Troubled union: Apple's China problem
How will Apple branch away from building products in China?

The smartest insight and analysis, from all perspectives, rounded up from around the web:
As China's COVID-lockdown protests spread, Apple is finally being forced to address its dependence on Beijing, said Tim Culpan in Bloomberg. Last week, fighting broke out at a massive factory complex nicknamed "iPhone City" in Zhengzhou, where footage of violent scenes showed "white-clad storm troopers in protective gear beating people, while hordes of workers fight back." For weeks, workers had been "confined to their dorms, starved of reliable information, denied adequate food, and fearing for their safety." The 200,000-person industrial metropolis is owned by Taiwan's Foxconn, but it has been making iPhones since 2007. The unrest there is "likely to result in a production shortfall of close to 6 million iPhone Pro units this year." The conflict might "have been avoided if Apple and its suppliers" had had "sufficient backup options." But China still produces roughly 95 percent of Apple's iPhones, despite "mounting evidence that such concentration is a major political and economic risk."
"It's no coincidence that Apple's rise from near bankruptcy in the 1990s has closely followed China's economic ascent," said Tripp Mickle in The New York Times. In many ways, Apple "pioneered a best-of-both-worlds business model: Products designed in California were assembled inexpensively in China and sold to the country's growing middle class." Over time, it has added more Chinese components to its products at lower prices. In recent years, however, those ties "have turned into a liability," and Washington is "watching carefully what goes into its products." Apple can "no longer afford to ignore its China problem," said Helen Raleigh in The Federalist. It's not just the moral hypocrisy of turning a blind eye to China's environmental and human rights issues. It's that Apple has tied its supply chain and profitability to "the mercy of one man — China's dictator for life, Xi Jinping."
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Apple has other options, said The Economist. In September, it "started making its new iPhone 14 in India," and shifted MacBook and AirPod production to Vietnam. "The need to spread operational risk" is one motive. Another is that "average wages in China have doubled in the past decade." India's sketchy infrastructure always held it back, but it has improved. "Apple also increasingly sees locals as potential customers" for its iPhones. Still, it's impossible to ignore that Apple "requires its own 'city' just to build iPhones," said Dan Gallagher in The Wall Street Journal. Bank of America analysts earlier this month wrote that it will take "many years" for Apple to achieve "meaningful diversification from China-based manufacturing."
Breaking up is hard to do, said Pete Sweeney in Reuters. Despite massive tariffs, foreign direct investment in China "rose 14 percent from January to October." Apple may be diversifying its supply chain, but other firms, such as Starbucks, are "increasing exposure." Politicians hoping to replicate China's supply chain ought to remember it "started building out the logistical infrastructure in the 1980s." It has taught "hundreds of millions of blue-collar workers to be seasoned manufacturing hands in sophisticated production systems." Replicating that elsewhere requires more than wishful thinking.
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
What does the Le Pen verdict mean for the future of French politics?
TODAY'S BIG QUESTION Convicted of embezzlement and slapped with a five year ban on running for public office, where does arch-conservative Marine Le Pen go from here — and will the movement she leads follow?
By Rafi Schwartz, The Week US Published
-
Discount stores were thriving. How did they stumble?
The Explainer Blame Walmart — and inflation
By Joel Mathis, The Week US Published
-
Kaja Kallas: the EU's new chief diplomat shaping the future of European defense
In the Spotlight Former Estonian Prime Minister's status as an uncompromising Russia hawk has gone from liability to strength
By David Faris Published
-
Pet cloning booms in China
Under The Radar As Chinese pet ownership surges, more people are paying to replicate their beloved dead cat or dog
By Chas Newkey-Burden, The Week UK Published
-
Trump's China tariffs start after Canada, Mexico pauses
Speed Read The president paused his tariffs on America's closest neighbors after speaking to their leaders, but his import tax on Chinese goods has taken effect
By Peter Weber, The Week US Published
-
Pros and cons of tariffs
Pros and Cons As Trump imposes tariffs on cars from overseas, here are the arguments for and against duties
By The Week UK Last updated
-
Chinese AI chatbot's rise slams US tech stocks
Speed Read The sudden popularity of a new AI chatbot from Chinese startup DeepSeek has sent U.S. tech stocks tumbling
By Peter Weber, The Week US Published
-
Why is China targeting Nvidia? (And why is the AI giant so important?)
Today's Big Question A new front in the 'chip war' with the US
By Joel Mathis, The Week US Published
-
Russia's currency crisis as sanctions bite
The Explainer Rouble plunges to lowest rate against dollar since invasion of Ukraine as economic toll finally begins to be felt
By Elliott Goat, The Week UK Published
-
Is this the end of the free trade era?
Today's Big Question Donald Trump's threat to impose crippling tariffs 'part of a broader turn towards protectionism in the West'
By Elliott Goat, The Week UK Published
-
A new stimulus might (or might not) jump-start China's economy
Talking Points Fears of social instability drive rate cuts
By Joel Mathis, The Week US Published