Báo cáo cuối kỳ Quản lý chuỗi cung ứng Apple tại Trung Quốc | Đại học Hoa Sen

lOMoAR cPSD| 47206521 SUBJECT
Recognizing the importance of business management in supply chain
management, our group has chosen the topic of "Supply Chain Management of
Apple Components in China" for our end-of-semester report. The essay includes the following main content:
Firstly, an analysis of Apple's SWOT.
Secondly, an analysis of China's PESTEL model to answer the question of
why China chose Apple as the place to produce and assemble its components.
Thirdly, an analysis of Apple's strategies in supply chain management.
Fourthly, based on the above analysis, an evaluation and proposal of
solutions to help Apple effectively manage its supply chain.
The essay is a process of researching and collecting primary and secondary
information from domestic and international research documents, journals,
statistical sources from the General Statistics Office, General Customs Office, and
international banks to analyze and evaluate the current status and issues of Apple's supply chain. lOMoAR cPSD| 47206521 TABLE OF CONTENTS
SUBJECT ................................................................................................................................................. 1
TABLE OF CONTENTS ......................................................................................................................... 2
CONTENTS ............................................................................................................................................. 2
I. APPLE’s SWOT ANALYSIS ............................................................................................................. 2
1. Introduction to Apple .................................................................................................................... 2
2. Apple’s development ...................................................................................................................... 3
3. Swot Analysis .................................................................................................................................. 4
a. Strengths .............................................................................................................................................. 4
b. Weaknesses ......................................................................................................................................... 9
c. Opportunities .................................................................................................................................... 12
d. Threatens .......................................................................................................................................... 14
II. MACRO-ENVIRONMENT ANALYSIS.......................................................................................... 16
1) Political .......................................................................................................................................... 16
Firstly, Stable and strong political environment ................................................................................ 16
However, currently, with the US-China trade conflict and political tensions in many major countries
such as Russia-Ukraine, large countries find it easier to move multinational companies to regions
like Vietnam and India to replace them ............................................................................................. 18
2. Economic ....................................................................................................................................... 18
Overall, China's potential still holds an advantage as its infrastructure, logistics network, and skilled
labor supply remain superior to many emerging economies ............................................................. 21
3. Society ........................................................................................................................................... 21
Looking at the comparison chart, it is important to note that the cost of living in major cities such as
Beijing, Shanghai, and Shenzhen is relatively high compared to other cities in China. Therefore, the
high minimum wages in these cities may not necessarily reflect a higher standard of living for
workers. In addition, there are still many workers in China who earn wages below the minimum
wage, particularly in the informal economy. The Chinese government has been working to improve
labor standards and increase wages for workers, particularly in industries with high levels of labor
exploitation. Despite these efforts, there are still concerns about labor rights and exploitation in
China's workforce .............................................................................................................................. 26
4. Technology ..................................................................................................................................... 26
5. Legal .............................................................................................................................................. 29
The VAT rate of 6% usually applies to interest and royalties (which may be exempt in cases of
technology transfer payments).” ........................................................................................................ 32 lOMoAR cPSD| 47206521
6. Environment ................................................................................................................................... 32
To combat the negative impacts of transportation infrastructure on the environment, the Chinese
government has implemented policies to encourage the use of public transportation, electric
vehicles, and green technologies. For example, subsidies are provided for electric vehicles, and
restrictions on the purchase of traditional gasoline vehicles have been implemented in some cities.
Additionally, the government has invested in the development of high-speed rail networks to reduce
the dependence on air travel and road transportation ........................................................................ 35
In recent years, China has made significant efforts to reduce its carbon emissions and transition
towards cleaner forms of energy. In 2020, China announced its commitment to achieving carbon
neutrality by 2060, which has significant implications for the country's energy and environmental
policies. To achieve this goal, the government has implemented policies to increase the share of
renewable energy in the country's energy mix, such as wind and solar power. Additionally, the
government has invested in research and development to improve energy efficiency and reduce
carbon emissions in industrial processes ........................................................................................... 35
7. Summary ........................................................................................................................................ 35
III. LOGISTICS STRATEGY MANAGEMENT OF APPLE IN CHINA ............................................ 40
1. Apple’s logistics overall ..................................................................................................................... 40
b. Production .......................................................................................................................................... 44
c. Shipping ............................................................................................................................................. 50
d. Distribution ........................................................................................................................................ 52
e. Return................................................................................................................................................. 54
f. Comment on apple's strategy in china ................................................................................................ 55
IV. SOLUTIONS TO ENHANCE APPLE'S SUPPLY CHAIN EFFICIENCY IN CHINA .................. 58
The company needs to work faster with suppliers to decarbonize production activities related to Apple
and expand investment in climate and clean energy solutions worldwide ............................................ 60
To support a healthy and clean environment for all, Apple proactively takes steps to improve product
design, production, energy use, and recycling programs, including: ..................................................... 60
Choosing environmentally acceptable raw materials ............................................................................. 60
Reducing waste from the production process ........................................................................................ 60
Providing software tools that enable users to control the energy-saving features of their devices ........ 60
V. CONCLUSION ................................................................................................................................. 60 lOMoAR cPSD| 47206521 ACKNOWLEDGEMENT
Throughout our study at Hoa Sen University, we have learned a lot of
necessary and useful knowledge and skills through the learning process. What is
particularly important is that I have completed my final term paper for the
International Business Management course. To achieve this result, it is thanks to
the dedicated teaching, guidance, and support from the professors at Hoa Sen
University. I express my sincerest and deepest gratitude to them.
Especially, we would like to express our gratitude to Mr. Vu Hai Nam, who
has given us his affectionate, meticulous guidance and shared with us valuable
knowledge throughout the process of completing our paper.
Here, we would like to express our thanks to the professors of Hoa Sen
University, the Faculty of Logistics - International Business and the leaders of the
university for creating the conditions, providing modern equipment for us to study
in a professional environment to achieve the best productivity. We wish the
professors and teachers good health, happiness and success.
Although our term paper has been completed, it is still not perfect and has
some shortcomings. Therefore, we sincerely hope to receive feedback and
suggestions from the professors and teachers to improve our paper.
We would like to express our sincere thanks! FIGURE CATALOG
Figure 1.1: Apple Inc's brand image from 1976 to 2015. lOMoAR cPSD| 47206521
Figure 1.2: Apple Inc's revenue by product from 2019 to 2022.
Figure 1.3: Apple Inc's net income from 2005 to 2022.
Figure 1.4: Apple's product market share produced in China.
Figure 2.1: Political stability chart of China.
Figure 2.2: Economic development indicators of China from 2020 to 2022 and
projections for 2023-2024.
Figure 2.3: Some labor cost indicators in China from 2010 to 2021.
Figure 2.4: Annual average wages of production workers and machine operators
in 13 countries, including the United States.
Figure 2.5: Top 10 semiconductor-buying companies in 2020.
Figure 2.6: Carbon dioxide emissions in China from 1960 to 2021.
Figure 2.7: Comparison of Apple Inc's and Huawei's phone products from 2019 to 2022.
Figure 2.8: Apple's development in the Chinese market at an astonishing pace.
Figure 3.1: The process of launching Apple Inc's products.
Figure 3.2: Apple Inc's supply chain.
Figure 3.3: iPhone screen components.
Figure 3.4: Image of a produced iPhone screen.
Figure 3.5: Image of iPhone component production in a factory.
Figure 3.6: Percentage of Apple products produced in China.
Figure 3.7: Apple's supply chain model for iPhone products.
Figure 3.8: The timeline of iPhone transportation to the USA.
Figure 3.9: Apple's inventory turnover.
Figure 3.10: Apple's distribution strategy. lOMoAR cPSD| 47206521 INTRODUCTION
We are living in a highly digitalized economy, an advanced era where
information technology is changing day by day. All countries are influenced by
this transformation, and globalization and integration are becoming a trend of the
era, narrowing the gap between countries worldwide. For this reason, the global
supply chain is gradually becoming a strategic weapon, helping businesses
enhance their competitive advantages in the economic market. A strong, good, and
reliable supply chain will bring significant benefits to the development and
integration not only of that country but also of the global economy.
In addition to the general impacts of the global economic environment, most
countries, including many supply chains, are affected by the consequences of
wars, natural disasters, climate change, greenhouse effects, storms, floods,
earthquakes, tsunamis, etc., which occur regularly every year, causing damage to
people and property. Moreover, from 2019 to now, the whole world has been
suffering from the prolonged effects of the Covid-19 pandemic, causing many
serious consequences. Faced with the direct impact on the economy, culture, and
society, many countries want to find solutions to address these issues, maintain
stability, and not be led or manipulated by the excessively strong global supply
chain changes as today. To achieve the goal of "growth for businesses," large
companies in various industries in the global supply chain always seek every way
to promote businesses through new technologies, urban planning, production
standards, product improvements, and distribution to customers.
In recent years, besides the strong supply chain models of large corporations
such as Coca-Cola, Unilever, Colgate-Palmolive, Cisco Systems, Inditex, etc., we 1 lOMoAR cPSD| 47206521
cannot fail to mention the famous supply chain of the giant company, Apple. This
business was once considered the strongest and most efficient global supply chain
from 2012 to 2015. Recognizing the importance of business management in
supply chain management issues, we have chosen the topic: "Supply Chain
Management of Apple's components in China" for our endof-term report. The
essay includes the following main contents:
Firstly, the SWOT analysis of Apple.
Secondly, the PESTEL model analysis of China to answer the question: "Why China?"
Thirdly, Analyze Apple's supply chain management strategies.
Fourthly, Based on the above analysis, evaluate and propose solutions to help
Apple effectively manage its supply chain. CONTENTS I.
APPLE’s SWOT ANALYSIS 1. Introduction to Apple
Apple Inc., formerly known as Apple Computer, Inc., was founded by Steve
Jobs and Steve Wozniak in 1976. It is a U.S. manufacturer of personal computers
(Mac), smartphones (iPhone), tablets (iPad), computer peripherals, and computer
software. It is the first successful personal computer company and is popular for its graphical user interface.
Headquarters: Cupertino, California, USA Founded: April 1, 1976
Service areas: Computer hardware, software, consumer electronics, and
electronic software distribution 2 lOMoAR cPSD| 47206521
Geographical coverage: Worldwide
Founders: Steve Jobs, Steve Wozniak, and Ronald Wayne
CEO: Tim Cook - current CEO
Total assets: USD 338.516 billion (2019)
Total employees: 137,000 2. Apple’s development
Apple Inc. is a multinational company based in the United States specializing in
the development, production, and sale of computers, consumer electronics, and
software along with related services. It is one of the most reputable brands in the
world, particularly in terms of market capitalization and brand recognition.
Figure 1. 1. Image of the Apple Inc. brand through the period from 1976 to 2 Source: Apple-Inc
In 1984, Apple introduced the Macintosh (the first personal computer sold
without programming language).
In 1994, Apple, IBM, and Motorola formed the AIM alliance to create a new
computer platform (PowerPC Reference Platform, PReP). 3 lOMoAR cPSD| 47206521
In 1997, Apple acquired NeXT for its NeXTSTEP operating system and
brought Steve Jobs back to the company.
On November 10, 1997, the company launched the Apple Store website.
In 1998, Apple executed several deals such as buying the Key Grip software
project from Macromedia, the Astarte company, and the DVD production platform Spruce Technologies.
Since 2001, the company has made remarkable strides when the iPod MP3 player was introduced.
On January 9, 2007, the company changed its name to Apple Inc. and shifted
its focus from computers to consumer electronics. Steve Jobs introduced the
iPhone, iPad, iPod Touch, and Apple TV.
On August 20, 2012, Apple's stock price rose, bringing the company's market
capitalization to a record high of over 624 billion USD.
In 2014, Apple reported sales of over 51 million iPhones and 26 million
iPads, a profit that made it the best-selling quarter of all time. Apple has also
topped Interbrand's Best Global Brands rankings for six consecutive years. The
total asset valuation reached 214.48 billion USD.
Apple's development in technology, computer hardware, and smartphones
has been at the forefront from the start. The company's smartphones - iPhones
with their own iOS operating system, generated a total of 54% of the company's total revenue 3. Swot Analysis a. Strengths
Firstly, the company has the most valuable brand in the world. 4 lOMoAR cPSD| 47206521
Apple has been ranked number 1 by Interbrand for the 9th consecutive year “
with a brand value of $408 billion. Following Apple is Amazon at 2nd place with
a brand value of $249 billion and Microsoft at 3rd place with a brand value of
$210 billion. With a market capitalization of $2.23 trillion as of April 2021, Apple
Inc. is considered the largest corporation in the world in 2021. ”
Secondly, Apple leads trends by using top-notch technology.
Apple is the first company to introduce some of the most innovative products,
changing the world with iPhones, iPads, AirPods... Along with Amazon and
Google/Alphabet Inc., Apple continuously introduces new trends in technology
development. From introducing breakthrough features such as face recognition
through Face ID (iPhone X) or augmented reality applications through ARKit
(iPhone 8), Apple has pushed boundaries by bringing the most advanced solutions
to the consumer market faster than any other competing rival can keep up. Apple's
design is always elegant and chic.
Thirdly, innovative products.
Apple is known for its meticulous attention to product design. The company
conducts extensive research and analysis to gain insights into customer needs and
market trends. Apple is committed to investing a substantial amount of resources
in research and development to stay ahead of the competition and advance its product offerings.
For instance, Apple allocates $26.25 billion (around 7% of its revenue) towards R&D activities. 5 lOMoAR cPSD| 47206521
Each of Apple's products is meticulously researched and further studied to “
understand customer needs and requirements. Therefore, Apple is a beloved brand
in offices, among individuals, and especially among creative professionals. Apple
provides top-quality technology solutions for every corporation's needs. Experts
love high-performance technology like the Mac Pro or iMac for visual design,
animation, video production, and other creative work. ”
Currently, Apple offers a wide range of products such as iPhone, iPad, Apple
Watch, Apple TV, software, electric cars, Apple energy, and various product lines.
This diversified investment portfolio always ensures income stability and
profitability for the company.
Figure 1.2. Apple Inc. revenue by product segment 2019-2022 6 lOMoAR cPSD| 47206521 Source: Apple.Inc
Fourthly, expanded services.
Over the years, Apple has diversified its portfolio of services to ensure stable
revenue growth and a robust business model. In fiscal year 2022, services
accounted for approximately 20% of Apple's annual revenue, bringing in $78
billion out of a total of $394 billion. The iPhone remains the company's largest
revenue generator, accounting for 52% of its overall revenue.
Apple's suite of services includes a digital content store, streaming services,
iCloud, AppleCare, payment services, and more. The company has recently
introduced a host of new services such as Apple TV+, which launched in
November 2019 and will integrate with Home Pod and Face Time camera in 2022.
Other new services include Apple news+, Apple Card (a credit card service),
Apple Arcade (a game subscription service), and Apple Fitness+ and Watch Ultra,
which were launched in September 2022. At the same time, the brand has also
stopped producing some old devices and services that are no longer relevant, such
as Apple Watch Series 3, iPhone 11, iPod, etc.
Fifthly, stable and robust financial position. 7 lOMoAR cPSD| 47206521
Image 1.3. Net income of Apple.Inc during the period 2005 - 2022. Source: Apple.Inc
From 2018 until now, Apple has had a market capitalization of over $1
trillion, becoming the first US technology company to reach the highest level.
The annual net income is more than $50 billion.
Sixthly, a wide distribution network worldwide.
Apple's retail locations ensure that consumers have direct interaction with
machines and professional staff who provide enthusiastic and attentive customer
service. Apple has 470 stores in 17 countries around the world, and its distribution
network also sells through trade partners, online platforms such as Amazon, or in
Vietnam, Lazada, Shopee, or other premium retail locations in each country.
Seventhly, effective marketing strategy. 8 lOMoAR cPSD| 47206521
Apple has long been regarded as an advertising master, creating a lot of buzz
before launching new products. Effective public relations are focused on word-
of-mouth approaches to raise brand awareness and improve products. b. Weaknesses
Firstly: High product prices
Apple's products focus on the segment of people with above average income,
targeting middle- and upper-class customers. As a result, individuals with low
income find it difficult to purchase genuine Apple products. Currently, the prices
of Apple's items such as iPhones and Macs are consistently higher than those of
other well-known brands such as Samsung, HTC, etc.
Secondly, product incompatibility with other systems
Apple products all run on the iOS operating system, making it difficult for
these devices to be compatible with other operating systems, reducing user
friendliness and requiring time for users to adapt. This also forces customers to
choose Apple devices, and if they do, they must use other devices with the same iOS operating system.
Thirdly, market share decline
Currently, Apple's market share is declining, and one of the main reasons is “
their significant reliance on using iPhones and iPads. This can result in financial losses for the company. ”
Fourthly, patent infringement 9 lOMoAR cPSD| 47206521
Currently, Apple is often accused of patent infringement by other companies,
and has also lost in some trials, damaging their reputation, brand, and financial situation.
For example, in 2020, VirnetX began to sue Apple since 2012, accusing the
company of violating 4 patents. Apple had to pay $503 million for violating the
virtual private network (VPN) technology copyright of VirnetX, a security
software company based in Nevada.
Apple has also violated intellectual property rights five times in using basic
wireless communication systems, bandwidth, and other mobile network-related
technologies that belong to Neo Wireless LLC.
Fifthly: Many Apple products are faulty
Apple's iPhone and iPod products have clear flaws that have damaged the
sales figures and reputation of the company.
For example, in 2022, Apple spent $14.8 million to settle the iCloud case,
when the company was sued for false advertising and violating user trust by
renting cheaper third-party storage services to store iCloud data without notifying them.
Apple had to pay $50 million for MacBook keyboards; MacBook Air and
MacBook Pro have sticky keys, unresponsive keys, and fatty residue.
The production process of the iPhone 14 Pro was stalled. The Covid-19
outbreak in Zhengzhou (China) spread to the production area of Foxconn which
is responsible for about 85% of the iPhone 14 Pro output - making the product not
meet the year-end demand for customers. 10 lOMoAR cPSD| 47206521
Apple had to pay $14.8 million to settle the iCloud case, when the company
was sued for false advertising and violating user trust by renting cheaper
thirdparty storage services to store iCloud data without notifying them.
Apple had to pay $50 million for MacBook keyboards; MacBook Air and
MacBook Pro have sticky keys, unresponsive keys, and fatty residue.
Sixthly: Limited product line
Currently, Apple Inc's product portfolio is extremely limited as the company
has produced iPhones that look exactly the same in terms of features, interface,
and function upgrades over the past 10 years, with only changes in camera design, size, and color.
Seventhly: Dependence on Chinese component manufacturers
Currently, Apple has more than 30 suppliers based in Shanghai, with over 70
companies owning manufacturing plants in Guangzhou. Most of them are in Côn
Sơn and Tô Châu - 2 cities near Shanghai. 11 lOMoAR cPSD| 47206521
Image 1.4: Apple's market share of products manufactured in China.
Source: Counterpoint Research EMS Insights Service c. Opportunities
Firstly, Apple has loyal customers
Due to its large market share and brand recognition, Apple's demand for its
various devices continues to increase. Apple users remain loyal to the brand by
showing interest in upcoming device releases.
Having dominated the technology industry for many years, Apple provides
advanced and high-quality technology that brings a breakthrough in user experience.
Secondly, Apple has a widespread distribution network. 12 lOMoAR cPSD| 47206521
Currently, the company can expand its distribution network worldwide, with
the majority being self-distributed, providing its products for sale. Therefore, the
company can generate more profits by expanding its distribution network.
The introduction of iTV by Apple will increase sales of Apple TV and the ecosystem of the product.
Thirdly, Apple has quality resources.
Currently, Apple's experts and researchers are highly educated individuals “
with extensive experience in building consumer product brands. Expanding
Apple's team allows them to create new opportunities consistently. ”
Fourthly, there is an increasing demand for media services.
The demand for communication devices has grown significantly since 2013. “
Thus, it will allow Apple to explore new markets that the company has not
previously explored, such as countries in the bloc of common prosperity. ”
Fifthly, there is an increasing demand for cloud-based services.
With the increase in data speed and connectivity, more people are using “
cloud-based services for data. The market for cloud-based services is developing,
and Apple can expand the scope of its iCloud services and applications. ”
Furthermore, as the market and economy continue to develop, people around
the world increasingly rely on technology, especially mobile phones. They are
more interested in electronic devices and have an increasing demand for high-tech
products, especially in the areas of smartwatches, tablets, and laptops.
Sixthly: China market still very potential 13 lOMoAR cPSD| 47206521
Currently, China's population is increasing and has exceeded 1.3 billion
people. This indicates that there is still a lot of potential for expanding and selling products in this market.
Seventhly: Expanding environment-friendly technology
Currently, Apple has not released any products manufactured using green
technology and the company has not participated in and implemented sustainable,
environment-friendly technology. Therefore, this is an opportunity for Apple to expand its product line. d. Threatens
Firstly: Rapidly changing technology
Currently, information technology is developing much faster than other
industries. The consumer electronics industry is continuously advancing with new
technological advancements every day. Keeping up with the latest trends will be
a major challenge for the company. Until now, Apple has been able to bring some
revolutionary products to the market. However, Apple has not yet announced its plans for new products.
Secondly: Competing competitors
One significant threat that the company has to face is the significant
development of the competing operating system, Android. The dominance of
Android reduces the control of iOS to encourage consumers to join Apple.
Furthermore, with technological advancements allowing Samsung to provide
high-end and cheaper products, Sony, Asus, Nokia, and Dell are all scaling up, 14