Peter Navarro, President Trump’s trade adviser, recently blasted Apple CEO Tim Cook over the company’s reliance on China for iPhone manufacturing. He called Apple’s slow diversification of its production and supply chain away from China “the longest-running soap opera in Silicon Valley.” A compelling new book, Apple in China: The Capture of the World’s Greatest Company, sheds light on the reasons behind Apple’s dependency on China and the significant risks this poses to both the company and the United States.
Authored by Patrick McGee, who covered Apple for the Financial Times from 2019 to 2023, this book delves into Apple’s complex history in China, stretching from the 1990s to the present. McGee notes that Apple’s relationship with China began shortly after Steve Jobs, the co-founder, returned in July 1997. At that point, most of Apple’s competitors, like Compaq and Dell, had already begun relocating their production to contract manufacturers in lower-wage regions such as South Korea, Taiwan, and mainland China.
Apple once took pride in its self-sufficiency, resisting the outsourcing trend. However, after Steve Jobs returned, he transformed the company’s focus on product design into a cornerstone of its success. Since then, every product — from the Mac with its eye-catching translucent shells to the revolutionary iPod — has been intricately designed and complex, often challenging to mass-produce. To drive the turnaround, Apple needed to introduce thrilling new products while also scaling production of those not initially designed for mass manufacturing, all while keeping costs in check to protect profit margins.
Apple’s leadership found China to be the perfect solution for its manufacturing needs. The vast labor force could craft Apple hardware on a large scale and offered significant advantages. The Chinese Communist Party (CCP) actively incentivized Western companies, particularly in tech, to establish manufacturing operations through tax breaks, free land for factories, and relaxed labor laws, allowing more than 200 million migrants to move from rural areas to cities, creating the largest available workforce in the world.
Of course, Beijing’s generosity came with one caveat: Foreign companies were “expected” (more like “required”) to establish joint ventures with local firms. This strategic move was designed to ensure that local partners would gain valuable technological and operational expertise from foreign entities, paving the way for the eventual rise of homegrown brands over foreign competition.
In contrast to other Western computer companies, Apple chose not to form a joint venture in manufacturing with a local Chinese company. Instead, it opted to outsource the entire production to Chinese suppliers, with Foxconn being the largest and most significant player in this arrangement.
According to McGee, “Apple was not outsourcing as the word commonly understood. Instead, it was sending its top product designers and manufacturing design engineers from California and embedding them into suppliers’ factories for weeks or months at a time. … Apple’s engineering and operations team would rigorously train local partners, in the process giving away manufacturing knowledge, in particular how to effectively scale while maintaining the highest quality standards.” By McGee’s estimate, Apple has trained at least 1,600 suppliers in China this way.
After absorbing Apple’s tuition-free and world-class training, Chinese suppliers then took the know-how to help homegrown companies such as Huawei and Xiaomi. According to McGee, “Apple’s presence in China was enabling technology transfer on an extraordinary scale. … Apple wasn’t just creating millions of jobs … it supported entire industries by facilitating an epic transfer of ‘tacit knowledge’ — hard-to-define but practical know-how — ‘in the art of making things, in organizing practical matters, and in the way people produce, distribute, travel, communicate, and consume.’”
McGee concludes that Apple management, Tim Cook & Co., made the “rookie and calamitous mistake of consolidating all its eggs in one basket” and doubling down “when that basket turned out to be more of a ruthless, authoritarian surveillance state.” This strategy puts Apple itself and America at risk.
From the company’s perspective, Apple’s iPhone has been losing market share not just in China but worldwide, as competitors like Huawei and Xiaomi — companies Apple has unknowingly helped — gain ground with advanced, competitively priced products.
With 90 percent of its supply chain based in China, Apple has handed the Chinese government substantial leverage, which Beijing has shown it is willing to deploy to shake down Apple. A notable incident occurred in the spring of 2016 when the Chinese authorities abruptly shut down Apple’s iTunes and iBooks stores. In a swift response, Apple announced a $275 billion investment in China over the next five years.
To put this in perspective, McGee compared Apple’s investment to the 1948 Marshall Plan, through which the U.S. spent $13.3 billion over four years to rebuild Europe — equivalent to $131 billion today. In essence, to curry favor with the CCP, Apple has committed to investing more in China than the U.S. spent to revitalize Europe, highlighting the dangers of the company’s reliance on a single market.
The CCP gladly accepted Apple’s money while continuing to tighten its screw on the company at various points. In 2023, a few Chinese ministries banned their employees from bringing iPhones to work, further reducing demand for Apple products in China. This suggests that Apple has become an expendable asset for the CCP.
Apple’s decades of voluntary technology transfer and its enormous investment in America’s No. 1 adversary put America at risk, too. McGee noted that no other foreign company has contributed as much to the CCP’s “Made in China 2025” initiative, which seeks to replace Western firms with Chinese companies in key technology sectors. CCP General Secretary Xi Jinping has frequently emphasized that China’s rapid technological advancement signals the need to shift from a U.S.-led world order to a China-centric one.
At home, America is facing a weakened manufacturing sector due to decades of outsourcing, a situation Apple helped create. Andy Grove, co-founder of Intel, warned that this trend would lead to serious consequences: “Our pursuit of our individual businesses, which often involves transferring manufacturing and a great deal of engineering out of the country, has hindered our ability to bring innovations to scale at home. Without scaling, we don’t lose jobs — we lose our hold on new technologies. Losing the ability to scale will ultimately damage our ability to innovate.”
A few former Apple employees McGee interviewed have pointed out the dangers of the company’s reliance on China. However, their warnings have largely been ignored by management, including CEO Tim Cook, who fears that diversifying the supply chain swiftly could upset Beijing and hurt short-term profits. Thus, while Apple announced a $500 billion new investment in the U.S., it also opened its fifth research and development center in China last year, prioritizing placating the CCP over minimizing long-term strategic independence to China.
Apple in China is a gripping and well-researched book that highlights the failures of globalization over the past thirty years. It offers valuable insights into the strategies of the Chinese Communist Party and is highly relevant to today’s economic and political landscape. It is crucial for U.S. business leaders and politicians to develop measures that counter the CCP’s assertiveness while revitalizing America’s manufacturing sector, drawing crucial lessons from Apple’s experiences in China.