Question

If you look on the back of an iPhone or iPad you will see an imprint to the effect of "designed in the United States and manufactured in China." Some believe that America will continue to lead the world in intellectual property, and will allow manufacturing to be outsourced to countries that will give the largest profit margin.

Do you see logic in this perspective, or should companies be manufacturing domestically for a lower profit margin?

Answer 1

1. I see logic in this perspective because:
a. Because we have to use the resources in the most efficient manner possible. If someone can do it at lower cost than us then it is better to outsource because it eventually decrease the cost of entire supply chain and increase efficiency. It also provides us flexibility during volatile demand. If suddenly the apple sales fall down due to technological disruption due to a competitor then apple can easily cancel the contract given to out sourcing department in China. China and India are best when it comes to out sourcing of work as the labour cost is very cheap over there.
Also it helps the company to establish is globalised foot print.
Instead of lowering the profit margin it is better to increase and maintain profit margin. And investing back the profit to its main R&D department in America. It ensures huge R&D expenditure which inturn increases the GDP.

America has been smart it terms of doing business.

Current affairs:
China is decreasing in terms of popular destination of manufacturing as it's population is getting older. China has a less percentage of young population compared to old. Young population are finding jobs in better position rather than manufacturing.

India is becoming a popular destination for manufacturing in the recent past.