Previously, Apple and Foxconn heavily promoted iPhone production in India and Vietnam. However, times have changed, and recently, Apple's contract manufacturers have significantly increased production capacity in China. Foxconn's Zhengzhou factory has even offered a reward of 7,500 yuan to attract workers, as Chinese contract manufacturers secure more orders, leaving Foxconn seemingly deceived.

Since 2019, Foxconn has successively established factories in India and Vietnam, followed by Wistron and Pegatron, who also ventured into India to produce iPhones. It seemed that everything was proceeding according to Apple's wishes to reduce the proportion of Chinese manufacturing. However, the subsequent experiences of these contract manufacturers in India and Vietnam have shown that replicating success in the Chinese market is not easy.

These contract manufacturers have suffered significant setbacks in India. Wistron's Indian factory has been acquired by the Indian conglomerate Tata, effectively forcing Wistron to nearly exit the iPhone contract manufacturing market – Apple allocated only 1% of iPhone 15 orders to Wistron in 2023. Recently, Tata has been negotiating with Pegatron regarding an acquisition, and considering the dominance of Indian conglomerates, it seems almost certain that Pegatron will fall into Tata's hands.

Foxconn has also encountered considerable challenges. Its Indian factory has struggled to expand production capacity, and due to concerns about following Wistron's footsteps, Foxconn has scaled back its expansion plans in India. The factory has frequently faced production halts. Guo Taiqiang, the younger brother of Foxconn's founder Terry Gou, set up a factory in India to support Foxconn, but in 2022, a massive fire destroyed four of the ten production lines. Foxconn's Vietnamese factory was also forced to halt production during the day due to power issues in 2023 and was recently requested by India to reduce electricity consumption by one-third during summer.

Apple's bet on India has not only caused problems for the many contract manufacturers providing manufacturing services but has also drawn the attention of Indian conglomerates. Apple's retail stores in India have been forced to allow Indian conglomerates to invest, and if factories acquired by Tata, such as Wistron, obtain Apple orders, Apple's production and sales in India will be influenced by Indian conglomerates, which is unacceptable to Apple. As a result, Apple has begun to re-emphasize Chinese manufacturing.

In March of this year, Tim Cook visited China and appeared at Apple's retail store in Shanghai, personally welcoming customers. At the same time, Cook met with the leaders of Chinese suppliers such as BYD and Lens Technology, emphasizing the strengthening of cooperation with Chinese manufacturing. The Chinese market is an indispensable market for Apple.

Cook's statement does not seem to be perfunctory. Currently, Apple's iPhone 16 is in production, and Chinese mainland companies Luxshare Precision and BYD have secured orders for the iPhone 16. At the end of 2023, Apple adjusted its supply chain, with 10 new companies entering its supply chain, indicating that Apple is indeed strengthening its cooperation with Chinese manufacturing.

The reason behind Apple's actions lies in the immense importance of the Chinese market. In 2023, the Chinese market became the largest market for iPhones. The decline in shipments in the Chinese market during the fourth quarter of 2023 and the first quarter of this year led to a decline in Apple's global shipments, highlighting the significance of the Chinese market. To win the support of Chinese consumers, cooperation with Chinese manufacturing is necessary to appease them.

Compared to the Chinese market and Chinese manufacturing, the proportion of iPhones sold in the Indian market accounts for less than 5% of total iPhone sales, and only about 12% of iPhones are manufactured in India. The Chinese market is far larger than India, and China produces 70% of iPhones. However, no Chinese company participates in Apple's retail system. Contract manufacturers like Foxconn and Wistron have had control over their enterprises after years of development in China, which undoubtedly highlights the friendlier nature of the Chinese market and Chinese manufacturing compared to the greed of Indian conglomerates.

These facts have prompted Apple to genuinely strengthen its cooperation with Chinese manufacturing to ensure its dominance in the Chinese market. Foxconn, which ventured into India, seems to have become a victim. Apple has reduced Foxconn's share of iPhone manufacturing, and Foxconn has had to offer high bonuses once again to attract workers back to ensure production of the iPhone 16. This is certainly not good news for Foxconn, which has invested heavily in India and Vietnam. Now that Apple has continuously reduced Foxconn's manufacturing share, Foxconn has paid a huge price without commensurate returns from Apple. Foxconn must regret setting up factories in India, right?