【明報專訊】The global production chain is a business model that originated from the tide of globalisation. Enterprises break down the production process into several procedures (such as design, the sourcing of raw materials and assembling) and outsource these procedures to manufacturers all around the world. This enables enterprises to fully exploit the cost benefits of different regions and maximize profits.

An iPhone that has travelled all around the world

The iPhone produced by Apple Inc., an American technology giant, has the words "Designed by Apple in California. Assembled in China." embossed on the back. But the truth is far from that simple. According to Apple's official website, there are hundreds of suppliers located in different countries and regions that provide Apple with the different parts of its products. The iPhone's parts mainly come from companies in Japan, Taiwan, South Korea and mainland China, while the assembling is mostly conducted in factories in mainland China.

But the global supply chain is constantly changing. Apple's iPhone SE is the designated phone which is being produced in India. Apple's first batch of ''assembled in India'' iPhone SE has made its debut in select stores in 2017.

Pollution

Many enterprises choose to shift manufacturing procedures that are more harmful to the environment to developing countries, where environmental and pollution laws are lax and less strictly enforced. The assembling of smartphones and the dyeing processes conducted by multi-national fashion brands often lead to pollution of water and health problems of workers in mainland China due to the lack of supervision of factories.

Southern Asia - the next "world factory"

Hong Kong's economy relied mainly on import and export trade at the beginning of the previous century. It developed into an industrial city afterwards, and is now reliant on the service industry. The city's economic transformation is closely related to the global production chain. The 1970s saw the industrial and economic rise of the ''four little dragons of Asia(亞洲四小龍)'', namely Hong Kong, Singapore, Taiwan and South Korea. Back then many enterprises in Europe and the US, taking advantage of Hong Kong's inexpensive but efficient labour, moved their production chain here, fueling Hong Kong's industries of clothing and toy production. However, following mainland China's pursuit of the Opening Up and Reform policy in 1978, many Hong Kong factories began to shift northward to the mainland, where labour and land were much cheaper. That resulted in a structural change of Hong Kong's economy – it no longer relied on the industry. Meanwhile mainland China, thanks to the influx of foreign investment, became the ''world factory''.

In recent years, due to the rise of land and labour costs, enterprises have been shifting their production chains to places where production cost is even lower. For example, while China is still the biggest exporter of clothes, many enterprises have been gradually moving production to factories in Bangladesh, India and Vietnam.

Related concepts:

．industrialisation

．industrial waste

．tariff

[通通識 第494期]