Power Shift – Apple Made in India
The Chinese economy has taken so many hits in 2022, after appearing to emerge as the clear superpower due to their swift recovery from the COVID-19 pandemic. Many factors have played into this, but the biggest must be the harsh COVID-19 policies instituted on businesses and citizens. These lockdowns to suppress the virus have already stifled large businesses, including Tesla who saw a dent in their car deliveries and production because of the lockdown in Shanghai. The policies are in effect once again, and this is creating uncertainty that businesses are acting on. Paired with geopolitical uncertainty and concerns about labor, it seems that manufacturing could be shifting to different areas of the world.
Data shows that China’s share of global exports for items like furniture and clothing has decreased since 2016, but there was further evidence this week. Due to the COVID issue, Apple elected to manufacture their iPhone 14 in the neighboring country of India, an emerging economy, which has the potential to be a big player. The number of new iPhones being made in India could make up for 25 percent of the global share in 2025, showing a rise in the manufacturing sector there. The potential is visible; Morgan Stanley expects the Indian economy to become the third largest in the world in 2027, with their manufacturing share projected to make up for 21 percent of GDP. India provides many benefits such as a large population and friendly foreign relations with the West, but it’s up to them if they want to implement this plan. Currently, India raises tariffs and pays firms to boost manufacturing throughout the country, a strategy that has seemed to work, but there are things they could do to reduce government involvement in the economy, which continues to harm the country due to state affiliations. India can rise as the hub of manufacturing, but it is up to how they navigate the next decade to set themselves up for success.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
