Apple Inc. transformed China into a global powerhouse, a new book says, but in doing so, the world's largest technology company is now effectively a captive of China.
Patrick McGee, author of Apple in China: The Capture of the World's Greatest Company, says Apple has poured more than $55 billion per year into China since 2015, training 28 million workers (more than the entire workforce of California) since 2008 in a vast and historic transfer of knowledge and technology.
China created a massive workforce out of their 1.4 billion people. That workforce made it possible to build 230 million iPhones per year, including 155 million for Americans.
McGee says the least understood story of the century is how China created a floating workforce of 300 to 500 million factory workers. Larger than the entire population of the U.S., the floating workforce is made up of people from rural areas who temporarily go to Chinese cities, where they are housed and trained. They labor in factories for 12-14 hours a day. During a period of months, the entire workforce turns over and returns to the countryside. They are then replaced by a new workforce.
"The iPhone literally can't be built in America or anywhere else," McGee says. Although some iPhones are labeled 'Made in India,' this is little more than a tariff dodge. The iPhone wouldn't exist without China, McGee says.
Unfortunately, as other corporations have discovered, trade with China is "a one-way street," McGee says. Once a company does business in China, the Chinese learn the technology, replicate it, and then oust the company from the country. Apple has avoided this fate so far, but it literally can't move its operations, even if it wanted to do so.
"It is difficult to overstate how vulnerable Apple is," McGee told The Free Press's podcast Honestly. McGee also says the U.S. is extremely vulnerable. "If China would cut off exports for a month, there would be chaos in the streets. Our dependency could be crazily exposed."
