[gentran]

Back in the day, my international economics professor told me corporations will set up, and base their business out of the countries that they see as the most stable. Because of this, it scares me when I see headlines like this, even though it is only production. If anyone has a counterpoint to what he said, I am very interested in hearing it

[rossdavidh]

I think that is giving CEO's and corporate boards way, way more credit for long term thinking than they deserve. Corporations base their business out of whatever gives them the best result over the time period when they expect to be involved. If it's a founder, that is a lifetime commitment, probably, unless the founder is intending to sell to a larger business. But in any other case, the CEO and all of the other high-ranking types are thinking about this year and next, for the most part.

[throwaway5752]

I don't think that is true of Apple given the scale of their operations.

[Krasnol]

What special scale would that be?

[jodrellblank]

If you have a point, please make it without whatever this is.

Apple scale is hundreds of millions of devices sold per year. Nobody said it was a “special” scale only for Apple.

[Krasnol]

So the persons pointless comment is no problem but my question is? Why? The commenter does not give any sign to why the size may be relevant so the only special thing about the sentence is the name of the company. As if that may be enough to kill the long and descriptive comment above. The second answer by someone else followed up on this bait.

At the topic of size: https://news.ycombinator.com/item?id=20309140

[jodrellblank]

The person’s comment is a reasonable, if low effort, comment. The exchange is “companies go to stable countries”, “no they go wherever short term profit leads”, and the comment says “Apple is too big not to think of long term stability”.

Which is a point, even if it’s not substantiated. Even if it’s not true it’s a reasonable claim to reply with.

Your question is a problem because it’s a fake-innocent question, with a veiled accusation of Apple being a special case. You’re not engaging with whether Apple could move often, or does or doesn’t look at the long term, or is too big to ignore the long term, instead you’ve taken a straw man “Apple is special” - which was never claimed - and not even argued that either way, just tried to set some trap for the unwary.

[pertymcpert]

It wasn't pointless, your contributions however have been.

[AdamJacobMuller]

largest-ish company in the world scale?

[Krasnol]

And how is this related to the argument above now?

Is it some kind of monarchy?

PS. It's not the largest. Neither by market cap nor by employee number.

[killjoywashere]

> Is it some kind of monarchy?

Bueno de Mesquita makes a compelling case for modeling most corporations as dictatorships in The Dictator's Handbook. So as long as succession is planned at the Corp, then yes, I suppose monar hy would be the correct model.

[gaze]

Basing your business and basing your production are quite different. Apple has likely done the math on the cost of their relations with their manufacturer going belly up against the additional savings from having their production done in china.

I don't know that you could say Apple is based anywhere. Their offices are in the US, they have finances in Ireland (I think?), and their production is in China. They just put stuff where it's cheapest and drawdown is minimized in the event of a catastrophe. It's all thought out, I'm sure.

[pfranz]

I'm not surprised. I figured when they announced the Mac Pro would be produced in the US it was a test with a low volume product with high margins. That experiment failed (on many fronts), so they're reverting back to what they do for the rest of their products. Tim Cook has been pretty explicit about why they do production in China and it's not just the cost.

What's ironic is that only a week ago reports were that Apple is looking to move production /out/ of China (which is mentioned in the article): https://www.wsj.com/articles/apple-examines-feasibility-of-s...

[webmobdev]

What other reasons are there apart from low cost and lax environment regulations and weak labour laws?

[tcpekin]

Some interesting quotes (can be found in other accounts as well):

For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.

“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”

So, from what I've read, there is also the huge factor of being able to easily source parts, much easier than in the US, and also much easier to change a factory.

[1] https://www.nytimes.com/2012/01/22/business/apple-america-an...

[pfranz]

Thank you for pulling a source and some specifics!

I also remember Apple talking about expertise. The number of people experienced in running a large factory exist in the US, but at a much smaller number. Which means they're harder to hire and likely warrant a higher salary.

I also think people greatly over emphasize the role of assembly. I believe it's less than 10% of the cost of each phone. But, in light of all that, it was good to see attempts to onshore more of the production.

[floppycode]

Far lower wages and fewer regulations seem to be much more important when it comes to production. As long as they do not want to move their headquarter I guess a little bit of instability and underdevelopment is actually desirable.

[EpicEng]

That seems far too simplistic. At some point other factors (e.g. cost) outweigh "stability".

[nexuist]

Apple has enough money in the bank at this point to not really care about what is or what isn't the most stable. They could make the worst decisions possible and it would take years before the consequences of their actions come back to bite them. While I'm sure they had genius analysts crunch and ultimately approve this move, the rules are different for them.

[sokoloff]

Did they get to that enviable position by making a long series of good or bad decisions on balance?

[OBLIQUE_PILLAR]

I think the old Jack Welch quote is more revelevant

https://www.economist.com/leaders/2013/01/19/welcome-home

“IDEALLY”, said Jack Welch in 1998, when he was chief executive of General Electric, “you’d have every plant you own on a barge to move with currencies and changes in the economy.” Reality followed vision for Mr Welch, who was a pioneer of offshoring, setting up one of the first offshore service centres in Gurgaon on the outskirts of Delhi.

[phaus]

I think its more a matter of setting up in a country that's stable vs most stable. This is balanced out by the entire cost of doing business vs other stable countries they could have selected.

[nswest23]

BA in finance here. There are many factors that companies weigh when choosing countries to base their manufacturing from, only one of which is "stability" although there are many dimensions to this as well. Availability of labor force, costs, proximity to markets for product(s), etc. also determine where a company might base manufacturing. In the case of China, companies also might choose to place part of their supply chain there b/c it encourages the Chinese middle class to purchase their products.

[fouc]

I guess it depends on how easy or hard is it for apple to move its production around. If it's easy, then stability isn't the concern here. There's probably lots of other factors too, so realistically it wouldn't boil down to "Oh, US must be less stable"

[gandalfian]

As you said its production going to china. When its their headquarters and management moving they go to Singapore and the like. So I think your professors theory holds out.

[duxup]

Perhaps stability is less a concern when "everyone else is doing it" and you are worried about quarter to quarter results... not longer term.

[muzani]

Why do you say China is unstable?

The US is talking about starting a war, had government shutdown issues recently, and has a president that is abrasive on foreign affairs. UK is dealing with brexit.

China may have the issue with HK recently, but to an outsider, they look more stable. Of course, something like Japan or Australia seems better, but China isn't a terrible choice.

[Majestic121]

I think the parent agree with you, and tried to imply that China is indeed more stable than the US, and that was scaring him.

[gentran]

I'm not saying China is unstable. My implication was that maybe these massive USA based corporations might see China as more stable for business continuity. I know production is totally different, and understand some of the reasons for moving it to China. While I do not imagine them leaving, what do you think would happen if America lost these massive, global corporations to their biggest rival?

[muzani]

Oh, I see. I interpreted the comment differently, as many others were saying it's done to save money.

[tnolet]

China is stable because it is a totalitarian dictatorship that jails critics, has no free press and no real elections.

[majia]

No. Chinese people overthrew many kings and dictators far more oppressive than CCP in its long history. China is stable because CCP delivered economic results, lifting hundreds of millions of people out of extreme poverty. So a stable but oppressive CCP gov has been tolerated so far.

[ZanyProgrammer]

Stability at the cost of cultural genocide (Uighyrs).

[JumpCrisscross]

> Why do you say China is unstable?

It's now a dictatorship, with a single man ruling for life. The history of dictatorships shows, for fundamental reasons, stability in the short term and chaos in the medium.

(The fundamental reasons include not being able to back away from bad decisions, eliminating competent rivals, and as a result bumbling into crises that seem to escalate themselves.)

[esoterica]

That’s a very ahistoric perspective. Many of the longest-lived and most successful empires throughput history have been monarchies and dictatorships. The current popularity of broadly democratic regimes is a very recent development in human history.

Even the US was very undemocratic for most of its history (remember when only white male landowners could vote?), and that didn’t stop its ascendancy to world superpower.

[Retric]

That’s less true the deeper you dig into history. Major political change doesn’t always make a big splash into history.

New leadership in a dictatorship often means a quiet realignment at the top. China tends to use the corruption excuse, but look at the upper leadership after such transitions and you find many new faces.

[Barrin92]

>It's now a dictatorship, with a single man ruling for life.

This is a cartoon take on China. Yes, China is led by a fairly Leninist party structure in nominal terms, but in terms of management China is relatively decentralised. Politically but in particular fiscally regional and local authorities manage day-to-day operations with significant leeway depending on the region, anything else would be unfeasible in a country with 1.4 billion people.

The bureaucratic nature of the Chinese state (which is really thousands of years old) makes comparisons to Western strongman dictatorships impossible. There's a reason the communist state has survived Mao, market reforms under Deng and now Xi, and it's not because it's run by some big brother figure who gets assassinated and then everything collapses.

[JumpCrisscross]

> China is led by a fairly Leninist party structure in nominal terms

China's party structure was fine and decidedly non-dictatorial. Deng was not a dictator and neither was Hu Jintao. They did not, like Xi has, ensconce themselves as leaders for life [1].

[1] https://www.theguardian.com/world/2018/feb/26/xi-jinping-chi...

[Barrin92]

Nothing much about the party structure has changed. Xi doesn't get any more power than he has right now simply because of a term limit removal. Given how opaque and complex the power distribution inside the communist party is, Xi could have feasibly governed with a marionette in place without changing the term limits at all, just like Putin in Russia while Medvedev was in office.

China was certainly much more dictatorial than any Western country before this change, and it isn't much more dictatorial now. Xi's extension of time in office isn't really related to governance as much as it is related to the problem of succession. With significant amounts of the old guard finally reaching retirement age, there is a fear of political instability in the party.

[addicted]

Xi doesn’t have more power because of the term limits removal. But the fact that he was able to get the term limits removed was a public display of the power he has accumulated.

And the way he has done that is by imprisoning and killing competitors to his power. The fact that he could even contemplate bringing the term limit up indicated that he was certain at that point that there was no one to compete with him within the party, who would protest the term limits removal.

[Danieru]

I noticed you avoided mentioning at all Xi's power grab and now dictatorial status.

[mfatica]

The US is not talking about starting a war. President Trump has been very clear he wants to avoid war.

[1986]

Trump may not want to go to war but he's surrounded himself with people (e.g. Bolton) who do.

[pinkfoot]

Have you been following what China does to entire population groups that threaten their stability?

Name one country that is more stable for mass production than China?

Its just not the leafy vision of stability you had in mind.

[smacktoward]

The problem is that these types of regimes tend to preside over a system that's extremely stable, right up to the moment when it really really is not.

Batista's Cuba was very stable and friendly to foreign investment too, for instance. Then along came Castro, and suddenly not only was it not particularly stable, but lots of those foreign companies had all their holdings expropriated by the new government for having collaborated with their oppressor. Oops!

[bduerst]

The difference being that China's culture, for the most part, is okay with the surveillance state. There's protests for sure, and places Hong Kong (an ex-British colony) are not okay with it, but most Chinese citizens are aware of the censorship and don't care.

I think what's happening more is that westerners are projecting their own culture and philosophies onto the population. Americans are especially passionate about free-speech and they assume that Chinese citizen's share that, hence all the doom prophesying like your comment.

[smacktoward]

> The difference being that China's culture, for the most part, is okay with the surveillance state.

If they weren't, how would you know? Do you honestly think anyone who isn't would be dumb enough to say so out loud, especially to a pollster or a foreigner?

[bduerst]

Fair enough, it could be survivor bias, but the firewall is so easy to bypass with a VPN that it would most likely be more evident.

Anecdotally I spent half a year in China, and whenever I brought up the censorship with people who lived there, I got more than just a few responses where they rolled their eyes and said we (Americans) are obsessed with it, followed up with, "Who cares?"

[smacktoward]

My point wasn't entirely about survivorship bias. People in a surveillance state are going to be especially careful about what they say to people like foreigners and journalists, as those are people who are likely to be under even more close surveillance than are average citizens. So whatever you say to them is very likely going to be something you say in the hearing of the government, even if the person themselves does their best to keep your secret.

[lozenge]

Many Chinese have gone from sharing a plate of meat with their family once a month to affording meat every day. In that context, surveillance (and minority concentration camps) feel irrelevant.

[frequentnapper]

It's not just about censorship and surveillance. These are there to prevent people from finding out and doing something about other forms of oppression. So what you are saying is that Chinese people culturally don't care about govt oppression unless it's their turn?

[varenc]

Hmm, how can we really know the population is _okay_ with this? Seems like if things are working this is what the outward appearance would be. But the existence of all this social control means there must be some internal risk China sees.

After all, China is continually upgrading its surveillance and other means of social control. They're also committing cultural genocide in Xinjang despite the international media fallout. They must feel like there's some real threat worth fighting to do all this.

Also unlike the other top 8 or so world economies, China has had an internal revolution/civil war quite recently.

[whatshisface]

Desperately trying to keep stability isn't evidence of stability, it's evidence that the leadership thinks they aren't stable.

[Lambdanaut]

The only thing in your statement that provides evidence of instability is your arbitrary inclusion of the adjective "desperately" to describe China's actions.

All governments work towards stability in their own ways. I don't see desperation in Chinese strategy, but I do see a lot of energy.

[whatshisface]

>I do see a lot of energy

You are free to use any word to describe it, you could also call it "expense." China is spending time and energy on suppressing dissent proportional to their fear of their own people. The CCP has decided that the risk of being deposed is high enough to justify the cost and effort required to implement all of those nightmarish schemes.

[gpvos]

Unfortunately, it does seem to work.

[muzani]

Logic may not be sound. A factory owner invests in lowering costs. It doesn't mean that costs aren't already low.

China is investing in increased stability. US assumes they are very stable and thus takes on a lot of destabilizing actions.

So a lot of people deduce that China will be more stable than USA in N years.

[Sherl]

>Name one country that is more stable for mass production than China?

India

[NTDF9]

Not really. Lack of basic infrastructure still plagues vast parts of India. But yes, India is perhaps the most interesting consumer market outside of US and China. Interesting enough to set bases there