As a symbol of the dangerous sham and total wonkiness of the official Obama administration campaign to force China to upvalue the yuan, Apple's hot new iPad is perfect. The iPads now selling in the United States retail priced at US$499 and up carry a label: "Assembled in China." Based on early deconstruction work by U.S. firms who began taking the iPads apart this past weekend, it looks like the iPad's manufacturing history is similar to Apple's iconic iPods.
The imported cost of the http://mall.ec51.com/ipad-wholesale-237_242.html, maybe US$250, will show up as another part of the U.S. "trade gap" with China that needs to be "rebalanced." In reality, as little as 5% of the import price is value added at assembly in China. The real content of an iPad, reports The Wall Street Journal, comes from South Korea's Samsung, Japan's Toshiba, Broadcom in the United States and (for batteries) Amperex Technology, a Hong Kong company owned by TDK in Japan. The touchscreen, processors, wireless gear and a score of other elements are created and manufactured around the world.
What's China got to do with it? It is actually impossible to know with absolute certainty, but "not much" is the main answer. A study by iSuppli Corp. estimated the total parts and manufacturing cost of the mid-range iPad with 32GB and 3G capability at $287, but all of that is parts cost. The final "assembled in China" portion amounted to $11.20. In other words, not much has changed in the Apple supply chain system since the precursor iPod was first de-constructed several years ago by California reasearchers.
One of those researchers, Greg Linden at the Personal Computing Industry Centre at the University of California, Irvine, said in an interview yesterday there's no evidence that the China component of the iPad has improved over the years compared with the iPod. Mr. Linden adds that the manufacturing plant in China where the iPad is assembled is actually run by a Taiwanese company. "China is just not getting into these global supply chains." Even if some of the parts assembled into an iPad were made in China, the value-added China content would still be minuscule, he said.
With so little of an iPad actually Chinese, http://mall.ec51.com/ipad-wholesale-237_242.html imports into the United States become important misleading indicators of the alleged underlying trade imbalance. The import data on a mid-range iPad will raise the U.S. trade gap with China by $287--even though China's role isn't worth more than $12. As Mr. Linden and his colleagues put it in a paper last year, the realities of the iPad global production scheme "shows that there is a need for better data to understand what that [China-U. S.] trade deficit really means for each country."
The biggest beneficiary of the system is Apple, which analysts estimate could retain a gross profit of more than $200 per iPad. So here's the issue: The United States is launching a major trade and currency offensive against China which, in the iPad case, amounts to attempting to punish China for trade transactions that are a huge benefit to U.S. companies, investors and consumers.
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