GoKawiilIn 2025, Patrick McGee published Apple in China: The Capture of the World’s Greatest Company, a deeply-reported look at the tech giant’s investment in — and growing reliance on — China.
The following excerpt, pulled from Chapter 9 of Apple in China, examines the company’s relationship with Foxconn, today the infamous builder of iPhones. Foxconn wasn’t always a formidable company, though. As McGee’s reporting illustrates, its exponential growth was thanks in large part to founder Terry Gou’s cultivation of a relationship with Apple. That relationship played a huge role in taking the company from a supply outlet for affordable components to, today, the world’s largest electronic manufacturer.
From the founding of Communist China in 1949 until 1978, mainland China was largely shut off from outsiders as it underwent multiple up-heavals. Mao might have been proficient as a military commander, but as a national leader he was paranoid and domineering, driven by a bastardized form of Marxism. Before Mao became head of state, the country had just undergone what the Chinese call their “century of humiliation,” a humbling period when the world’s top economy for countless generations suffered repeated military defeats by British, French, and Japanese forces. In centuries past, China had been a technological powerhouse that had invented gunpowder, the printing press, the compass, and paper. Mao wanted to catch up to industrialized countries, but his Great Leap Forward was a catastrophe, resulting in famine that killed 30 million to 45 million people. Mao’s next act was the Cultural Revolution, a whirlwind decade beginning in 1966 meant to purify Communism. Students organized as Red Guards were encouraged to attack “the four olds”: old customs, old culture, old habits, and old ways. By the time Mao died in 1976, China was poorer than sub-Saharan Africa.
In the final years of the 1970s, as Terry Gou was developing a real technical expertise with electronics, China’s economy entered a transformative phase initiated by Mao’s successor, Deng Xiaoping. As part of his “reform and opening up” policies, Deng established several special economic zones on the eastern coast—areas open to capitalist experimentation— which flourished by drawing in foreign investment and millions of rural workers from inland China. Entrepreneurs in Hong Kong, a British colony at the time, were the first to invest heavily, combining “Third World costs” with “First World caliber management, infrastructure, and market knowledge.”
The result was a remarkable boom unprecedented in world history: the Middle Kingdom, a country of more than a billion people, opened to the world, modernized at a frenetic pace, and grew some 10 percent a year for three decades. Hundreds of millions of people were lifted from poverty. As early as 1984, President Reagan was calling China “a so-called Communist country,” suggesting that as the country planted the seeds of economic reform, the flower of political reform would bloom. In 1980, Shenzhen was a fishing village of fewer than 70,000 people. But as a special economic zone just across the harbor from Hong Kong, Shenzhen and the area around it underwent a metamorphosis. “By the late 1980s, the entire 104-mile route from Hong Kong to Guangzhou was lined on both sides with factories,” according to the late Ezra Vogel, a Harvard scholar and the biographer of Deng Xiaoping. By 1990 the city of Shenzhen had a population of 1.7 million; in the early 2000s, it had grown to around 7 million. In just twenty-five years, Shenzhen’s population grew a hundredfold.
Quality was often horrendous by Western standards. A manufacturing design engineer at Apple recalls visiting Shenzhen-based suppliers in buildings that would fail a regulatory test on a mere glance, let alone a deep audit. “There weren’t elevators, so you’d walk the stairs,” this person says. “And I’d count the stairs. There might be twelve between the first and second story, then eighteen stairs to the next floor, then sixteen, and then twenty-four.” The stairs themselves were sometimes ten inches in height, sometimes seven, and so on. “My point is those buildings were handmade,” he says. Everything was done in a slapdash manner. Speed and scale were the only priorities. Apple engineers sent to Shenzhen describe the city as a rough place back then. When one engineer, six-four, tried walking out of the hotel to go for an evening stroll, the concierge stopped him and warned it was too dangerous. “I’m a big guy,” he said, dismissing their worries. “A dozen monkeys can kill a gorilla,” the concierge responded.
More than any area in China, the province of Guangdong transformed the fortunes of the world’s most populous country. Shenzhen in particular became a hub for electronics, earning it the nickname the Silicon Valley of Hardware. The journalist James Fallows, who lived in China in the late 2000s, has argued that Terry Gou ranks second only to Deng Xiaoping in transforming China into an industrial behemoth over the previous fifty years. That’s an extraordinary claim, but one backed up even by Gou’s rivals. “The reason Shenzhen is Shenzhen is Terry Gou,” says a high-ranking contract manufacturing executive. “Without his ambition, Shenzhen wouldn’t be the manufacturing power it is.”
Yet it’s worth highlighting how recently Foxconn developed this reputation. In 1999, it was a company with $1.8 billion of revenue, far smaller than Solectron, SCI, or Flextronics, its US rivals. By 2010, Fox-conn revenues were $98 billion, more than those of its five biggest competitors combined. And Foxconn’s extraordinary growth in those eleven years is the consequence of one client more than any other: Apple.
A Second iMac Supplier
The Apple-Foxconn relationship goes back to at least the early 1990s, but in a limited way. Foxconn had been championed by H. L. Cheung, a Singaporean Apple executive from 1981 to 1997, who would later join Foxconn. But Terry Gou’s company was mostly just a supplier of affordable components, like those connecting printed circuit boards to the housing. Apple engineers from the mid-1990s remember it as “the connector company.” But Foxconn quickly expanded its skill set, and approaching the year 2000, it was demonstrating its prowess as a jack-of-all-trades with a model different from the other Taiwanese companies expanding to the mainland.
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