China: Employees
The typical worker at Apple’s main manufacturer is a young man of 27, a “migrant worker” who grew up in a village. One among 170,000 employees, he (two-thirds of staff are male) earns about £180 a month at China’s biggest technology manufacturer, most likely in one of its airport-sized facilities in Shenzhen, about an hour’s drive from Hong Kong. Those wages are more than many blue-collar jobs in China – and many go to Foxconn for a short-term summer job before returning to school or university in the autumn. The biggest threat to their livelihood might not be Apple; instead, it’s Foxconn’s plan to install robots to eliminate errors.
Apple’s rise has come through lucrative contracts with Foxconn and many other suppliers in and around Shenzhen handpicked to meet exacting deadlines and quality controls. Apple boss Tim Cook says it is impossible to find companies of such scale in the US.
Workers typically put in 56 to 61 hours a week (despite the local legal maximum of 60), some doing seven-day stints without a break during the summer as orders are ramped up for new devices to be launched in the autumn. A Fair Labor Organisation investigation in 2012 found that required 15-minute breaks every two hours were sometimes ignored. The strain drove some to suicide in the past; Apple has repeatedly pledged to improve its labour practices, with counselling and labour monitoring.
Ireland: Treasury
Not a beneficiary of Apple’s gigantic success so much as a facilitator, Ireland’s tax offices wrangled with Brussels in September after the competition regulator said a tax deal that ran from 1991 to 2007 amounted to (illegal) state aid.
The European commission said that Apple paid just 3.7% in tax on non-US profits of $31bn in 2013; two-thirds of Apple’s global profits for 2011 were attributed to companies registered in Cork.
Like many other technology companies, Apple does not send all its overseas profits back to the US as they would be taxed heavily. Instead it “parks” them in US-owned companies and bank accounts in Ireland, helping swell its vast cash mountain, which is then used to fund Foxconn’s expansion for next year’s products.
Apple says that it has created 4,000 jobs in Cork, where its European HQ is located. It also pays corporation tax in the US at 26%. Dublin has said it is confident no EU rules were breached in its dealings with Apple, which pays a tax rate of less than 2% in Ireland.
UK: Consumers
An Apple-happy family of four could quickly spend £3,373 on the Californian company’s sleek products – that would be an iPad each for the children (16GB iPad Mini £199, 64GB iPad Air 2 £479), a desktop computer (iMac 1.4GHz, £899) in the study and four iPhones – two £319 5Cs for the kids, and a £539 iPhone 6 and £619 iPhone 6 Plus for the adults.
Given that the median two-child family income in the UK is £44,200, you would not think many families would be keen on choosing Apple: it is clearly a luxury brand. Yet it is one that people seem happy to spend their money on: 30% of UK consumers own an iPhone and about 50% of the tablets in use in the UK are iPads.
Proportionally, Britons tend to buy more Apple products – especially iPhones – than other European countries, which is reflected by the number of Apple retail stores in the UK: 38, second only to the US’s 263, and far ahead of the 18 in France, 15 in Italy or 14 in Germany– the latter with a much bigger population than Britain’s.
Peru: President
The president of Peru since 2011, Ollanta Humala might not be happy at Apple’s long run of success: the company’s 2014 revenues of $199.8bn are worryingly close to Peru’s GDP in 2013, which stood at about $200bn, putting it around 51st on the UN’s ranking.
Apple’s revenues are growing faster, though, at 15% against Peru’s 6%. The world’s 20th largest country by land area, with principal exports of copper, gold, zinc, textiles, fishmeal and Tintin plots, Peru seems likely to be surpassed for economic output by an American company offering a range of products which, as Cook has previously observed, could all fit on one table.
Not only that: Peru’s population of 31.1 million people is only half as big as the number of iPhones bought over the past three months, and less than a tenth of the total number of iPhone owners (reckoned to be about 420m) worldwide. Next for Apple to conquer by revenue are oil-rich Qatar, Algeria and the Czech Republic – by which point the Californian corporation will be in the top 50 “countries”.
US: Pop stars
Apple transformed the music business with the launch of its iTunes music store in 2003, making buying digital music easy and fast. Since then iTunes has become a behemoth – but the rise of streaming services such as Spotify, Deezer and Pandora has made “buying” tracks less popular, leading to a slump in digital sales.
Some major pop artists, such as Taylor Swift, still prefer sales over streams: in October she removed all her songs from Spotify, and had the year’s second-best selling album with 1989 (behind the Disney soundtrack for Frozen). Pharrell Williams had the most downloaded song with Happy.
Even so, Apple sees that downloads are becoming passé. Having bought Dr Dre’s company Beats Electronics, it is expected to wrap the streaming service that came with it into iTunes this year, and make Beats headphones (which have a huge following) into a new gateway for Apple products.
Will Swift be able to shake that off? She might not have a choice.
South Korea: corporate rival
For Samsung, Apple is seen as both a deadly rival and an essential customer.
Making screens, memory and processor chips as well as TVs, PCs and smartphones, the South Korean electronics giant relies on a “flywheel effect”: when its smartphones sell well, its screen, memory and processor divisions pick up the pace too. That can also be a disadvantage, as a slowdown is also magnified.
Profits in mobile slumped after its Galaxy S5 phone stuttered in the spring, so now Samsung hopes its chip division can make the processors for Apple’s next phones and tablets, and supply the screens for its computers, iPads and iPhones.
For Samsung, losing out in the smartphone battle is a bitter pill to swallow: but profit from selling components sweetens it substantially. Even when Samsung loses, it still wins.
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