‘China has Apple by the balls': How the rising superpower captured the tech giant
Investigative journalist Patrick McGee describes it as the biggest untold story of technology in the 21st century: how, over decades of jaw-dropping investment in China, Apple became one of the world's biggest companies – but in the process helped China become a technology and manufacturing superpower. That power is now being used to challenge the West.
You've said that Apple wouldn't be Apple today without China. And China wouldn't be China without Apple. How so?
By 2015, Apple was investing $55 billion a year into China, and a lot of that was in training people to assemble iPhones, iMacs and other Apple products – by [Apple CEO] Tim Cook's public estimate, 3 million people were trained. Apple sent planeloads of its best engineers – from MIT, Caltech and Stanford – to train the Chinese on how to produce their products. Overall, it has trained 28 million people in its supply chain since 2008. That's bigger than the labour force of California or the population of Australia. It has had more impact on China than the Marshall Plan on Europe after World War II.
In 1999, none of Apple's products was made in mainland China; by 2009, virtually all were, and company profits shot into the stratosphere as a result. Apple was on the brink of bankruptcy in 1996 but within a decade became the richest company on Earth, thanks to sales of its iPhone and iPad. What did China offer that no other country could?
China has policies and a population base tailor-made for the electronics industry. They created bonded zones [places offering generous tax breaks and streamlined customs procedures to attract foreign investment] in cities like Shenzhen. Back in the 1980s, Shenzhen was a series of fishing villages. Today, it's a city of 18 million people. We in the West don't understand how easy it is to build a factory in an area like Shenzhen. The government provides you with the labour from the western part of the country, where literally millions are leaving backbreaking agricultural jobs to work 12-hour shifts in factories. Businesses get free land and cutting-edge machinery. Local cadres in the political system are incentivised to build factories and get growth from their region. The bureaucracy is shaped to be more like a venture capitalist. China has invented a new form of capitalism, where instead of having dynamism in the private sector, it's on the public side.
'Apple provided China with the Ivy League equivalent of a hardware engineering education.'
You write that Apple essentially cracked the code on how to manufacture the world's best products without doing it itself.
In the early 2000s, Apple was figuring out how to manufacture their products in China without owning any of the factories. It was about orchestrating the production of the products rather than building them themselves. But the orchestration they've done is just phenomenally obsessive. This isn't normal outsourcing. They're not just saying, 'Here's a blueprint of what we need; let us know when it's ready.' They're inventing the processes, the components.
So by bringing all its technological expertise and sophisticated production methods to China, Apple taught the Chinese how to develop high-level manufacturing …
Indeed. Jony Ive [instrumental in the design of the iPhone, iPad, iMac and Apple Watch] came up with some spectacular-looking products. But the only way those designs came into large-scale reality was that China was investing massively in supply chains, in infrastructure and in ports. And as one engineer told me, Apple provided China with the Ivy League equivalent of a hardware engineering education. Because Apple is epic, the technology transfer is also epic.
Loading
US Vice President J.D. Vance has very patronisingly reduced the Chinese competitive advantage to its having 'millions of peasants' available to work in factories. But its economy has moved far beyond just low-cost labour producing cheaper products, hasn't it?
Yes and no. China has robotics and automation on a scale we [the United States] completely lack. But hundreds of millions of people still live in impoverishment, and go to cities like Shenzhen and Guangzhou to work in factories. China has the capacity to move an entire Western city's worth of people, say, up to 500,000, who are willing to relocate for a few months at a time to assemble iPhones and then go someplace else. We have nothing like that. Even if it could, we in the West wouldn't want that to change, because that's not what anybody really wants to do with their life.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles

Sky News AU
4 hours ago
- Sky News AU
‘Never mention the war': Albanese takes ‘Fawlty Towers' approach to foreign affairs
On tonight's episode of Paul Murray Live, Sky News host Paul Murray discusses Prime Minister Anthony Albanese's China trip, Labor MPs obsession with social media, Sussan Ley's push to reconnect with corporate Australia and the net zero fight. '(Anthony Albanese) in his natural environment, communist China,' Mr Murray said. 'Six days of building an important relationship, which begins with the traditional backside kissing of the Chinese leader. 'Never mention the war, this is the Fawlty Towers approach to foreign affairs.'

The Age
a day ago
- The Age
With no one to take over, Australia's oldest Chinese restaurant is closing
'We are getting old,' says Sai Yoke 'Sue' Wong, 74, who runs Toi Shan in Bendigo with her husband, Kok Hem 'Peter' Chee, 71. 'We have been wanting to retire for a long time. We looked for someone to take over, but no one has.' The couple will permanently close their restaurant in Bendigo's CBD on July 30. It will later reopen as an Indian restaurant. Toi Shan has been around since 1948, when Allan Chan took over On Loong cookshop and renamed it after the southern Chinese city he was born in, more commonly transliterated as Taishan. On Loong, however, dates back further, possibly to 1892. Its first iteration was on Bridge Street, in the heart of Bendigo's Chinatown, and it moved to the current location on Mitchell Street in 1942. The Chan family sold the business to Sue Wong's family in 2003. 'We've been here 20 years,' says Wong. 'It's a hard job with long hours. Staff are hard to find, and you don't make enough money to pay them anyway, so you work until midnight. One day it's busy, two days quiet, one day busy. It's hard for old guys.'


Perth Now
2 days ago
- Perth Now
China's premier proposes global co-operation on AI
Chinese Premier Li Qiang has proposed establishing an organisation to foster global co-operation on artificial intelligence, calling on countries to coordinate on the development and security of the fast-evolving technology. Speaking at the opening of the annual World Artificial Intelligence Conference (WAIC) in Shanghai on Saturday, Li called AI a new engine for growth, but adding that governance is fragmented and emphasising the need for more coiordination between countries to form a globally recognised framework for AI. The three-day event brings together industry leaders and policymakers at a time of escalating technological competition between China and the United States - the world's two largest economies - with AI emerging as a key battleground. "Currently, overall global AI governance is still fragmented. Countries have great differences particularly in terms of areas such as regulatory concepts, institutional rules," Li said. "We should strengthen co-ordination to form a global AI governance framework that has broad consensus as soon as possible," he said. Washington has imposed export restrictions on advanced technology to China, including the most high-end AI chips made by companies such as Nvidia and chipmaking equipment, citing concerns that the technology could enhance China's military capabilities. Despite these restrictions, China has continued making AI breakthroughs that have drawn close scrutiny from US officials. Li did not name the United States in his speech, but he warned that AI could become an "exclusive game" for a few countries and companies, and said challenges included an insufficient supply of AI chips and restrictions on talent exchange. China wanted to share its development experience and products with other countries, especially those in the Global South, Li said. WAIC is an annual government-sponsored event in Shanghai that typically attracts major industry players, government officials, researchers and investors. Tesla CEO Elon Musk, who has in past years regularly appeared at the opening ceremony both in-person and via video, did not speak this year. Besides forums, the conference also features exhibitions where companies demonstrate their latest innovations. This year, more than 800 companies are participating, showcasing more than 3000 high-tech products, 40 large language models, 50 AI-powered devices and 60 intelligent robots, according to organisers. The exhibition features predominantly Chinese companies, including tech giants Huawei and Alibaba and startups such as humanoid robot maker Unitree. Western participants include Tesla, Alphabet and Amazon.