Apple In China, the Industrial Commons story and Lessons for America
Factories Alone Don’t Build iPhones... Commons Do - Industrial Policy #9
Apple is a unique company. It's one of the only companies that routinely re-invents the way its products are made—not just what they look like. That means buying specialized equipment, retraining teams, and building out new production processes at massive scale. And for the past 15ish years, all of that has happened in China.
No other Western company has invested more heavily in Chinese manufacturing than Apple—about $55 billion a year. And no company has helped train more Chinese workers: estimates put the number around 26 million. Apple doesn’t just manufacture in China. It helped build China’s industrial capacity.
Patrick McGee's book, Apple in China, paints the picture. It's a brilliant investigative work. It's *not* blessed by Apple, which raises its truthiness value to me. It's a complicated story and Patrick comes at it from many angles. I highly recommend it. Here’s Patrick’s X account.
Today I'm going to explore what the book says about the industrial commons in China, and lack there of elsewhere. The strengths of nurturing an industrial commons come through, and maybe we can find some lessons for America. Let's dive in.
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1. China’s Industrial Commons: Deep, Dense, and Responsive
Dense supplier networks:
“The Foxconn hubs in China are surrounded by hundreds of sub-suppliers all ready to compete for the next major order.”
“If Foxconn needs to install sonic welders... it can call up any number of firms to run the line and hire the labor.”
Ecosystem depth:
“What China offers... is not simply labor, but an entire ecosystem of processes developed over more than two decades.”
Localized manufacturing clusters:
Apple seeks “next-door” suppliers in India—“industrial clusters comprising operations from a diverse set of vendors”—but these clusters are not yet comparable to China’s.
Apple benefited from the proximity of suppliers, if they needed a part cut at a different length, the change request could be given and tooling reconfigured the same day. Much like America had in its industrial clusters as depicted in Freedom’s Forge.
Technological integration:
“Apple engineers were the general managers for this manufacturing supply base. But there wasn’t any way to do it, anywhere, but in China.”
“If you’re shipping a million of anything a day, there are only a handful of companies on the planet that can do it, and Apple found itself in that place with many technologies.”
2. The Manufacturing Feedback Loop
A manufacturing process is highly iterative before scaling, especially for Apple, where millions of iPhones would be produced before launch date. Once the right process and procedure is discovered, it’s scaled up. China’s industrial commons grew to support exactly this kind of quick scale up.
Iteration speed and agility:
“In China, if you’re building and it’s like, ‘Oh, shit, the screw is too short,’... you call someone and 1,000 are at the factory tomorrow. That was not a thing in Texas. It would take two months.”
There was a bunch of stuff that we at Apple were very used to doing, that just didn't work anymore. Like, we're very fond of making custom fastening hardware, custom screws—you know, little nuts and stuff like that. Well, in China, if you're building and it's like, "Oh, shit, the screw is too short," and like, "I need a longer one," you call someone on a cellphone and 1,000 are at the factory tomorrow. That was not a thing in Texas. It would take two months. It was absurd.
“All the engineers are so frustrated with us because we don’t move at ‘China speed.’” - a Flextronics worker in Texas, "described as an overweight fifty-year-old white guy."
US production experience WITHOUT a local Industrial Commons
Apple’s industrial commons was, and remains, in China and that caused countless issues when Cook placated Trump by building the Mac Pro in Texas.
“Mac Pros were indeed shipped from Texas... We flew people from China to get it fixed... People working for Foxconn.”
Even working with local [U.S.] supplier Texas Instruments was difficult, because the semiconductor maker was producing parts overseas, testing the parts overseas, and then reimporting them.
Grove's Innovation <-> Manufacturing connection
Grove’s lamentation: “Without scaling, we don’t just lose jobs—we lose our hold on new technologies. Losing the ability to scale will ultimately damage our capacity to innovate.”
"Just a few years earlier, Intel cofounder Andy Grove had warned that without manufacturing, America might lose the ability to innovate. Certainly that was the case for any number of hardware companies that sent blueprints off to Asia for someone else to turn into gleaming products. In Apple's case, Grove's worry was only partially true, but in revealing ways. Apple still knew how to manufacture; the problem was that it couldn't execute these plans without China."
I’ve mentioned Grove’s lamentation here, here, here and here.
3. The Limits of Rebuilding Elsewhere
India’s slower progress:
“India is taking on iPhone orders at one-tenth the rate China did a decade earlier.”
“Apple’s India operations are only in the early stages... and it’s likely to take a minimum of five to ten years.”
Troubled U.S. reshoring:
“Rather than representing some milestone, the [Texas] factory had been demonstrating just how difficult it was to make computers in America.”
“The worst project I ever worked on at Apple was bringing up Flextronics for the Mac Pro in Texas.”
Bonus: Risks & “Benefit” in China
Compliance costs:
“You don’t get to do business in China today without doing exactly what the Chinese government wants you to do. Period. No one is immune.”
Apple’s survival strategy:
"Politically, Cook's move was a masterstroke. Apple survived a trade war between the United States and China by gaining exemptions on tariffs from the Trump administration. And even though Washington kneecapped Huawei, Beijing didn't retaliate, because Cook had already made it clear just how much Apple was investing in the country, raising quality standards across its electronics supply chain."
Contrast with democratic systems (the “Benefit”):
Samsung operates at a disadvantage because South Korea is a democracy...
"In her view, Samsung operates at a considerable business disadvantage because South Korea is a democracy with NGOs, trade unions, and a vibrant press that, for instance, has interviewed grieving parents after some workers developed leukemia from working in factories. "Apple doesn't have any of that possible pressure," White says. "Apple actually has a government [China] that prevents all of those key stakeholders in society from writing an article or appearing on television. They can't even protest."
Summary: What This Says About the Industrial Commons
China’s industrial commons is a deeply integrated ecosystem of skills, tools, suppliers, and institutional knowledge. It thrives on:
Proximity-based collaboration
Speed of iteration
Technically trained labor at scale
A dense web of subcontractors and specialty firms
These aren’t things you can buy off the shelf. They grow out of decades of cumulative investment—public and private. That’s why Apple can’t just move its supply chain to Texas or Tamil Nadu. It’s not just about cost. It’s about capacity.
Lessons for America
If the U.S. wants to rebuild an industrial commons, here are a few takeaways:
Make it easy. Apple built its industrial base in China because it was easy. Foxconn knew how to goad local governments into supplying land *and* labor for their operations. Apple committed significant capital and resources to new production lines: training workers and developing new technologies. American firms and government alike need to make bold bets that justify new industrial investment.
Co-location matters. Speed, agility, and innovation all thrive on proximity. Rebuilding manufacturing means rebuilding _clusters_—of suppliers, tools, testers, and talent—not just isolated factories.
Technical training is infrastructure. 26 million trained workers didn’t appear overnight. China’s vocational and technical pipeline deserves as much credit as its subsidies. The U.S. must re-invest in technical education at scale.
Time horizons must be long. China’s commons took 20+ years to build. A few tax credits and ribbon-cuttings won’t cut it. Industrial strategy is generational work.
“China is not just standing still waiting for us to catch up,” said Morgan Bazilian, director of the Payne Institute at the Colorado School of Mines. “They are making investments on top of their already massive investments in all aspects of the critical-minerals supply chain.” - WSJ (May 2024)
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