Apple is urging suppliers to make sure that all shipments from Taiwan to China follow Chinese customs regulations to avoid processing delays at the border — reports Nikkei Asia.
As political tensions between China and Taiwan continue to rise, the former has started strictly enforcing a long-standing rule that requires Taiwan-made imports to be labelled as originating from either “Taiwan, China,” or “Chinese Taipei,” people familiar with the developments told Nikkei Asia. The labelling language required by Chinese authorities indicates that Taiwan is part of China.
As a result of the increased scrutiny, a shipment of components to iPhone assembler Pegatron’s Chinese plants was held for review on Thursday.
Apple would definitely want to avoid such incidents moving forward. That is especially true right now, given that shipping delays could cause hiccups in key production timelines as suppliers ready the company’s next iPhones and other products for a fall launch.
The bulk of Apple’s global iPhone production capacity is in China, while most of the microprocessors that power iPhones are manufactured by TSMC in Taiwan. Earlier this week, TSMC warned that its Taiwanese operations would shut down if China were to invade the island.
According to one of the sources, the phrase “Made in Taiwan” appearing on any import declaration forms, documents, or cartons is problematic for Apple as it increases the chances of Chinese customs holding and checking the package. Such shipments can attract fines of up to 4,000 yuan ($592 USD) or, even worse, be rejected.
Taiwan, meanwhile, requires that all outgoing shipments be labelled as from “Taiwan” or the “Republic of China,” the island’s official name. The dichotomy between Taiwan’s export regulations and Chinese import rules puts suppliers in a sticky situation.
Apple wants to avoid any more supply chain disruptions, which it has seen plenty of in recent months. The tech giant has asked suppliers to form contingency plans or quickly review and amend their labels on cartons and forms for shipments.
U.S. House Speaker Nancy Pelosi made a formal diplomatic visit to Taiwan earlier this week, further straining both countries’ relations with China.
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Biggest mistake of Cook’s tenure was his absolute inability to see the writing on the wall that China was not viable longer term. Mexico is now a rival that he should have looked at 5-10 years ago. Better demographics for age and education of workers, less totalitarian and authoritarian and right next door to Apple’s largest market.
Staying in bed with China is a mistake.
He’s knows it’s an issue, he’s a logistics expert, but he might be more accepting of it while enjoying the lower cost. But Apple *have* been urging their biggest contractor Foxconn to establish factories in countries like Brazil (which failed), Vietnam and India (it helps that India taxes devices lower if manufactured locally).
The problem is that there are not many companies like Foxconn in the world outside china, that can manufacture the colossal numbers Apple needs. The solution might be to offer to finance more of Foxconn expansion abroad and/or take some of it in-house and build their own plants, both of which would be expensive now but maybe better long-term.
So I’m sure he knows it’s a risk but he seems content with Foxconn’s slow expansion to other countries and that might be a mistake. You’re right that he could have done better, at least from a layman’s perspective Apple can easily afford to spend more on risk mitigation.