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New Statesman
6 days ago
- Business
- New Statesman
The People's Republic of iPhone
Photo by In Pictures Ltd./Corbis via Getty Images On Friday 23 May, Donald Trump threatened to impose a 25 per cent tariff on what is arguably the world's most successful consumer product, the iPhone. This would be a historic tax hike on American consumers, because Apple currently sells around 70 million iPhones in the US for about $1,000 each; the US government would ask for $17.5bn in additional taxes on a single product line from a single company. But what Trump wants is actually more extreme: he believes that in order to escape his punitive tariff, Apple might bring production of the iPhone back to America. There are two reasons that this is wishful thinking. The first is that the iPhone is the apex product of globalisation. It would be impossible to make something as complex as a smartphone with the resources of a single country. Apple's supplier list runs to 27 pages of companies, many of which are themselves multinationals with long lists of their own subsidiaries. It is not the product of one country – more like 50. It will never be the case that the iPhone can be described as a purely American product. As Patrick McGee explains in Apple in China, in light of the company's long history of contract manufacturing, the vast sums it has invested in China, the knowledge and skills it has imparted to Chinese workers and the Chinese factories it has developed, it makes more sense to describe it as Chinese. Trump's discomfort with Americans using Chinese phones is not without foundation. What Apple has achieved in China is a spectacular example of industrial strategy. Apple's investment in China for a single year, 2015, was $55bn – greater than the combined research and development spending of every business in the UK. Around the same time, Apple's engineers were working in 1,600 Chinese factories. 'We were unwittingly tooling them up,' a former Apple executive told McGee, 'with… incredible know-how and experience.' It is unclear how other countries can loosen China's grip on technological manufacturing; an American iPhone would cost more than three times the price of current models, according to one analyst. But this is a power that China has been helped to acquire by the Western capitalists who rushed to exploit its people for cheap labour, and who never stopped to consider the long-term implications. A former Apple vice-president told McGee: 'We weren't thinking about geopolitics at all.' For all the Silicon Valley rhetoric about changing the world, Apple does not appear to have understood how successfully it was doing just that. We're reminded to question the information we see on our screens, but the screen itself is also an illusion. The devices of digital modernity are made, we are told, by companies that are American, German, Japanese and Korean. The brightest minds compete in an unending race to make the displays ever more crisp, the computers ever more intelligent. We choose between phones and laptops made by Google, Microsoft, Apple or Amazon, televisions made by Philips or Samsung, games consoles made by Sony or Nintendo. But there is only really one company. It makes products for all of these companies, and hundreds of other businesses around the world. It is called Hon Hai Precision Industry. Hon Hai began in 1974, in a shed in a suburb of Taipei called Tucheng ('dirt city', in Mandarin), in which ten people moulded knobs and dials for televisions from molten plastic. Their boss was Terry Gou, the 24-year-old son of a police officer, and recently released from national service. As personal computers began to proliferate, Gou moved to making components, mostly sockets and connectors; the trading name for the company, Foxconn, refers to connectors. The 'fox' part is simply an animal Gou admires. He also admires Ghengis Khan, and wears a bracelet from a temple dedicated to the Mongol emperor. Gou was instrumental in Apple's return from the brink of defeat. In 1997, Steve Jobs and Jony Ive had created the iMac, which offered to replaced the complicated and boring world of personal computing with an aspirational consumer product that connected easily to the internet. Apple quickly realised why everyone else made beige boxes – making anything else was expensive and difficult – but the company's designers and executives had an additional problem, which was that if they didn't do exactly what Steve Jobs told them to do, he would scream at them and then sack them. Every engineer who doubted the design eventually left and the 'unmanufacturable' iMac was finally manufactured by the Korean company LG. When Apple's exacting demands became too much for LG, it began looking for another company to build its products, and in Taiwan it found Terry Gou. Subscribe to The New Statesman today from only £8.99 per month Subscribe In Gou's factory at the end of the 1990s, the roof was made from corrugated metal and the air conditioning was reserved for equipment, not people. Around the building, banners reminded workers of the wisdom of 'Uncle Terry', which included such aphorisms as 'work hard on the job today or work hard to find a job tomorrow' and 'hungry people have especially clear minds'. Gou, more than anyone else, took advantage of the opportunities offered by the special economic zone that had been established around Shenzhen, in Guangdong province on the east coast of mainland China, in 1980. At the time the zone was created, Shenzhen was a town of around 70,000 people; by 2020, it had a population of 17.5 million. This accelerated growth was the result of the 'Guangdong model', in which local government and private businesses (often led by Taiwanese entrepreneurs such as Gou) collaborated to produce growth. Gou's factory was subsidised and outfitted by the state; the advanced machines on which he began making Apple's designs had been paid for by the Chinese Communist Party. China also provided its people, in vast numbers. Among the sources that McGee has obtained for Apple in China are documents showing that when Apple needed to increase production – in the weeks before a new iPhone went on sale, for example – the Chinese state would be able to secure an additional 800,000 workers for its production lines. This would be done by government-backed companies, which would send buses into rural areas to draw workers from China's 'floating population' of internal migrants. These migrant workers numbered in the hundreds of millions, a larger workforce than that of the European Union. Apple was an exceptionally demanding client, led first by Steve Jobs and then, after his death, by his trusted lieutenant, Tim Cook, whose forensic eye for detail was even more exacting than his predecessor's temper. On his first day as CEO, Cook presided over an operations meeting that lasted for nearly 13 hours. But this was also what China needed: a company that would push its factories to ever greater standards and quantities of production. Jobs, Cook and Gou helped to make China the global factory. By 2010, the executives of Silicon Valley joked that within 20 years, there would be two companies left. Wal-Mart would be the only shop, and everything it sold would be made by Foxconn. As the Guangdong Model brought economic growth to China, Apple discovered that the country was also becoming its most important new market. Despite the role the company had played in China's industrial development, access to this market still came at a price. In 2016, Cook and two of his top executives visited the headquarters of the Chinese Communist Party, where they promised to invest $275bn in the country over the following five years. McGee points out that this sum is more than twice the amount (in real terms) that America had invested through the Marshall Plan in rebuilding Europe after the Second World War. The effects of this investment can be seen on government buildings around the UK. The technology transfer enabled by Apple and others enabled the rise of a new generation of native Chinese companies, such as Huawei. China ceased to be a taker of foreign technology and began pushing its own technology into other states, including Britain. Huawei equipment was installed in the UK's mobile networks, and cameras made by companies such as Hikvision (of which the Chinese state is the largest shareholder, and which human rights organisations have alleged supplies equipment used in the mass surveillance of Uyghur people) appeared at sensitive sites in the UK. Some were worn by our own police officers. Attempts have been made to ban Chinese technology from our infrastructure, but it will be years before it is removed, if it ever is. The trade policy of the Trump administration is an erratic series of pronouncements made via social media, which are almost always delayed and abandoned. And if Trump does persist in battling Apple, he will be abruptly reminded that trillions of dollars of American savings are invested in the company. Xi Jinping has no such concerns. Apple must appease him or lose access to the world's largest group of consumers. As the trade war between America and China grows, then, it must be asked if the world's most influential technology company can avoid picking a side – and to what extent it already has. Apple in China: The Capture of the World's Greatest Company Patrick McGee Simon & Schuster, 448pp, £25 Purchasing a book may earn the NS a commission from who support independent bookshops [See also: The lost futures of Stereolab] Related This article appears in the 04 Jun 2025 issue of the New Statesman, The Housing Trap
CNBC
19-05-2025
- Business
- CNBC
Apple inadvertently became the largest supporter of 'Made in China 2025', says author Patrick McGee
Patrick McGee, 'Apple in China' author, joins 'Squawk Box' to discuss Apple's supply chain dilemma in China, moving the company's supply chain to India, and more.
Yahoo
14-05-2025
- Business
- Yahoo
WWSG Announces Exclusive Speaking Partnership with Patrick McGee, Author of 'Apple in China'
WASHINGTON, May 14, 2025 /PRNewswire/ -- Worldwide Speakers Group (WWSG), a global leader in connecting elite speakers with audiences who seek transformative ideas, is proud to announce a new partnership with renowned journalist and author Patrick McGee. McGee's book, Apple in China: The Capture of the World's Greatest Company, released by Simon & Schuster May 13, is generating buzz among business leaders, tech insiders, and global affairs experts—and now, he's available for select keynote addresses, panels, and fireside chats exclusively through WWSG. For readers of Steve Jobs by Walter Isaacson or Chip War by fellow WWSG-exclusive speaker Chris Miller, Apple in China is a riveting, behind-the-scenes account of how Apple's pursuit of efficiency and growth helped fuel China's rise as the global electronics powerhouse. Based on over 200 interviews, internal memos, and never-before-reported accounts, McGee's book explores how America's most iconic company became deeply enmeshed with an authoritarian regime—unintentionally giving Beijing a technological edge that could be turned into geopolitical Patrick McGee?Patrick McGee, a veteran journalist for the Financial Times and The Wall Street Journal, has spent over a decade covering Apple, electric vehicles, and emerging tech. His reporting has earned him accolades for its depth, accuracy, and ability to break complex topics down for business audiences. As a speaker, McGee brings the same clarity and insight to the stage, captivating audiences with stories that illuminate the hidden forces shaping today's global economy. In an era of heightened U.S.-China tensions, McGee provides context that helps leaders and planners anticipate the next shift in global dynamics."Patrick McGee offers a perspective no other speaker can. His work is more than just reporting—it's an investigation into the intersection of innovation, policy, and power," said Dan Sims, President at WWSG. "We're thrilled to bring his voice to audiences looking to understand the future of business, technology, and geopolitics."Why WWSG?WWSG represents today's most influential voices in business, policy, and innovation. With a white-glove approach to speaker engagements, we ensure that every speaker selection is tailored to your audience, objectives, and message. Our speakers don't just fill agendas, they shape meaningful conversations and foster McGee joins an elite roster of thought leaders partnering with WWSG for their public speaking opportunities, including historian Niall Ferguson, author Chris Miller, former Vice President Mike Pence, CNN Chief Medical Correspondent Dr. Sanjay Gupta, globalization expert Peter Goodman, former trade representative Robert Lighthizer, former Secretary of Labor & Secretary of Transportation Elaine Chao, former Barstool CEO Erika Ayers Badan, and many you're hosting a global leadership summit, industry roundtable, or executive retreat, Patrick McGee brings unmatched value and insight to your stage. Book him now for an unforgettable session that will leave your audience thinking differently about Apple, China, and the future of global Abela***@ release distributed by PRLog View original content: SOURCE Worldwide Speakers Group Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
New York Post
11-05-2025
- Business
- New York Post
How Apple invested big, profited greatly and sold itself to China
'Apple in China,' by Patrick McGee, tells the gripping tale of how the computer giant's decades-long investment in China fueled its spectacular success and, in turn, accelerated China's rise as a technology superpower. This story begins nearly 30 years ago. After returning to Apple in 1997, co-founder Steve Jobs needed a hit product and a way to build it at scale. The iMac was Jobs' comeback hit. But it was quirky and tricky to assemble. Apple was able to get the iMac launched with the help of Korea's LG, but early production problems and increasing consumer demand had them looking for a second producer. 9 Under the watch of Apple CEO Tim Cook, the company has poured some $275 billion into China. Getty Images Advertisement At the time, China's completive advantage was its 'low wages, low welfare, low human rights' according to China scholar Qin Hui. That began to change in the 1990s. It was Taiwanese entrepreneurs such as Terry Gou, the charismatic and ruthless cost-cutting CEO and founder of Foxconn, who turned China into a high tech workshop capable of awesome feats of production — and eventually innovation. Apple had seemingly landed on a winning formula: pairing the signature innovation and design personified by the late Steve Jobs, with China's vast production capacity, overseen by now-CEO Tim Cook, the architect of Apple's China strategy. Advertisement 9 Chinese leader Xi Jinpin viewed Apple's vast China play as a way to spur development in his nation's vaster hinterland, away from its more prosperous coastal cities. Getty Images Yet despite Apple and Cook's extraordinary success in China, 'Apple in China' is ultimately a cautionary tale. The book describes how hubris and a lack of foresight bordering on wilful blindness to geopolitical realities can eventually pose huge, existential risks to any company. Apple's massive investment in China is beginning to look like a Faustian bargain. As Apple entrenched itself in the nation, it became beholden to the Communist Party and eventually became the junior partner in China's decades long effort to gain technology superiority over the United States through knowledge transfer and best practices. 9 The iMac was Steve Jobs 'comeback' hit and the challenges he faced manufacturing it at scale led helped lead to Apple's massive investment in China. Getty Images Advertisement 'China allowed Apple to exploit its workers, so that China can, in turn, exploit Apple,' says McGee, a former Financial Times reporter who covered the company for nearly five years. As Apple benefited from China, China parlayed the company's historic investments into a great technological leap forward for itself. From the start, Apple has embedded its top people and invested significantly in scaling its complex Chinese supply chain. For example, in 2015, Apple committed to spending $275 billion in China over five years, more than double what the US spent on the Marshall Plan to rebuild Europe, adjusted for inflation. Over the decades, Apple estimates it has trained 28 million workers, more than California's entire labor force. These are nation-building efforts, says McGee. 9 Workers at a Foxconn factory in Southern China. Established by Taiwanese entrepreneur Terry Gou, Foxconn is one of many companies in China to have become powerhouses of their own since partnering with Apple. AP Apple's success, fueled in part by its huge embrace by Chinese consumers, began to strain local labor markets, forcing the company and its suppliers to build more operations inland in cities like Chengdu. These investments were also aimed at pleasing the Chinese Communist Party bosses in Beijing and their new leader Xi Jinping, who wanted the interior to enjoy the same prosperity as coastal cities. Advertisement Apple was notoriously tough on its suppliers. One executive, Tony Blevins, once forced a manufacturer to sign a contract without reading it and was known for making and breaking companies. But the opportunity to work with Apple kept everyone coming back. And it paid off spectacularly for the firms who worked with Apple — and survived. Indeed, Apple's China strategy spawned a huge ecosystem of technology companies, including brands like electric carmaker BYD, which began as an Apple contractor assembling iPads, and is now building cutting-edge electric cars. In other words, 'China brilliantly played its long-term interests against Apple's short-term needs,' says McGee. 9 One of the greatest allures of manufacturing in China for Apple was the nation's vast domestic market. Getty Images Around the time Xi came to power, Apple began to get serious about government relations in China, bringing in top executives to manage their operation in the Middle Kingdom. Known as 'The Gang of Eight,' this team included Doug Guthrie, a China expert, who according to McGee was 'the most instrumental character in Apple's political awakening.' Guthrie, initially a China bull, eventually realized Xi's so-called reform program was 'meant to lure in capital and Western businesses as a way of learning, so China could reverse-engineer the technology, replicate it and then replace it.' Despite these risks, China's authoritarian turn under Xi helped Apple, by squashing the nascent labor movement, allowing the company's contractors to extract more from their workers and ultimately boost margins on iPhones and other products. 9 Foxconn workers in one of their massive facilities in Shenzhen, China. AP Apple faced a new risk in 2016 with the election of Donald Trump, a China hawk. In McGee's telling, Tim Cook deftly handles the new president, visiting and calling him frequently. In fact, rather than hurting Apple, Trump's first-term China policy (which included Tariffs on China) was a boon to the company: Trump imposed harsh sanctions on Huawei, Apple's main Chinese rival, allowing it to recapture market share it had lost to Huawei in China and reap billions in profits. Advertisement In 2020, COVID struck China, and the rest of the world went into lockdown. But within months, Chinese factories reopened, churning out iPhones and iPads at a record clip. But in 2022, after an anti-government protest was violently quashed, Apple finally, belatedly, realized that its China exposure was too great. McGee reserves some of his most pointed criticism for America's policy elite. 9 Apple has attempted to reduce its reliance on China bye shifting production to India —which also has a sprawling domestic market as evidenced by this Apple store in Mumbai. But India has stricter worker regulations, workers unions and less manufacturing capacity than China. 'At the turn of the Millennium, Washington made a bet on China — a bet that free trade would liberalize the country and perhaps catalyze the creation of the world's biggest democracy,' says McGee. But rather than ushering in democracy, trade with China only enriched and entrenched China's ruling elite. McGee offers this damning critique: 'Xi's actions made Washington's hopes from two decades earlier — that it could export democracy through capitalism — look almost willfully naïve.' Advertisement Today, Apple is scrambling to diversify its supply chain. In 2022, following the Shanghai lockdowns, Apple greenlit a plan to boost manufacturing in India, also a huge consumer market. But a full 'decoupling' from China would require hundreds of billions of dollars of investment and decades to implement. Furthermore, India lacks China's powerful central government which can redirect workers into factories. And it lacks the ecosystem of high tech suppliers — most of whom are still in China. Plus, in India, there are labor unions! So where does Apple go from here? Taiwan, and contract manufacturer TSMC, are emerging as a new risk. 'Today, the main 'system on a chip' in every iPhone, iPad, MacBook, desktop Mac, AirPod and Apple Watch is being made on one small island' — Taiwan — which Xi has threatened to annex. A war or even an embargo of Taiwan would completely cripple Apple. Warren Buffet recently sold his $5 billion TSMC position because of China risk, and heavily cut his Apple exposure, McGee believes for the same reason. Advertisement There are other risks. Huawei, an Apple competitor that benefited from Apple's decades long China strategy, is leapfrogging Apple in design and technology. Decoupling from China could cause a backlash from Chinese consumers and Beijing. And then there's Trump and his continually shifting tariff strategy, yet another source of uncertainty. 9 Author Patrick McGee. Cayce-Clifford McGee ends by asking, how did China do it? How did they grow so quickly? 'Some portion of the disquieting answer is that Apple taught them,' he says. There's Apple DNA everywhere. Alex Tapscott is the author of 'Web3: Charting the Internet's Next Economic and Cultural Frontier' and managing director of the Digital Asset Group, a division of Ninepoint Partners LP.
