Apple can inch toward India and Vietnam, but it can't leave China, with or without tariffs

Time of India

3 days ago

HighlightsApple Inc.'s technology transfer to China has significantly contributed to China's emergence as a leading global tech power, as detailed in Patrick McGee's book. The manufacturing ecosystem that Apple built in China, characterized by skilled labor and efficient production, is unlikely to be replicated in the United States despite political pressure from former President Donald Trump. Apple's reliance on China for high-tech manufacturing poses a strategic challenge, as the company faces increasing competition from homegrown firms like Huawei Technologies Co.
During US President
Donald Trump
's first term, he famously toured a Texas factory and claimed credit for bringing
Apple Inc
. production back to America. Except the plant had been running long before he took office. And it was an 'unmitigated fiasco.' Workers in
China
had to be flown in to help fix the mounting manufacturing issues encountered in the US heartland.
This telling anecdote from
Apple
in China, a gripping read by former Financial Times journalist Patrick McGee, shows how the tech giant became beholden to America's biggest geopolitical adversary. Up until this point, the book recounts how Apple flew engineers from California to China to train and collaborate with local workers to manufacture its most iconic products.
Now, it seems, the tables have irreversibly turned.
McGee argues that the technology transfer facilitated by Apple to China, via small decisions compounding over decades, ultimately made it the biggest corporate investor into Made in China 2025, President Xi Jinping's bold plan to end reliance on Western technology. 'Here was America's most famous tech giant volunteering to play the role of Prometheus, handing the Chinese the gift of fire,' McGee writes.
Yet the overarching argument of the book — that the US company made China into the tech behemoth it is today — begs the question of why Apple didn't make the same kind of investment in the US. And amid Trump's second term, when he has repeatedly threatened tariffs on the company if it doesn't onshore manufacturing, this query has new urgency.
But the reality is that Trump's nagging will never be able to recreate the ecosystem that local governments in China, with the help of Taiwanese suppliers such as Hon Hai Precision Industry Co., created to lure Apple. A simplistic answer from a scholar early in the book is that China was a 'low wages, low welfare and low human rights' nation. Suppliers could exploit a massive underclass of migrant workers, and local authorities could quickly suppress any labor unrest or media reports of it.
If there were any voices I wanted to hear more of in the book, it wasn't the dozens of Cupertino, California, engineers but these Chinese workers who turned Apple into the $3-trillion-dollar company it is today. (Apple has publicly called claims in the book untrue and full of inaccuracies.)
But if there's a lesson for Trump — or American consumers — here, it is that electronics manufacturing jobs can come at a high cost for workers. It's hard to imagine that these are the kinds of positions Trump's base is hoping for, in an area where automation would be welcome.
China is hardly a low-wage manufacturing base anymore. Apple Chief Executive Officer
Tim Cook
acknowledged this before, saying that his company produces in the country not because of labor costs but because of its legions of skilled workers.
McGee argues that this upskilling is now being used to fuel innovation at homegrown tech giants such as Huawei Technologies Co. — and a direct result of Apple's investments. While the
iPhone
maker was chasing short-term profits, savvy suppliers in Asia were playing the long game.
We've all heard about the legendary union between founder Steve Jobs and designer Jony Ive that made the iPhone a unique product. But the partnership that made it a revolutionary one, owned by more than a billion people, was between Cook and 'Uncle Terry,' McGee argues. Terry Gou, the founder of Hon Hai (better known as Foxconn), was the hyper-efficient manufacturing genius who brought the iPhone to the masses.
Gou was described as obsessed with cutting costs — even if that meant diluting hand soap in factories with increasing amounts of water. One source in the book described him as worth billions in 'nickels and dimes.' But Gou recognized the value of working with Apple wasn't just profits: It was the tacit knowledge that he and his team would receive from the engineers shipped over from California to help set up and run the factories. This learning was invaluable, Gou understood, and made even losing money to get Apple orders worth it.
Ultimately, the high-tech manufacturing ecosystem built up in China took decades, marked not just by the factories producing its iconic goods but by the creation of sub-suppliers nearby and an army of skilled engineers. It will be nearly impossible for Trump to try to recreate this during his four-year term. The US could start by focusing investments in vocational education and engineering, but policymakers should recognize that catching up now requires a strategic long game.
And all the years it took to develop a reliance on China means it's not Trump's tariff threats that pose the biggest existential threat to Apple. It's Beijing. Uncoupling too fast risks angering local authorities, but not doing so quickly enough makes it even harder for it to inevitably be done.
As this book convincingly argues, Apple can inch toward India and Vietnam, but it can't leave China anytime soon.