher sales than Apple, Samsung hasn't raked in the revenue that's it's Cupertino based rival has:

By right Samsung should have been able to capitalize on this particular weakness of Apple, given that it has a whole range of smartphones with different price points targeted at a variety of consumers. In terms of unit sales, Samsung is doing extraordinarily well, given that analyst firms have consistently ranked Samsung as topping the charts in China’s smartphone shipments.

With Xiaomi making it's much vaunted debut in the Chinese smartphone market has caused something of an upset.  Their CEO doesn't want you to call it China's Apple, but they're going to have a hard time dropping that moniker.  Even if they aren't aiming at the higher end smartphone market, by smartly tying in services and deals with existing Chinese content providers, they do everything that the average Chinese consumer wants - at a much lower price, depressing the market price for higher end models.  Working smarter, means that as Apple and Samsung lick their wounds for Q2 2013 Xiaomi is aiming for double it's revenue in 2013 than it made in 2012.

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Made in the USA: Why Tech Companies Are Looking West

Once upon a time, China was known for being the factory of the world, producing goods that it's own people couldn't afford to buy.  The economies of outsourcing to China were pretty obvious, lower wages and a large population looking to earn a low wage meant that production lines could be manned with substantial savings, especially for tech companies.

Apple, and Motorola (Google providing the OS for their phones) are all moving their production back to America for selected products, however.  The Moto X, MacBook Pro and Thinkpad are all proudly boasting that they are now made in the USA.

Besides the fact that customers in the US prefer to buy things that are made in the US, and that Chinese made products tend to have things in them that poison people, shipping time constraints and rising wages (Chinese wages have increased 71% since 2008) are also being blamed for the new "look west" attitude of industry giants.  The cost of assembling in China and shipping to the US will be the same as manufacturing the product entirely in the US by 2015.  Media reports, no matter how untrue, criticizing the working conditions of those who work on the Apple production don't do much to sell iPod, either.

Apple had tried to make it's products a little more appealing to patriotic Americans by famously adding the "Designed by Apple in California" tag to it's products, but the Made in America, as the Japanese auto industry proved, might not be enough to shore up sales.

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Daisey, Daisey...

Fargo, the Coen brothers admit is not based on a true story, despite opening with"This is a true story. The events depicted in this film took place in Minnesota in 1987. At the request of the survivors, the names have been changed. Out of respect for the dead, the rest has been told exactly as it occurred."  If you change the date and the place to China, and 2010, the same could be said for Mike Daisey's monologue, and his subsequent report that was subsequently retracted on This American Life. 

He's never actually seen one on, this thing that took his hand. I turn it on, unlock the screen, and pass it to him. He takes it. The icons flare into view, and he strokes the screen with his ruined hand, and the icons slide back and forth. And he says something to Cathy, and Cathy says, "he says it's a kind of magic."

According to those in the know, this was apparently one of the more emotional points in Mike Daisey's stage monologue, The Agony and the Ecstacy of Steve Jobs.   Emotional, dramatic, the performance formed the basis of an NPR report, Mr. Daisey and the Apple Factory.  There was only one thing wrong with it - what Mike told NPR  wasn't entirely true.  Actually not true at all.  In fact it was so not true that This American Life not only retracted the story, but made a story about the retraction of the story.

I think that one takeaway from this particular China story is how American "news" broadcasters leapt on the monlogue and presented Daisey as a journalist rather than a performer who used dramatic license to tell a story.  About things that didn't happen.  NPR is guilty as hell, and they managed to take their own gullibility into a very well deconstruction of how they were duped.  Statistician guru Hans Rosling once commented that the worldview of his students at the Karolinska Institute corresponded with the reality of the year that their teachers were born, and it's that ignorance that Americans have of modern China that Daisey exploited with his stage show.  The story he concocted had almost everything you needed - illegal unions banned by the state, workers that made machines they could never afford to buy, child laborers, guns and mysterious Chinese woman called Cathy.  Or Anna.  Probably Cathy.  No wonder NPR smelled fresh meat.

Lots of other bloggers have pointed out that if it wasn't for Mike Daisey, then America wouldn't have taken notice of what was going on at Foxconn - the apparently endless suicides that plagued the company for a good long while, and the fact they did in fact hire around 91 underage workers in 2010 - then things wouldn't have improved at the factories.  The sad thing is that now the story isn't about factory conditions in China, it's about Mike Daisey, despite his protestations that we are losing sight of the bigger picture.  Daisey has returned to the stage with a modified version of his monologue, adding a disclaimer that the performance is only based on a true story, and actually isn't.  The odd thing is that by becoming the story, Daisey is just as guilty as Apple in terms of exploiting anonymous Chinese workers for his own gain.

Related articles

• Mike Daisey: I'm a storyteller, but my story wasn't far-fetched (thetechblock.com)


• The extent of Mike Daisey's lies (modeledbehavior.com)


• Mike Daisey urges focus on the 'bigger story' of global manufacturing (popwatch.ew.com)


• Foxconn won't sue for damning radio episode, Steve Wozniak supports Mike Daisey (venturebeat.com)


• Woz supports Mike Daisey's message and says you should too (news.cnet.com)