iPhone travel notes: From production workshop to retail store

Beijing time, December 29th, according to foreign media reports, the iPhone is Apple's most profitable and best-selling product, with sales exceeding 1 billion units since its release.

Figure 1: Apple Store in Beijing

Currently, about half of iPhones are manufactured in Zhengzhou. This article will explain the journey of iPhone from being manufactured in Zhengzhou to appearing in the hands of users.

Procurement of parts

Each iPhone is made from components from more than 200 suppliers.

Apple sources many of the components for the iPhone — such as memory chips, modems, camera modules, microphones and touch-screen controllers — from more than 200 suppliers around the world. Foxconn also makes some smaller parts, such as metal casings.

Apple purchases a large number of components from suppliers around the world and sells them to contract manufacturers in mainland China. In Zhengzhou, Apple's contract manufacturing partner is Foxconn.

Production of mobile phones

The factory produces about 350 iPhones per minute.

Figure 2: Workers at Foxconn’s Zhengzhou production base

Foxconn's Zhengzhou production base covers an area of ​​2.2 square miles (5,697,974 square meters) and can employ up to 350,000 employees, many of whom earn about $1.9 (about RMB 13.2) per hour.

Foxconn's Zhengzhou production base has 94 production lines. It takes about 400 steps to assemble an iPhone, including polishing, welding, drilling and installing screws. The production base can produce 500,000 iPhones a day, or about 350 per minute.

After coming off the production line, the iPhone will be placed in a beautiful white cardboard box, packaged, placed on a wooden pallet, and then pushed out on a cart and loaded onto a truck waiting outside.

Going through customs

The customs is right next to the Foxconn factory.

Newly produced iPhones are transported to customs a few hundred yards from the factory gate, located in a bonded area that makes it easier for Apple to sell iPhones to Chinese consumers.

China, the final destination of iPhone production, is also the starting point of Apple's global tax strategy. In Zhengzhou, usually at the customs, Foxconn sells iPhones to Apple, which then sells them to its branches around the world.

The process, done largely electronically, allows Apple to attribute some of its profits to its Irish unit and receive tax benefits. The system is not unique to China.

Shipping to all parts of the world

Smartphone traveling on a Boeing 747.

iPhones destined for the United States and the rest of the world arrive by truck at Zhengzhou Airport, about 3 miles (4.8 kilometers) from customs. The airport has undergone a major expansion in recent years as iPhone production has increased.

A few years ago, PCs produced in mainland China were shipped to the United States by container ships, and the journey took about a month. Smartphones are small in size and can be transported in large quantities and economically by plane. A wide-body Boeing 747 can easily carry 150,000 iPhones.

Planes loaded with iPhones from freight companies such as UPS and FedEx took off from Zhengzhou, refueled in Anchorage, and flew to Louisville and other parts of the United States.

Selling in China

It takes about the same amount of time to ship a phone to Shanghai as it does to San Francisco.

Figure 3: Truck transporting iPhones

For iPhones sold in the Chinese market, customs officials use an electronic system to virtually mark them as "export" goods and then mark them as "import." In Zhengzhou, this process is completed at the customs office located outside the gates of the Foxconn factory.

Once the product is identified as imported goods, the customs can collect 17% value-added tax on the product based on the import price. After that, the product can be shipped to all parts of the country for sale.

iPhones sold in mainland China are usually loaded on large trucks and arrive in Shanghai after an 18-hour journey. Apple has built a national distribution center in Shanghai. A large truck can carry 36,000 iPhones. Since each truck carries iPhones worth about US$27 million (about RMB 190 million), they are usually equipped with surveillance cameras and sometimes even security guards.

After leaving Foxconn's Zhengzhou factory, it takes an average of two days for an iPhone to reach a store in Shanghai, 590 miles (950 kilometers) away, and just three days on average to reach a store in San Francisco, 6,300 miles (10,139 kilometers) away.

Different prices

The price of iPhone in mainland China is nearly 20% higher than that in the United States.

Due to exchange rate fluctuations and value-added tax, iPhones cost more for Chinese customers. A 32GB iPhone 7 costs about $776 (about 5,393 yuan) in an Apple store in Shanghai, while the same product costs only $649 (about 4,510 yuan) in New York.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.