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Apple in China

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Apple in China

The Capture of the World’s Greatest Company

Scribner,

15 min read
9 take-aways
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What's inside?

Apple’s investments in China made the nation a manufacturing behemoth — and placed Apple under its thumb.

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Few people link Apple’s success story with China’s rise to become the tech hardware manufacturing powerhouse it is today. But in truth, reporter Patrick McGee argues, neither Apple nor China would be what they are today without one another. McGee details how Apple’s growth from a niche, challenger position to a global phenomenon was — and is — dependent on the manufacturing ecosystem in China — which Apple funded and engineered. This story validates the industrial policy and path-dependent capabilities narratives of heterodox economists and speaks to the economic nationalist debates in American politics.

Summary

Apple’s investments in Chinese manufacturing capabilities allowed the company to create luxury products at scale.

When the first iPhone debuted in 2007, no competitor could offer anything close to its cutting-edge look and features. Today, though Apple has less than a 20% share of the smartphone market, it routinely achieves an estimated 80% of industry profits.

Apple has managed to maintain premium retail prices thanks in part to its high quality, extremely loyal customer base, and locked-in app ecosystem. However, there’s another, far less-understood reason Apple has become one of the world’s most profitable companies: its unique manufacturing relationship with China, which has been instrumental in enabling Apple to mass-produce its luxury tech. But, in many ways, China has benefited far more than Apple from this arrangement. The company’s vast investments — financial and intellectual — in China are directly responsible for that nation becoming the globe’s leading electronic components manufacturer. Over the years, the balance of power between Apple and China has continued to shift in China’s favor. In one Apple engineer’s words, “We’ve trained a whole...

About the Author

Patrick McGee has been a reporter at Financial Times since 2013, reporting from Hong Kong, Germany and California. He was the FT’s Apple reporter from 2019 to 2023. Previously, he was a bond reporter for The Wall Street Journal.

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