In a recent interview with The Wall Street Journal, Apple CEO Tim Cook addressed the controversial issue of the low wages paid to workers in China who assemble Apple products. Cook defended Apple’s decision to outsource most of its manufacturing to China, saying that it was not driven by cost savings, but by the availability of skilled labor and supply chain efficiency.
Cook said that China has a large pool of workers who have the technical skills and the work ethic that Apple requires for its complex and high-quality products. He also said that China has a well-developed infrastructure and logistics network that allows Apple to source components and materials from different suppliers and deliver them to the factories in a timely manner.
Cook acknowledged that the wages paid to workers in China are lower than those in the US, but he argued that they are fair and competitive in the local market. He said that Apple pays more than the minimum wage and provides benefits such as health insurance, education, and training to its workers. He also said that Apple monitors the working conditions and labor practices of its suppliers and enforces a strict code of conduct that prohibits child labor, forced labor, excessive overtime, and other violations.
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Many people assume that cheap labor is the key factor for successful manufacturing. They think that if a country has low wages, it can produce goods at a lower cost and compete in the global market. However, this is a misconception that ignores other important aspects of manufacturing.
First of all, what does it mean to say that something is a necessary condition? It means that without it, something else cannot happen. For example, water is a necessary condition for life. Without water, there can be no life. Similarly, cheap labor is a necessary condition for manufacturing. Without cheap labor, manufacturing costs would be too high, and the products would not be affordable or profitable.
However, what does it mean to say that something is a sufficient condition? It means that if it is present, something else will definitely happen. For example, fire is a sufficient condition for smoke. If there is fire, there will be smoke. However, cheap labor is not a sufficient condition for manufacturing. Even if a country has cheap labor, it does not guarantee that it will have successful manufacturing.
Why is that? Because there are other factors that affect manufacturing besides labor costs. For example, infrastructure, technology, innovation, quality, skills, regulations, markets, etc. These factors determine how efficiently and effectively a country can produce goods and services. If a country lacks these factors, it will not be able to utilize its cheap labor to the fullest potential.
For instance, imagine a country that has very low wages but also very poor infrastructure. The roads are bad, the electricity is unreliable, the water supply is scarce, etc. How can this country transport its raw materials and finished products? How can it operate its machines and equipment? How can it ensure the safety and hygiene of its workers and consumers? These challenges will increase the costs and reduce the quality of manufacturing.
Another example is a country that has cheap labor but also low technology and innovation. The machines and equipment are outdated, the processes are inefficient, the products are obsolete, etc. How can this country compete with other countries that have more advanced technology and innovation? How can it meet the changing needs and preferences of consumers? How can it improve its productivity and profitability? These limitations will hinder the growth and development of manufacturing.
Therefore, we can see that cheap labor alone is not enough for successful manufacturing. A country needs to have other factors that complement and enhance its cheap labor advantage. Otherwise, it will not be able to sustain its manufacturing sector in the long run.
Cook said that Apple is committed to improving the lives of its workers and supporting the economic development of China. He said that Apple has invested billions of dollars in China, creating millions of jobs directly and indirectly, and contributing to the country’s innovation and growth. He also said that Apple supports various social and environmental initiatives in China, such as providing clean energy, promoting education, and protecting wildlife.
Cook concluded by saying that Apple is proud of its relationship with China and its role as a global citizen. He said that Apple will continue to work with its partners and stakeholders in China to create products that delight customers and make a positive difference in the world.