Review of Patrick McGee, Apple in China: The Capture of the World’s Greatest Company (Scribner, 2025).

China’s rise as the manufacturing center of the world has been nothing short of miraculous. Since the start of the reform period in 1978, China’s GDP per capita has grown nearly a hundred-fold. Hundreds of millions of people have been lifted out of poverty. With the famines of the Mao days long behind them, many Chinese now have middle-class living standards and reside in massive cities with top-notch infrastructure. More recently, China’s industrial policy initiative Made in China 2025 has made it the global leader in high-tech industries like solar panels, high-speed rail, and electric vehicles. While other East Asian states like South Korea and Taiwan have accomplished similar success, China is uniquely differentiated in the massive scale of its achievement. China is the development story of the last few decades and anyone who sees ending global poverty as a moral imperative must understand it.

While there are many reasons for China’s success, an essential ingredient has been foreign direct investment (FDI) from advanced countries. At the start of the reform era, Chinese officials set up “special economic zones” to bring in foreign investment and gradually introduce the country to global capitalism. To attract foreign investors, government officials offered tax incentives, regulatory exemptions, and new infrastructure. In exchange, foreign multinational corporations worked with local partners by entering joint ventures with Chinese companies. For a developing country without a strong industrial base or manufacturing experience, the technology and know-how brought by foreign multinational corporations is crucial for developing competitive industries. With foreign firms bringing in advanced production methods and training a labor force of tens of millions of Chinese workers, China eventually learned how to innovate on its own and grew to the high-tech industrial superpower that it is today.

Apple in China by Patrick McGee tells the story of perhaps the most important of these foreign investors, Apple Inc. Apple is one of the most valuable countries in the world today, with a market capitalization larger than France’s economy. While Apple is thought of as a quintessential American tech giant, the manufacture of their iconic phones and laptops are almost entirely dependent on one country: China. But despite China’s centrality to Apple’s manufacturing, the transition to China was gradual, unplanned, and far from inevitable.

Foreign Capital and Chinese Industrialization

McGee begins his narrative in Apple’s early days when manufacturing was all done in-house (initially with Steve Jobs’s pregnant sister assembling circuit boards in the living room). Apple’s manufacturing professionalized and improved as it scaled up, but its vertically-integrated model began coming under pressure in the 1980s. The economies of scale and flexibility of subcontracting proved to be far more effective at reducing costs, and Apple’s main competitors were quickly gaining ground by switching to contractors. At the brink of bankruptcy in 1996, Apple sold off its plant in Fountain, Colorado to the subcontractor SCI Electronics and shifted circuit board assembly operations to Singapore. With the outsourcing taboo broken and the surging popularity on the new iMac, Apple doubled down on its subcontracting model. In the name of maximizing efficiency to meet soaring demand, the company began dismantling its own factories to switch to manufacturers and suppliers in South Korea, Taiwan, and Mexico.

Initially, Taiwan was the most important of Apple’s offshore sites. Its strong tech industry and sophisticated suppliers were the only ones capable of delivering on Apple’s increasingly demanding designs. Paramount amongst these Taiwanese companies was Foxconn, which emerged as Apple’s most important supplier and the speartip of Apple’s entry into China. As Taiwan’s labor costs began to rise, its labor-intensive electronics assembly became less competitive. The island’s small population limited the size of its labor force and led to capacity constraints that couldn’t keep up with the voracious demand for Apple products. In search of abundant cheap labor, Taiwanese contractors like Foxconn began off-shoring production to China—and Apple followed.

Here is where the story of Apple in China truly begins. While there were fledgling amounts of FDI in China in the first period of reform of the 1980s, FDI truly skyrocketed in the second period of reform kicked off by Deng Xiaoping’s 1992 Southern Tour and continued with Zhu Rongji’s premiership in 1998. In 1988, FDI into China was only about $3 billion. Just 10 years later, this number skyrocketed to $45 billion, a 15-fold increase. Within this wave of FDI in the 1990s were Apple and Foxconn.

China’s allure came from a combination of its economic endowments and government involvement. As a poor country with a massive population, the People’s Republic was endowed with a huge pool of cheap labor. Nowhere else could provide China’s combination of economies of scale and low wages. In addition, China’s geographical proximity and linguistic similarities with Taiwan made setting up shop far easier for Foxconn. While workers were still unskilled and the country lacked advanced machinery, Foxconn and Apple could fill in the gap. Foreign companies poured in massive amounts of capital and resources and brought in experienced managers to train workers on the assembly lines. Local government officials, who were motivated by kickbacks from industrial growth, sweetened the deal by offering subsidies for land and machinery, funneling cheap rural migrant workers into industrial clusters, and building crucial infrastructure for industrial operations.

This stage of Chinese development was marked by a partnership between foreign capitalists and the Chinese government. Apple and Foxconn engaged in a quid pro quo with the state, offering huge investments and manufacturing know-how that spurred Chinese industrialization; in turn, it received access to a huge labor force and support from local government officials. This story was repeated many times by household names like GM, Volkswagen, and IBM: multinational corporations earned shocking profits, and China achieved even more shocking industrial growth. The greatest beneficiaries of this arrangement were foreign economic elites and Chinese political elites.

The Chinese Sweatshop and American Deindustrialization

But there were far more who didn’t fare as well. Chinese workers undoubtedly gained substantially through industrial employment that offered wages much higher than rural farming at home. This period of huge foreign FDI and its employment was essential for China’s remarkable poverty alleviation. However, this growth was accompanied by hyper-exploitative labor practices inflicted upon Chinese migrant workers. In the name of maximizing efficiency, Foxconn’s CEO Terry Gou instituted a reign of terror on the factory floor. Shifts were often twelve hours or longer. Managers hovered over workers’ shoulders and docked pay for talking and any minor defect. Foxconn’s labor practices would later make its name inseparable from the wave of worker suicides at its Shenzhen campus.

The alliance between foreign capital and the Chinese government extended to the factory floor. In addition to regulatory and financial assistance, the Chinese state provided authoritarian control to keep workers in line. Despite being a nominally Communist country, only one national labor union is allowed, the All-China Federation of Trade Unions. Instead of genuinely representing workers and organizing labor action for better wages and conditions, the union functions as an arm of the government that executes state initiatives and controls workers towards those goals. Given the importance of Apple and Foxconn’s investments, the All-China Federation and local Chinese officials were happy to let them violate laws limiting overtime. During the wave of Foxconn worker suicides in 2010, striking workers took to the internet to share stories and videos of their struggles, but government censors quickly removed them. While China’s development story has been miraculous, it has also been led by elites willing to ride roughshod over the concerns of Chinese workers.

The biggest losers, however, were manufacturing workers in the West. In its transition to the subcontracting model, Apple slashed manufacturing jobs in California—but one small chapter in the larger tale of American deindustrialization. Globalization’s pernicious effects on the power of organized industrial labor is best demonstrated in McGee’s contrasting of Foxconn’s Chinese, Californian, and Czech factories. While Foxconn eventually consolidated its operations in China, it was initially more diversified. At the same time that it set up its Shenzhen campus, Foxconn also created iMac factories in Prague and Fullerton, California. While Shenzhen’s workers lived in on-site company dorms and pulled twelve-hour shifts, Czech and American workers weren’t willing to work these long hours. Czech workers also had a labor union. In the face of terrible labor conditions and stolen bonuses, Czech and American workers protested, spoke to the press, and even threatened strikes. As one might guess, it didn’t take Foxconn long to shutter its Prague and Fullerton factories. McGee’s story offers us a microcosm of not only FDI’s role in China’s rise, but also globalization’s destructiveness to organized labor.

Economies of Agglomeration

After the abysmal experience of building the iMac G4 supply chain across six countries, Apple pushed to centralize all parts of their supply chain into China. McGee demonstrates here another key advantage in China’s development: economies of agglomeration. The term refers to the productivity gains from having companies, workers, and factories close to each other. The G4’s production stretched across six countries and coordinating across so many different sites proved to be a major headache for Apple.

China’s massive industrial clusters offered the ability to centralize production of nearly all parts of the supply chain into one site. In the mid-2000s, Foxconn’s Longhua campus had as many workers as Salt Lake City’s entire population. Only China could offer such a massive number of working-age, low-wage laborers in a single “all-in-one site.” With enough workers to fill almost every role in the supply chain, producers across the supply chain could quickly coordinate with each other to maximize speed and efficiency. If one producer needed a slightly shorter screw, a color swap for a part, or a larger mold, all they had to do was walk across the street, request what they needed, and receive the new part in less than a day.

This model of the centralized Chinese industrial cluster proved to be shockingly efficient. Once one supplier moved operations to China, all of its rivals had to follow to stay cost-competitive. The advantages of China’s unique economies of agglomerations were amplified by government subsidies, free land, and labor control. Despite Steve Jobs’s fear of excessive China exposure, the volume and efficiency of Chinese manufacturing proved far too attractive, and Apple soon shifted almost all their production to the People’s Republic.

It wasn’t just Apple that benefitted from the economies of agglomeration. In this period, China did not stagnate as a sweatshop following the orders of American and Taiwanese capitalists. Today, China’s homegrown tech giants like Huawei, Xiaomi, and Vivo also make top-notch smartphones and exceed Apple’s Chinese market share. Accusations that Chinese companies merely copied or stole IP are overblown, but Apple’s investment absolutely played a key role in the rise of China’s domestic innovators.

When Apple outsourced to Chinese suppliers, it did not merely email over designs for vendors to build. The company took an intense, hands-on approach where teams of engineers came to the factory floor for months at a time, training workers on advanced production techniques and ensuring that their high quality standards were being met. In the process, Apple transferred huge quantities of manufacturing know-how that transformed suppliers from ragtag groups of uneducated workers into a highly-skilled labor force capable of making cutting-edge products. In addition, Apple brought in expensive machinery that suppliers would normally never be able to afford and gain experience using. With this knowledge brought by Apple, suppliers took their skills to other clients and helped build burgeoning tech juggernauts like Huawei. Eventually, Apple’s competitors directly recruited top talent from Apple’s closest partners, going as far as to wait in company parking lots to poach particular individuals. Thus, the advanced supply chain Apple built in China also became the precondition for the success of its top Chinese competitors.

McGee’s story of Apple’s role in building Chinese supply chains offers an example of how developing countries can catch up to the technological frontier. For developing countries with no experience in complex manufacturing, domestic firms and workers are unlikely to develop the skills for advanced production on their own. But by leveraging its uniquely robust labor force and government incentives, China convinced Apple to teach its suppliers and workers production techniques that eventually built China’s incredible manufacturing ecosystem.

The Tide Turns Against Apple

During the first decade of Apple’s investment in China, Apple and Foxconn held the upper-hand over the Chinese government. Local government officials were desperate for industrial growth and the skills brought by foreign investment. A key reason for Foxconn’s success was CEO Terry Gou’s adept political skill. Gou pit local government officials against each other by dangling the carrot of big investments and extracted maximal government support from competing officials. But as Apple gradually concentrated its supply chains to China, the balance of power shifted to the Chinese Communist Party. With so much production localized in China, the CCP knew that Apple could only leave at a massive cost.

With Xi Jinping’s rise to power in 2012, the government began using its newfound leverage to turn the screws on Apple. The day after Xi’s official coronation as president, Chinese state media scolded Apple for its “incomparable arrogance” and made unsubstantiated claims that Apple discriminated against Chinese customers. Tim Cook initially denied these claims, but was eventually forced to bend the knee in Beijing to top Chinese officials after three weeks of relentless media attacks. The next year, Chinese officials passed a law limiting temporary worker employment, a move that would functionally destroy Apple’s manufacturing operations. Beijing had no interest in actually enforcing this law and fully expected Apple not to comply. The intention was for the law to act as a sword of Damocles, hanging over Apple to keep the tech company subservient to the CCP. With the permanent threat of having this law enforced, Apple would have to periodically kowtow to the same local government officials who had initially begged for investment.

The government used its regulatory assault to extract more and more concessions from Apple. After receiving a terrible corporate social responsibility score from China’s main regulatory agency, Apple executives flew to Beijing to do damage control and pledged to invest an enormous $275 billion in China. Apple expanded its investments beyond manufacturing and built R&D hubs that hired local staff and demonstrated its commitment to China. With a new cybersecurity law in 2017, Apple was forced to set up a joint venture with a Chinese government partner, building a data center that housed local user data. In 2022, Apple further showed its commitment to China by agreeing to work with Chinese state memory chip producer YMTC, a direct rebuke to Washington DC’s attempts at containing China’s semiconductor industry.

In addition to the government’s regulatory pressure, Apple began feeling the market pressures of China’s homegrown tech giants. In the past, Apple could safely ignore companies like Huawei because they made cheap low-end phones that didn’t directly compete with the iPhone. But by 2018, iPhone sales began to fall dramatically both in China and abroad due to competition from Huawei’s competitively priced, high-end Mate phone. The very supply chains and manufacturing know-how that Apple helped build are now aiding its competitors, who are rapidly taking their market share.

Thus, China has successfully transitioned from being dependent on foreign investment to lording over multinational companies and wielding its own domestic tech champions. These moves have been beneficial for its economy, but there are less admirable aspects of this development as well. Apple has, for instance, willingly become an arm of Beijing’s censorship regime. This period also coincided with a brutal crackdown on China’s nascent labor movement.

But for those of us who are tired of private capital calling the shots under neoliberalism, seeing a state forcibly direct capitalists towards national goals is refreshing. The key problem in China is that this state is neither democratic, nor representative of workers’ interests, despite its nominal commitment to Communism. The Apple story demonstrates that state control of capital is desirable, but it also points to the further need for democratic control of capital.

McGee focuses on Apple and Foxconn, but their stories are far from unique. The scale of FDI in China has been enormous and many firms have similarly brought growth-enhancing technology and investment to the People’s Republic. The great contribution of Apple in China is in telling the story of FDI’s contribution to China’s macroeconomic development through a scrupulously researched case study. The book’s lessons are invaluable to anyone who wants to see poor countries grow rich through industrialization.

But Apple in China’s lessons are applicable beyond the developing world as well. FDI can be beneficial to global North countries trying to become competitive in new emerging industries. Right now, green industrialization in the US is of paramount importance. Despite being the initial inventors of many core green technologies, the US is lagging in sectors like electric vehicles (EV) and batteries. These industries are not only essential for avoiding climate catastrophe, but also a potential source of good, blue-collar jobs.

America should take a page from China’s playbook and bring in investment from Chinese EV and battery champions like BYD. Just as China gained enormously from Apple’s mentorship, the US can learn from the global EV and battery leaders to develop competitive players beyond Tesla that can supercharge green industrialization. Given that Washington DC is filled with paranoid anti-China hawks, this is unlikely to happen anytime soon. But it’s not unimaginable to think that one day a book may be written on the US’s successful green industrialization called BYD in America.

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Daniel Cheng is a former Sociology PhD student and independent researcher on Chinese technology and political economy.

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