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Why Apple is Betting on India and Shifts Manufacturing Base from China
Opportunity in India
Apple CEO Tim Cook visited India in April after a seven-year gap to open two flagship stores in New Delhi and Mumbai. According to Angelo Zino, a senior analyst at CFRA Research, Cook sees a massive opportunity in India, similar to what China represented. Apple has been manufacturing older iPhone models in India since 2017 and started making the iPhone 14 in India in 2022. The company aims to eventually manufacture 25% of the world's iPhones in India.
Challenges Faced
There are several challenges in shifting iPhone manufacturing from China to India. One challenge is finding talent. Building out infrastructure and navigating the patchwork of regulations are also significant hurdles. Willy Shih, a professor of management practice at Harvard Business School, highlights the importance of diversifying production to mitigate the impact of disruptions in China. However, the move to India is not without its difficulties. Apple has not commented on these challenges or its strategy.
Building a Broader Supply Base
The decision to diversify production is a result of recognizing vulnerabilities in the supply chain. The disruptions caused by China's Covid zero policy highlighted the need for a broader supply base. Apple experienced production shortfalls and impacted sales due to the lack of multiple sources. Moving iPhone manufacturing to India offers the advantage of a diversified production base that can mitigate potential future disruptions.
The Slow Shift
While shifting manufacturing from China to India may seem like a good idea, the process is slow and riddled with obstacles. Despite the challenges, Apple remains committed to its strategy. The company recognizes the immense potential in the Indian market and aims to tap into it by increasing its manufacturing capabilities in the country. As the shift continues, Apple will need to overcome the hurdles of talent acquisition, infrastructure development, and regulatory complexities.
How Apple's Shift to India Could Impact a New Business
A Game-Changing Opportunity
Apple's decision to shift its manufacturing base to India presents a game-changing opportunity for a new business entering the market. With Tim Cook recognizing India's potential as a massive market similar to China, it reflects a growing trend of global companies looking to tap into the Indian consumer base. By establishing manufacturing capabilities in the country, Apple aims to leverage this opportunity, and new businesses could benefit from this wave.
Diversification and Supply Chain Stability
The move also highlights the importance of diversifying production and building a broader supply chain base. As witnessed during China's Covid zero policy, disruptions in a single manufacturing hub can have severe consequences for global companies. A new business that aligns its manufacturing base with this shift could ensure a stable supply chain and mitigate potential future disruptions, gaining a competitive advantage in terms of product availability and reliability.
Pioneering Talent and Infrastructure Development
One of the challenges faced by Apple in this transition is finding talent and building infrastructure. This presents an opportunity for a new business to tap into the growing pool of skilled Indian talent. By establishing partnerships and collaborations with local manufacturers and investing in infrastructure development, a new business can take advantage of the ecosystem that Apple and other global players are building.
Obstacles, but Promising Potential
While the shift from China to India may not be without obstacles, Apple's commitment to its strategy underscores the promising potential in the Indian market. As a new tech business, navigating the challenges of talent acquisition, infrastructure development, and regulatory complexities may be daunting. However, by learning from Apple's experiences and adapting to the local market, a new business can position itself to thrive in India's evolving business landscape.
Overall, Apple's shift to India signifies an immense growth opportunity and showcases the country's significance as a manufacturing and consumer market. For a new business willing to embrace the challenges and capitalize on the advantages, this strategic move by Apple opens doors to tap into the vast potential of India and establish a strong presence in the region.
Article First Published at: https://www.cnbc.com/2023/07/07/what-apples-big-bet-on-india-means-for-the-tech-giants-future.html
