Throughout my career in product development I’ve used Asian resources to supplement the work being done in the U.S. to bring new consumer tech products to market more quickly. When I worked at Polaroid in the 80s designing cameras, I used companies in Japan that were expert in optics to develop some cameras I designed. And years later when I was at Apple in the 90s, I led the development of the Newton using resources in Taiwan. That was the first time Apple developed a product from scratch in Asia.
The motivation was mostly about finding expertise that allowed the product to get to market quickly. Unlike many foreign companies, the U.S. had little expertise or resources in building high volume hardware products. The U.S. never made the investments that the Asians had.
I would have never expected that decades later, Apple would have become so dependent on China that it has put the company as risk and dangerously dependent on the Chinese government.
Apple in China is the riveting story of how Apple used many of the benefits of China to their advantage, constantly increasing their dependency to where they are now so intertwined that they have lost the ability to move elsewhere, putting them at a huge risk of a dictator. They are in a position where President Xi can exert an unprecedented level of control over one of the world’s greatest companies.
Apple initially moved to China to utilize China’s growing low cost labor force and the government’s support of industrialization to avoid building and running their own factories. Early on they found willing partners like Foxconn to develop and run huge manufacturing complexes and hire the workforce at their own expense, in turn for manufacturing Apple’s products.
Apple was the only foreign companies to operate in China without forming a joint venture with a Chinese company. Instead they did something even more significant to curry favor with the government. They worked with thousands of their Chinese suppliers to teach them new technologies, processes and techniques to bring their skills up to the level that Apple’s products required. It allowed Apple to create a huge network of suppliers with the skills Apple.
McGee, a reporter for The Financial Times, interviewed hundreds of people (including this writer) in researching this book, and seems to have covered nearly every important interaction between Apple and China over two decades, not only in manufacturing, but Apple’s sale of iPhones in China, the creation of Apple China, and a series of run-ins with Chinese authorities and the Chinese press.
He weaves one story after another into a compelling tale that reads like a novel. We learn the personalities and foibles of the key players, both the good and bad decisions coming from Cupertino, and the contention and rivalry between the employees on the two continents.
A major portion of the book focuses on the time during Tim Cook’s ascendancy to CEO and the challenges he had to keep both Xi and Trump I off his back. He had to continue to affirm his commitment to China, while conducting a facade about building a new plant in Texas to build computers. Even more disturbing, he has had to remove apps being used by democracy movements and keep all the cloud data in China subject to China’s access.
Apple has opened up manufacturing sites in India to build iPhones, but it’s only a small percentage and will take years to reach significant numbers. Surprisingly, many of Apple’s factories in India are run by subsidiaries of China based companies.
I thought I was pretty knowledgeable about the subject, but I never realized how tenuous a situation Apple is in and how Apple contributed so much to the rise of China while risking both its own future and our country’s. Ironically, the technology Apple brought to Chinese companies is now being used by new Chinese phone manufacturers that have displaced Apple in the Chinese market with even more advanced products.
This book will likely be one of the best business books of the year, and one that will keep Apple PR people awake at night. I expect you’ll be hearing a lot more about this book soon. It’s due to ship May 13.