In short, if the Nokia expert is right about the low labor cost component in its products, Apple could easily raise its prices to pay those Foxconn workers a higher wage without losing market share or its gross margin.

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As welfare costs have swollen, non-wage labour costs have shot up too, from 36% of gross wages in 1990 to a painful 42% last year.

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First, gross margins are likely to come down more than expected due to rising energy and transportation costs and increasing wage pressures in China.

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