iCapitalism

Patrick McGee’s Apple in China is meant to be an analysis of how one of the top for-profit companies in the world has become ensnared, captured, and controlled by the globe’s most powerful authoritarian government. The author’s fear is that the entanglement threatens not only Apple but America, democracy, and capitalist enterprise. But he also reveals what business success means and looks like in the twenty-first century and how the old battle lines, and indeed the distinctions, between capitalism and Communism aren’t relevant anymore. The story shows how business success no longer meets the idealized standards of fair play, independence, and autonomy — if it ever did.

Capitalism has a buoyant shape-shifting history, in various incarnations: colonial, industrial, post-industrial, entrepreneurial, state, crony, late-stage, surveillance, responsible, sustainable, and the like. Its adaptability reflects the solidity of the very idea of capitalism, the belief that it is grounded in almost Platonic laws, and that even if “the market” exists in various shapes and sizes, we still want to understand it as capitalism. Not yet assigned an adjective, the interdependence between Apple, the electronics manufacturer Foxconn, and China is a new combinatory market model. Innovation, co-creation, control, flexibility, manipulation, mutual investment, minimal environmental stewardship, and inexpensive human resources are its essential ingredients. Neither strictly capitalist nor Communist, the Apple-Foxconn-China model cuts through historically tenacious definitions and shows us the new rules of business success. It’s more than supply and demand, and the invisible hand is most definitely behind closed doors.

McGee, an expert Financial Times reporter — who studied religion at the University of Toronto and global diplomacy at SOAS University of London — is uniquely qualified to unveil the story of the birth, bumpy growth, and ascendancy of Apple Inc. Founded in 1976 as Apple Computer Company, it has given us an integrated, transformed personal ecosystem: desktops and laptops, listening devices and phones. Although it had experienced six straight quarters of revenue decline, with a 13 percent drop in share price, Apple recently posted a company record: $94 billion (U.S.) in quarterly global revenue. Around the world, 2.35 billion Apple devices are in active use, with 1.4 billion iPhone users. Their ubiquity, by any criteria, is a staggering accomplishment.

Apple has changed how we communicate, market, shop, work, socialize, share knowledge, and learn. Through radical innovation and sexy design, it has altered how we live our lives, playing a part in history’s most rapid, thorough, and peaceful revolution. Apple certainly did not achieve this breakthrough on its own. McGee begins with a strong nod toward the power of mutuality. “Apple wouldn’t be Apple today without China,” he concedes in his prologue. But, he argues, “China wouldn’t be China today without Apple.”

What’s clear from his meticulous research is that businesses do not succeed on their own — quite the contrary. Much like fungi-connected forests, companies flourish when they are interconnected. While McGee may want to hold on to the notion that enterprises thrive when independent and when other entities are, at best, transactional partners not to be trusted — or answered to — the relationship between Apple, Foxconn, and China demonstrates the need for interdependence.

What troubles McGee is Apple’s obeisance to Beijing’s authoritarian dictates, which threaten its competitiveness and undermine its autonomous decision making. The belief that economic growth — and read into that the growth of a viable middle class — will bend toward democracy and capitalism proves, according to McGee, not to be true. Hence his worry that China’s commands will undo the liberal order.

McGee describes in rich detail how Apple developed, almost failed, secured Chinese investment, and benefited from the design genius of Jony Ive and the production magic of Terry Gou and Foxconn. The special sauce can be reduced to collaboration, cost containment, and investment.

At the outset, the Apple co-founder Steve Jobs had a strong commitment to self-reliance and cost containment. His younger sister, Patty, assembled early circuit boards for a dollar each, even though “she wasn’t very good at it.” To produce greater quantities and better quality, assembly shifted to a network of women (yes, mostly newcomers) in Los Altos, California. Jobs and his colleagues gave no consideration to fair wages, social supports, or workplace safety — realities that were amplified in Foxconn’s spectacular scaling of production in a country with a seemingly unlimited supply of “cheap labor.” (The standard business language that McGee uses reflects the unstated truths of exploitative practices that minimize costs and the human factor. “Cheap labor”: what a way to refer to people.)

Scaling the distinctive designs of its gadgets required Apple to break down the strict barrier between product and manufacturing design, with designers and manufacturers in constant communication; solutions were the result of knowledge sharing and collaborative problem solving. This approach required Apple to invest in expertise and skills building, sending engineers and designers to work directly with production employees, and to grow a culture of capable talent. Apple encouraged knowledge sharing with suppliers, who went on to provide production for its competitors. Balancing Apple’s intellectual investment, China provided land, machinery, infrastructure, and “millions of migrant workers from the rural hinterlands [who] earned depressed wages and were treated as second-class citizens.” The whole set‑up meant control with lower costs and flexibility.

The arrangement, known as the “Apple squeeze,” was a departure from China’s typical joint venture approach to non-Chinese companies. Suppliers were encouraged to prioritize the acquisition of Apple’s know‑how over earning higher profits. For many years, such interdependence was a mutually beneficial way to build up business, skilled workers, and consumers — all necessary for a consumption-driven economy. But, as in every marketplace, there were players eager to game the system. When Apple limited the number of iPhones that individuals could purchase, for example, scalpers figured out how to buy more. Cheaters produced fakes, and when owners took these knock-offs to Apple Stores for repairs, Apple declined to service them because the products had no legal serial numbers. The Chinese government interpreted the refusal as disrespect, impairing the interconnected relationship.

The advantageous sharing and investment were, from Apple’s perspective, a win‑win. But McGee argues that “win‑win” in China means “China wins twice”: that the regime was always out to control Apple. From these pages, one could just as easily deduce that Apple was equally exploitative and thought it could control its conditions. If there is one reason for the company’s success in China, it has been the inexpensive, unsupported labour. China invested in improving the knowledge, skills, and economic power of its people, while Apple offshored production to avoid American wages and scaled with acceptable profit margins. Who is the more successful exploiter?

Just as Apple’s climb has not been easy or linear, so McGee’s methodical history runs into some odd bumps. Glaringly absent is any discussion of environmentally and socially sustainable sourcing and production, for instance, which would paint a more balanced picture of who is benefiting at the expense of whom. There are also two passages about female executives that, I’d argue, illuminate neither the importance of their roles nor the value of their characters. Jacky Haynes, who pioneered monthly performance reports, is described as “good with numbers and in an alternate life might have been a sports analyst.” Two pages later, she seems to disappear from the company and the book, though McGee does acknowledge that she died in 2022. Isabel Mahe, described as a “figurehead with no major responsibilities,” is discussed and then also disappears. These stories feel downsized, particularly compared with the much richer ones of the noteworthy male executives.

McGee concludes with the five reasons he is concerned about the future of Apple: competitors, backlash if Apple leaves China, revenues that have become dominated by services rather than products, artificial intelligence, and Donald Trump’s tariffs. All of these may be legitimate concerns, but they are not the result of a battle between capitalist production and Communist control. And none are a function of China’s authoritarian demands. Any large company operating in today’s competitive marketplace faces most of these concerns.

Given McGee’s detailed story of Apple and Foxconn’s expansion, it’s not clear that China is what’s threatening the company and liberal democracy. McGee may find it worrisome that a nation-state acts like a competitive corporation by investing in talent and production, leveraging its economic power, making demands, and gaming the system. (China is certainly not the only one.) He may also worry that the values of profit-driven Apple may be replaced by the values of a Communist state — although he spends no time describing the values of either. But in what world do corporations not have to navigate political systems in the same way they have to negotiate and build alliances with other corporations? Business is bargaining and making trade‑offs and sometimes yielding. This is how interests are aligned to deliver mutually advantageous outcomes. It is not about fairness or justness.

The Apple-Foxconn-China model is engineered interdependence. It demands quality control, low costs, exploitable but teachable labour, and investment from suppliers. Apple offered knowledge sharing and training to create workers who could deliver quality products. Beijing demanded knowledge sharing, control, and respectful obedience, while providing significant human and financial investment. Together Apple, Foxconn, and China have created an integrated, interdependent ecosystem of sophisticated and scaled skilled production — while middle-class consumption has fuelled economic growth. They have built massive gains for one another — proof that business is not a zero-sum game.

Capitalism has enjoyed a long history of critique and reinvention. An expansive array of literature exposes the corruptions, deceptions, and failures of capitalist enterprise; the erosion of corporate citizenship worries many observers; there are serious questions about what corporations and states ought to be responsible for; the evidence of exploitation and destruction is overwhelming, amid a marketplace where AI is rapidly replacing humans. The problems of capitalism may not be easily solved, but that is why the research McGee provides is so very important, even if some of his analysis is debatable. If we are to create a model of economic and social enterprise where value and values are mutually constitutive, we first need to understand how corporations work, how they create and scale, how they align divergent interests, and how they form alliances with other entities and states.

Apple in China reveals the current reality of business success. It requires certain key ingredients regardless of political conditions: low costs, exploitable labour, maximum control, ecosystems built on co-creation and collaboration — and, where possible, getting your partners to ante up the major financial investment. McGee may want to hold on to a capitalism where individualistic corporate behaviour escapes responsibility to partners, workers, and jurisdictions, but his research makes it clear what successful competition looks like now. It is no longer about capitalism or Communism. Hail the Apple-Foxconn-China model, in which all players, by and large, are on Team Capital.