China makes no cash out of the iPad and iPhone

While Apple’s Chinese based partners are in hot water for poisoning huge tracts of land and causing their staff to want to top themselves, it seems that the People’s Republic gets no advantage from hosting them.

Forbes points out, rather smugly, that countries who think it is a good idea to pay a fortune to step up manufacturing within their borders should look at the Apple experience and think again.

Looking at the global supply chains of the Apple iPad and iPhone it would appear that Apple continues to capture the largest share of value from its products. This seems fair enough.

However while most of these products, including most of their components, are manufactured in China, the primary benefits go to the US economy.

Apple keeps its product design, software development, product management, marketing and other high-wage functions in the US while China’s role is small.

To make matters worse, Forbes said, Apple has the power to make and break the fortunes of many of its suppliers and makes their lives a nightmare.

Chinese politicians are finding that there is little value in electronics assembly other than keeping a few of its workforce off the streets, or in some cases, removing them from the gene pool.

Forbes said that basic manufacturing, electronics assembly type manufacturing, simply isn’t a high value job these days so bringing the manufacturing “home”, to the UK or US, is pointless.

The question then is why would China bother running these plants if they are such a pain? The answer is that China does make a small amount of dosh, but it also has a huge amount of power which comes from manufacturing.

Who needs a high tech and expensive military, or even nukes. With all the Chinese gear in the US market, all the country has to do to bring a superpower like the US to its knees is refuse to send the products manufactured by US companies home. Since the cost of making the gear has little social impact an embargo on electronic products would only really hurt the US economy.