Look out iPhone users

2/27/2012

Here's a quick supply and demand problem. The officials at Foxconn (The main hub of Apple manufacturing) are going to increase the wages paid to their workers. What do you expect to happen to the price of iPhones and iPads?

I assume that Foxconn's decision to increase wages came from pressure by Apple who has recently been under scrutiny for how foreign labor has been treated. Do you think, though, that Americans would still be pressuring Apple to pay the people who manufacture their products more if they knew what this would do to the price of Apple products?

enthusiastic Foxconn employees

R#10465114

2/28/2012 04:06:10 am

I think that, once the issue of inhumane work conditions are raised, people tend to hold that banner over a large corporation without the realization of what that cost will be. However, I don't think the insistence for better care of workers will stop when the prices go up. I'm not sure most people will even connect the two. Instead, they will become two tallies against Apple, instead of a cause and effect as Apple tries to fix the former by bringing about the latter.

Jacob Page link

2/28/2012 04:50:53 am

I agree. I think the prices for their products will go up. The environment that the poor people work in is ridiculous. I understand that outsourcing is a smart business move, but at what cost. The cost of Chinese cheap labor that includes poor working conditions with long lasting negative effects.

Alfredo Galvan

3/5/2012 01:00:59 pm

Of course the prices will go up Jake; we all know that this will cause a snowball effect that the consumer will end up paying for. I don’t want to hear you complain about a poor working environments “Devil Dog” someone has to get the job done.

R10320590

2/29/2012 03:39:05 am

Considering Apple is the most successful company in the US right now, there's no reason why they shouldn't be able to pay their employees a high wage. It is encouraging to hear this as well because for so long the Chinese have underpaid their employees and it's nice to see they might actually be moving in the right direction.

R10372587

3/6/2012 11:45:51 pm

I completely agree. How greedy does Apple need to be? As the most successful company in the US, they should be able to find at least a small percentage of what they make towards going to the Chinese who are actually making them successful.

10337145

3/6/2012 11:47:06 pm

I agree. I would think that Apple is doing so well that they probably dont need to raise the price of iPhones to still make a profit. Apple should be less greedy and be aware of their surroundings. I would also love for them to move their manufactuers to the U.S. grounds, thus supplying more jobs.

R10402810

3/7/2012 12:40:43 am

I agree that Appel should move to the US. Many companies stay over seas because the price for labour is less, but if your raising the wages to around $17 and $20 an hour for factory workers I really do not see why it would cost more to produce here.

R10386241

2/29/2012 04:27:53 am

If anything, the prices of iPhones, iPads, etc. will go up because of this. It's funny how Apple has been somewhat forced by us consumers into raising wages for their overseas workers, yet we'll eventually be begging them to pay their workers less so that we can get cheaper iProducts.

R10433679

3/6/2012 01:11:26 pm

I will have to disagree with this comment because as Americans I believe that we will pay any price to have the top of the line technology in our hands. I think that if there is an increase in price of apple products due to an increase in wages to foreign workers Americans will pay those high products because we always want the best products no matter what the price is.

R10435313

3/6/2012 06:22:47 pm

Surely not everybody who buys Apple products now can afford them at any prize, even if they represent high-end technology. The size of one's income limits everybody. On the other hand I don't see the wage raise for overseas workers have such a big effect on prizes for Apple products. Assume someone gets paid 1.60$/hour and assembles 3 products at that time. Apple pays 53.3 cents for the work to assemble a product then. Now we increase the wage drastically, say to 2.40$/hour (increase of 50%!). With the new wage Apple would be paying 80 cents per item of one of their products. The effect on the actual prize of Apple products should be small. This is the case because we start with wages at a very low level. They are a very small part of the cost to produce a product. In an fully industrialised country with high wages, wages are an important part of manufacturing costs, and a raise will thus substantially affect the prize of the manufactured good.

R01948411

2/29/2012 04:57:20 am

The prices of Apple products will definitely increase, but I don't think that will hurt the Apple Company much, if at all. Their products are so well received that people are willing to pay the higher price already, why not just a little bit higher if it means the Chinese employees are getting paid more.

R 10363252

3/6/2012 01:00:00 pm

So if the people are already saying that they are willing to pay more for the same product and the same quality work, why shouldn't Apple bring their production to America? Their customers are already hooked on the iCrack that is the line, so why not up the price and give themselves a good image too?

R10455834

2/29/2012 11:25:40 am

Just because the price of production increases the product does not always go up in price to the consumer. Apple has a notoriously hig profit margin so it is really their call as to whether they want to sacrifice market share for profit and later increase the price of products due to the fact that they are immensely popular

R10429661

3/1/2012 01:43:00 am

I think raises the wages is a good thing for the employees, I mean Apples products will sell at a higher price because they are on such high demand. So if the price of an IPhone has to increase to pay the Chinese workers better then I say go for it because honestly I do not think the popularity is going to fall with a few extra dollars on the price tag.

r10409494

3/1/2012 01:52:41 am

I think that increasing the pay amount to the workers that build apple products is going to also increase the price of the actual product. This would be because they are making less of a profit if they pay workers more and keep the price of goods the same. They are going to want to make the biggest profit they can, so they will in turn increase the price of the goods. Even though this will effect people, they are still going to be willing to pay the higher price for the goods from apple.

R00431212

3/1/2012 07:35:42 am

While the production cost of the goods produced from Foxconn factories will obviously increase; apple dominates the tablet market with the ipad. This is with superior product quality and an app store that is without comparison on any other tablet. Apple owns companies that produce several components within its products, allowing them to acquire these parts at cost. Overall I'm not convinced the price of ipads will increase. Instead I believe it is very possible Apple will accept the decrease in Profit Margin to continue to dominate the tablet market.

R10390341

3/1/2012 08:50:04 am

I believe this is a very smart move by apple if they have excess resources to use. Apple was put into a situation where they were able to raise wages because of their continuing high profits, and satisfy some of the customer complaints about the low overseas wages. I don't necessarily believe this will raise the prices of apple products since the profit margin was already substantially high. This move in my opinion was to better the company's image and to continue being a major provider in electronic devices.

R10480114

3/2/2012 12:16:50 pm

I'd have to agree, I highly doubt this will change the price of Apple's current products. They have a market cap over $500 billion and an EPS(ttm) of $35.14. Apple can afford to increase the wages they pay the workers out at Foxconn considering the substantial profits they've made off the iPhone and iPad. Their also working on a new TV rumor has it. In the short term it might make Americans feel better if Apple increase's the salaries of their Chinese workers. Although the long term consequences of this action could have an effect on the price of future products and even the workers at Foxconn. i.e. wanting even higher salaries, reduced hours, etc.
in a sense becoming more and more "Westernized"

R10436673

3/3/2012 05:23:07 am

I think that apple has enough money to pay workers and not raise the prices of their products. Apple is one of the smartest and grossing companies and highly doubt they would raise prices because someone else would sell a similar product for less and they would lose money.

R#10440115

3/4/2012 07:19:20 pm

Apple's profit margin is definitely wide enough to enable it to increase the wages of its workers without raising the prices of its products. Although it would be hypocritical of most Americans to say that they would not demand higher wages if they were the ones working, the truth is many U.S. citizens would indeed be angered by even a slight increase in the prices of their precious Apple products. Furthermore, they are readily willing to sacrifice the labor and happiness of foreign workers with whom they cannot empathize.

R#10410186

3/5/2012 05:32:46 am

Yes, it would only make sense of Apple's products to rise along with rising wages of its employees. Apple will most likely raise prices of all their products that are made in China due to this wage increase. They will not miss an opportunity to rise prices when they deem necessary. That is the only way they are still on top. (Plus they are very innovative, but that is besides the point.)

R10359949

3/5/2012 08:12:48 am

I think that people's interest in the fair treatment of foreign workers will not dwindle with the increase of wages paid to workers even though this will likely lead to an increase in the prices charged for the products we buy. I do find it interesting that so many other popular companies are still facing little to no scrutiny regarding their unfair treatment of foreign labor as well.

R10410812

3/5/2012 11:22:37 am

i believe that people tend to start fighting against the treatment of foreign laborers because it's "the right thing to do" but if they knew that it would raise the price of their iphones and ipads, im sure they wouldnt be so adamant about the issue.

r10461071

3/5/2012 11:24:08 am

I think that this issue wont affect the prices for apple products directly although I feel that now that the world knows the way this workers are being treated many are going to doubt purchasing apple products. Even though their sale rates are unbelievable high, I think there will be a decrease in their sales.

R#10424321

3/5/2012 12:29:28 pm

It would not be the smartest thing for Apple to only increase the amount they pay the workers in China and not raise the prices of their products to gain more profit or keep their profit margin the same. This move is smart for them because of how popular and how high in demand their products are. Even if the prices of Apple products goes up people will still buy their products.

R10446726

3/5/2012 01:05:59 pm

With the increase is wages, that will increase the production costs of making an iPad of iPhone. In turn, this will then increase the price of the iPad or iPhone itself in order to maintain an equilibrium and for Apple to still make a profit. This could be bad for consumers since some people already believe that apple products are already outrageously priced.

10444048

3/5/2012 01:33:43 pm

If the wages go up for Foxconn employees than the price of Apple products will increase dramatically. You can bet that Apple is not going to start making less money, they are going to charge customers more in order to make workers in China happy. This is a direct relationship. Apple products are already extremely high, so for my own selfishness, please Apple keep the prices as low as possible!

R10413028

3/6/2012 10:02:19 am

I agree with you completely! Obviously paying the Foxconn workers more money is going to make the prices of Apple products go up. This condition might not work with other companies however Apple is already extremely superior to all of their competitors therefore many customers will still by lining up to purchase Apple products.

R10432564

3/6/2012 11:16:23 am

I agree with the fact that Apple's prices will rise, that's a certainty. However, I believe that if the prices do increase dramatically from where they are now, the average customer will find a cheaper solution. Only the die-hard apple fans will stick with the company no matter how empty their bank accounts get. If I were a competitor of Apple, this would be good news to me. If Apple's prices raise, the more likely customers are going to switch over to another company to fulfill their technology needs. With that said, the immediate effects are not going to be felt by Apple right away, but in long term, they might have hit their peak already. Charging more for products that one paid for less brand new isn't going to sit right in the American citizen's mind. Long term, we might see a downswing of Apple. That's my opinion.

10406635

3/6/2012 03:35:52 am

I think the price of apple products will definitely go up if they increase the wages of workers. But I don't think it will be a big deal. People will still pay for their iPhone as long as something better doesn't come around.

R10310218

3/6/2012 04:54:15 am

I believe the prices of Apple products will go up becuase Foxconn will start charging Apple more for the production costs. Apple will still want the same amount of products produced but that will cost Foxconn more thus costing Apple more which leads to higher retail prices for us.

R10300144

3/6/2012 07:37:28 am

Clearly the prices of Apple products will be going up but at this point, I don't see myself ever having any other phone than the iPhone so..oh well. And of course Apple knows this. They have a very loyal customer base so, I'm sure they're not very worried.

R10409604

3/6/2012 09:01:46 am

I think that the apple products will start to rise in price, but I really don't think that will make much of a difference here. I think that the US people will want the products even if the price raises a little bit. Also, I'm glad to see that the wages are finally getting better for those in China.

R10300090

3/6/2012 09:41:03 am

I think that they have already raised so much money that it wouldn't make much of a difference whether they paid there workers more or not. I'm glad they decided to raise the pay.

David Yeary

3/6/2012 10:18:16 am

I don't think people would approve the wage increases if they knew how it would affect the price of Apple products. With the a large portion of the American people already buying expensive Apple products, most of these "hippies" wouldn't really approve of these wage increases except to tell all of their friends "how much they help out the world." The people that support these increases are just easily irritated "liberals" who don't understand how the real world works.

Robert Ainslie

3/6/2012 10:20:34 am

If Foxconn is going to increase there wages of their workers I would assume that the price of the iphone/ipad would also increase. They do this to make up for the lost revenue of paying more money to create that product. Without doing so they would just have deadweight loss.

R10441854

3/6/2012 10:23:43 am

Although the prices of Apple's products may go up, due to the increase in wages from Foxconn, most of Apple's consumers are loyal enough to sacrifice the extra cost for the new product. You can't argue that a large majority of people are crazy for Apple products. It's proven in their sales. But there were also people that hated Apple because they knew about the underpaid, outsourced workers and their poor work condition. With Apple addressing this situation, those people will be more open to purchasing the products. So really Apple could potentially increase the amount of consumers.

10326603

3/6/2012 10:39:00 am

We have already learned in class that if the wages paid to workers increases the supply curve will shift left (decrease) because the input cost went up. The products will become more expensive, but I think consumers will still have a willingness to pay more because they'll still demand Apple goods. Apple claims to say they raised wages to overseas workers, but I think that was proven to be false by the calculation at the end. If they were already making $408 being paid $17 a day how can they say it got raised to only $400 a week. Is that even something to comment positively about in the first place?

10373875

3/6/2012 11:17:04 am

I believe that this will cause the prices of Apple products to go higher. I also believe that we Americans will still end up paying so in the end I believe they aren't really going to lose any money.

R10441603

3/6/2012 12:54:10 pm

I think since the prices of wages are going up they will have to raise the prices on their products to gain the income to help pay for the raises. My opinion is that the products are great, but still a little to much to pay for even though people are always shoveling out the money to get the items.

James 01957330

3/6/2012 12:55:50 pm

I really hate that Apple is blamed for Foxconn's low wages. Foxconn has over twenty other companies that they assemble items for including Dell, HP, Nintendo and Sony. All of the companies, and most importantly Foxconn and the Chinese Government, should share the blame for workers being paid $17 a day. I doubt prices go up for Apple, as they might have been able to increase salaries by charging the twenty plus companies just a small amount more.

r10413789

3/6/2012 01:16:42 pm

If China is going to increase the pay of their workers, then maybe it would be almost as cheap for mac products to be made in the US. That way we could profit and benefit from both the production and consumption of mac products.

10406636

3/6/2012 02:06:51 pm

I didn't think about that when I first read this article. I agree with what you are saying though. Although, they may be cheaper to make, they will probably still charge us more for them.

R10374650

3/6/2012 02:02:24 pm

I believe the price of iPads, iPods, ext. will increase because of the increase in pay to their workers. The cost of production goes up so the cost of goods will also increase.

R#10416464

3/6/2012 02:03:00 pm

I believe that with the release of this story, Apple will force consumers into assuming that since there increasing wages, the are going to have to increase the prices of their products; when in actuality they do not. By using this story, they now have an excuse to raise the price and know that consumers (Americans) will feel bad for the foreign worker and allow Apple to jack up the prices.

Its a way to keep the rich, richer and the working man wanting the latest thing.

80460329

3/6/2012 02:28:27 pm

The prices of the apple products will end up going up if we paid the chinese higher wages, and it wont matter in the US because no matter what, people will still purchase Apple products because we want the top technology at the moment and nothing less.

10460329

3/6/2012 02:29:24 pm

R10438726

3/6/2012 02:32:23 pm

I believe that consumers would be less inclined to raise the wages of Chinese workers if the consumers found out that the price of the already overwhelmingly expensive apple products went up in price.

R10175535

3/6/2012 02:36:05 pm

I think that Apple would not be be a very wise company if they only increased the amount of pay of their chinese workers without also raising their prices of their products to gain more profit or keep their profit margin the same. Apple has a remote advantage due to the exclusiveness of their product line they will always be high in demand and people will always want to buy their products.

10506939

3/6/2012 03:12:59 pm

As Americans we tend to have a reputation around the globe as being very selfish, greedy and maybe even inhumane. At first thought it may seem like American consumers may regret pointing the finger at Apple. However I feel like with a basic understanding of the work conditions in foreign countries and products as dominant as the iPhone, Americans would reluctantly continue to buy the products with little to no decrease in demand.

R10419815

3/6/2012 04:14:36 pm

I believe that the price of not only apple products but other products that Foxconn produces will eventually go up due to the fact that if these workers are getting paid more they will be required to work mean resulting in more products being produced. Apple is arguably the most popular brand in the world right now and consumers will buy it regardless of the price.

R10321572

3/6/2012 09:44:14 pm

I agree, if input costs go up, shouldn't by definition, price increase? This might not cause a huge increase do to the fact that its only a small increase in cost compared to the total amount of income Apple receives, but I think the price will go up.

R10363073

3/6/2012 09:25:51 pm

There is no doubt that the prices of IPads and IPhones will increase due to the increase in wages for Foxconn. They have to do this in order to make up for the money lost by increasing those wages. In my opinion, this day was coming from the beginning and I wouldn't be surprised if it happens again in the near future.

R01962697

3/6/2012 11:28:10 pm

The raise in wages will no doubt bring the prices of ipod and ipad up. However I feel this is something that apple had to do. With all their world wide success they must pay their workers better. However people are going to continue to buy the product no matter what because it is the best out there.

10404051

3/7/2012 12:17:49 am

The prices will go up. Apple is a very large company which means they are very successful. They got to have a good chunk of cash that can go to their foreign employees because the foreign employees are the ones that are making them so successful.

10445518

3/7/2012 12:22:32 am

We have that Apple is one of the most successful companies in the U.S.A. They have a really high income because people would pay a really high price for the best technology, but as we see in classes we all have a certain elasticity, so now that Apple will increase wages, prices are going up so they can keep being that successful company. But what is going to happen when if that knew price is over our elasticity demand?

R104656252

3/7/2012 12:45:17 pm

If the wagees of the chinese factory workers increase, the prices of Apple products will increase in the United States. This is a win lose Scenario. These products americans take for granted can only be produced from long hours.

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