Apple in China: A Story of Innovation and Vulnerability

Time of India

3 days ago

AI-generated audio summary; not verified by the edit team.
Excerpts:
Q. What prompted you to write this book, especially given the abundance of existing material on
Apple
?
A.
There's this perception that there's so much on Apple, but I really don't think there is. Sure, there are blogs devoted to daily Apple coverage and even newspapers with Apple beat reporters, so you'd think there's not much left to uncover.
Weirdly, no one has told the basic story: Apple was near bankruptcy in 1996—how did it come back to become the world's biggest company? Name the book that tells that story. From iMac to iPod to iPhone—you'd think that narrative would fill a dozen books. But mostly we have biographies. What we don't have is a corporate history of Apple in the 21st century, which is strange. And we rarely think of Apple as a manufacturer. Of course, they orchestrate the manufacturing rather than do it themselves—there's no building with a bitten apple outside and machines inside.
But that's still the DNA of the company.
By the late 1990s, Apple had three manufacturing sites—in the US, Ireland, and Singapore—and how they 'discovered' outsourcing and offshoring was also an untold story.
The third story that hasn't been told in any detail is China. Everyone knows the iPhone is built there, but what did China actually offer? Who made the decisions? Any one of those three stories could have been a solid book.
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But the chance to tell all three in one felt like a huge opportunity.
Q. As you point out, it's been a bumpy ride—not just in entering new territories, but also in how much they're willing to bend. Isn't it?
A.
Okay, so Apple really is in a major bind here—it's become a bargaining chip between the two superpowers, Beijing and Washington. Its operational dependence on China is extreme. There's no other company making $400 billion in revenue with 90% of its products built in China. That makes Apple uniquely vulnerable to geopolitical shifts.
And while there's pressure to shift the supply chain to places like India or Vietnam—possibly Mexico, though that's not really on Apple's radar—it's difficult.
Neither Beijing nor Washington wants that. Washington, especially under Trump, dreams of reshoring to the US. And Beijing is actively blocking a meaningful shift to India, where, frankly, Apple should be going.
Their success is their vulnerability. Other companies use China for production but don't rely on the local market. Apple, by contrast, has a $70 billion business in China. That success makes them a target—if Apple is seen as the Western company most visibly de-risking from China, it risks backlash from 1.4 billion Chinese who view the iPhone as an indigenous product.
So when I look at Apple's risk, I'm less concerned about antitrust or lagging in AI—those are issues, but not existential. What is existential is the fact that if something goes wrong in China, Apple has no Plan B. And that's an astonishing thing to say about a company that, over 25 years, built the world's most sophisticated, inspiring supply chain.
Q. You point out in your book that they're trying to diversify—building in India and Mexico. But they've tried moving into Mexico before, and it didn't really work out, did it?
A
. No, and that's what's so fascinating. Because we haven't really focused on Apple as a manufacturer, I was able to tell a narrative that few people know.
Even book reviewers and Apple enthusiasts have said they didn't know this history—and many in Apple's own supply chain were surprised by it.
Between 1996 and 2003, Apple was essentially scouring the globe for the right partners. The translucent iMac in 1998–99, for instance, was built by LG in South Korea. When it became a huge success, Apple expanded production to Mexico and Wales. That turned out to be a disaster, despite being a sound strategy.
It was around then that Foxconn came on board. There was a meeting of minds between its founder, Terry Gou, and Tim Cook, then SVP of operations. Foxconn began assembling the iMac in mainland China. That was significant, but its impact only became clear later.
They also built in the Czech Republic for Europe, and in Fullerton, California. At the same time, laptops and early iPods were made in Taiwan, while other operations continued in Singapore and California.
Some iMacs were even made in Germany. So Apple had manufacturing in eight or nine countries—a kind of 'long march to China' before full consolidation.
They embraced outsourcing late—long after the rest of the PC industry. But as with MP3 players and smartphones, they arrived late and then outperformed everyone. While companies like Dell and HP saw China as a source of volume and low cost, Apple saw something more: abundant labour enabling unconstrained design.
Most companies design products for easy machine assembly. Apple did the opposite—they made products maddeningly intricate, knowing they had the labour to build them by hand on conveyor lines. That's the story of how Apple discovered China—a marriage of skill and scale.
Q. The sheer amount of labour required—even at the design stage—was, in a sense, made possible by China's vast workforce, wasn't it?
A.
Yeah, absolutely. It's funny—some 90-second soundbites have circulated on social media and, unfortunately, given the impression that I'm not giving credit to China.
But in the book, I give a lot of credit. I don't think Apple could have found a better partner.
In China, not only was the labour force abundant, hardworking, and doing 12-hour shifts, but the country also had world-class industrial policy. On top of that, the communist system worked a bit like American federalism—many decisions were made locally. Local cadres in Shenzhen, for example, might follow broad directives from Beijing, but how they executed them was up to them.
They'd compete to secure factory orders and benefit economically from growth.
So, there were many reasons why China made sense. If you were Apple's partner—Foxconn, for instance—you could work with local officials to access free land, machinery, and labour. Apple simply took advantage of what was, in theory, available to everyone—but did it better than anyone else.
Ironically, it wasn't Apple orchestrating all this; it was Foxconn.
They realised Apple's complex designs required a highly skilled workforce, so they had US engineers fly in and train workers directly. Terry Guo became so savvy that someone like Tony Fadell—the 'Podfather'—would show up one day to find an entirely new group on the factory floor. Everyone he'd trained had been reassigned to other clients, and it was like a new semester had begun, with Apple engineers teaching Engineering 101 all over again.
So it wasn't just Apple and China—it was the people on the ground who made it a remarkable, even riveting, story.
Q. Given how tech giants today often align with govts, could Apple's relationship with China be seen as an early example of a tech company in strategic partnership with a nation?
A.
Yeah, I think it's the mother of all examples. You don't get bigger than Apple. Even a company like Walmart may, in some years, order more goods from China—but Walmart isn't in factories training workers to make action figures or kitchenware. They don't need the govt connections that Apple needs.
What many people didn't realise is that Apple doesn't just wait around for suppliers to innovate.
It works hand-in-glove with hundreds of factories, co-inventing and helping suppliers push beyond their capabilities. In the early 2000s, many suppliers couldn't afford hundreds of millions in machinery, so Apple began funding it.
A paradigmatic example: in 2008, Apple developed the unibody MacBook, milled from a single slab of aluminium. CNC machines were typically used only for prototypes, but Apple bought 10,000 of them—each costing nearly $1 million—and installed them in suppliers' factories.
That gave Apple massive influence over China's supply chain.
This is where the argument gets bold: Apple has trained 28 million people since 2008 and invested $55 billion in Chinese factories by 2015. That outweighs some of history's biggest nation-building efforts. Apple, in effect, played the role of a nation builder in China—not in infrastructure or agriculture, but in advanced electronics, Xi Jinping's priority sector.
So my argument, which took time even for me to reach, is that Apple became the largest supporter of Made in China 2025—Xi Jinping's strategy to reduce reliance on the West and become self-sufficient in automation, robotics, and electronics.
Q. You describe Tim Cook and a few colleagues standing in that hallowed, secret space in China. What were they there to sign? A deal promising $275 billion in investment over five years? This was unheard of, wasn't it?
A.
Yeah, it's really crazy. What makes it slightly less so is that some people see the $275 billion figure as a quid pro quo—like, 'here's a load of cash, now leave us alone.' And while there's a bit of that sentiment, the reality is more nuanced.
When Xi Jinping came to power in 2013, he viewed Apple as an exploitative force. He pushed the idea that companies had to be 'in China for China'—meaning, what are you giving back? Public filings made it seem like Apple wasn't doing much. In 2003, when Apple consolidated into China, it was a small company with 1.1% margins. That year, Foxconn actually made more money than Apple. But by 2012, Apple's margins had grown 25 times while Foxconn's had halved.
From that view, Apple looked like it was profiting massively without returning much to China.
Fearing a fate like Facebook or Google—blacklisted—Apple moved to flip the narrative. In 2016, Tim Cook went to Beijing's political heart and showed that unlike companies like Samsung with a few dozen joint ventures, Apple was working closely with hundreds of suppliers, installing machinery and training millions. At that time, 3 million people in China were indirectly working on Apple products.
Apple's message to Beijing was clear: you have no idea how deeply integrated we are—we're more 'in China for China' than any other company. The $275 billion figure came from Apple's internal supply chain audit. They were already spending $55 billion a year, so they pledged to continue at that level for five years.
So it wasn't really a quid pro quo. It was Apple quantifying what it was already doing. Some within Apple say it was just smart marketing—not a new commitment. But the size of the figure makes it undeniably revealing.