How Apple Accidentally Built China's Tech Superpower and Can't Escape with Patrick McGee
Fresh out of the studio, Patrick McGee, San Francisco correspondent for the Financial Times and author of "Apple in China: The Capture of the World's Greatest Company" joined us in a conversation to unravel the extraordinary story of how the world's most valuable company became inextricably entangled with China. Patrick shared the backstory behind Apple's century-defining Faustian bargain and progressed through how he uncovered the untold story of Asia's contract manufacturing history through Apple's supply chain point of view. He unpacks the famous "Apple Squeeze" philosophy of paying suppliers minimally while providing invaluable training, and shares fascinating stories from characters like the ruthless negotiator Tony Blevins to the tragic figure of Jackie Haynes. Throughout the conversation, Patrick demonstrates how Apple inadvertently created China's contract manufacturing capabilities and explains why the company's current attempts to diversify to India face insurmountable cultural and political barriers. Last but not least, he argues that Apple's very success in China has become its greatest vulnerability, trapped in a relationship where going too fast risks Beijing's ire, while going too slow means remaining stuck in an increasingly untenable position.
"I quote a study that looked at 84 countries in terms of internal migration and India was dead last. That's not a knock against the culture. It's just not part of the culture that young women in particular leave home at 17, go to the other side of the country and work in a factory. You don't have that. So what's the phrase: Culture eats strategy for breakfast. Apple might have a plan, but like good luck upending 5,000 years of Indian culture to make it happen." - Patrick McGee, author of "Apple in China"
Profile: Patrick McGee, Author of "Apple in China" and San Francisco correspondent for the Financial Times (FT Profile).
Here is the edited transcript of our conversation:
Bernard Leong: Welcome to Analyse Asia, the premier podcast dedicated to dissecting the pulse of business, technology and media in Asia. I'm Bernard Leong, and today we are exploring how Apple, once the world's most valuable company, becomes so intertwined with China, that the decoupling between them is almost impossible. With me today is Patrick McGee, San Francisco correspondent for the Financial Times and author of the newly released book "Apple in China: The Capture of the World's Greatest Company," spanning about 448 pages. Based on 200 interviews he unraveled Apple's century-defining Faustian bargain, concentrating 90% of its production in China, investing a staggering $275 billion, equivalent to the Marshall Plan and training millions, effectively transferring Apple's technological DNA into the heart of China's industrial ascent. In doing so, he demonstrates that the story of Apple's dependence on China's manufacturing and supply chain is the history of contract manufacturing of East Asia's countries told through Apple's lens. I finished the book over my work trip in Philippines and I have to say it was engaging to the point that I was glued to the book over three hours on the plane. So Patrick, welcome to the show.
Patrick McGee: Thanks, Bernard. Great introduction. Thank you.
Bernard Leong: Like all stories, I always start off with my guest's origin story. So how do you start your career?
Patrick McGee: Well, I studied religion at university and I spent four years telling people that no, I was not going to be a priest. I was an atheist studying religion. Really the anthropology, the psychology of religion. I mean, if you're atheist, the study of religion is even more fascinating because if you don't think anything exists, then why does it have such a force over human action, human history and everything else.
So it's a fascinating degree and I got really involved in it for my four years in Toronto. I'm Canadian. The trouble is nobody cares about your study of religion. No job. No law firm or any corporate entity is looking for students who've studied religion for four years.
So it's great for just general education and the humanities. It's good for cocktail parties. It is not good for job prospects. So really what I fell into by happenstance was a job at a Canadian magazine just because I liked reading, writing, and thinking. So I fell into it in that way.
Then I happened to find myself in Washington with a job writing about economics, macroeconomics a year before the collapse of Lehman Brothers. So that just forced me to become a financial journalist. Then when the Financial Times hired me to live in Hong Kong, that was my introduction to Asia and China in particular.
I'd been there before, but in terms of a career and then I spent three years in Germany covering supply chains in the automotive industry. A lot of stories about the Volkswagen scandal, and then I covered Apple for four years out of California. So if you do the Steve Jobsian thing of connecting the dots backwards, you get basically China supply chains and Apple.
That I think is the quickest origin story of my book.
Bernard Leong: So I just only have one question before I get to the main subject of the day because there's a lot to dive in. So from your career journey, what are the lessons you can share with my audience?
Patrick McGee: I suppose I just feel like I had a lot of lateral moves in my career and a lot of things that I didn't love about the earliest jobs I had. I mean, I was a municipal bond reporter for two or three years. That's kind of boring in a certain sense, but anything is interesting if you give it enough attention.
I mean, it's like a $4 trillion market. It has to do with how cities fund themselves in this tax exempt bond market. I think you just have to have a little bit of faith. Remember I'm an atheist here, but have a little bit of faith that whatever you're learning is gonna sum out to add up to a unique idiosyncratic worldview.
Because the more you follow some path in your own way, the more diverse your own worldview becomes. So if you're just embracing each stage, then I think you end up with something that's unique in the long run. So in other words, you can often think, well what, is there any point in me reading the same books as everybody else?
But if you have like three or four different interests that are wildly different and you're reading books about those or doing some travel and experiencing that, you're probably getting way off the beaten path in ways that you don't even know. So I don't know. So long as you're putting effort into what makes today interesting or today fulfilling, I think the long term kind of takes care of itself.
Bernard Leong: So I want to talk to the main subject of the day about your book "Apple in China." I want to start, the structure of the book begins on the date of March 15th, 2013, a day after President Xi Jinping is inaugurated as China's new president. I guess what happened on that day to Apple? Why is it a defining moment for Apple's history in China?
Patrick McGee: When I worked out the contours of the story during the book pitch, it was always clear that this was the day that was going to open the book. It's because it's the beginning of what I call the political awakening. So it's part five of the book, but it's also in the prologue.
So it's effectively like Xi Jinping has this new sheriff in town impact on Apple immediately. So one day after he becomes president and we're really talking like 12 hours after his first press release, Apple employees in Shanghai are confronted by a whole bunch of media including Western media like CNN, but also a bunch of Chinese media who have all been briefed by MOFCOM [Ministry of Commerce, People's Republic of China] as to there's going to be a big program tonight, criticizing Apple for its warranty differences. So this thing is called CCTV's Consumer Day, and it's every March 15th of every year. It goes back to 1991, really the days of Deng Xiaoping. The idea is that companies are called out for not living up to the socialist ethos of China for most of the nineties, I think all of the nineties actually. It was local companies, but you began to have western companies come under criticism in the early two thousands. 2012, it was McDonald's. In 2013, it's the world's most valuable company. It's Apple. This is a time when Tim Cook is only pretty new to being CEO. Steve Jobs has passed away maybe 18 months before.
Apple doesn't really know what it's dealing with. They are at the time, the most wildly successful producer, maybe you would say, manufacturer in China. They're also the most successful retail company that's not Chinese operating in the country. Yet nobody senior from Apple lives in the country.
They really don't understand the culture, they really don't understand the politics. This is the first "oh shit" moment that they have. It's really interesting that it's so quickly after Xi Jinping comes into power because he is taking China in a very different direction. Arguably the first entity to really understand that, or at least that had the opportunity to understand it, is Apple.
So I could go on, but I mean really it's the origin story of why Apple has to begin to understand how to speak the local language.
Bernard Leong: Before we get to this part five, I want to walk back all the way to the beginning of the book. I think what I appreciate in reading the book is that you tell the story of Apple right from the beginning of the history of their supply chain. Going back to the moment when Steve Jobs returned to Apple in 1997, Apple's manufacturing supply chain only spanned across few countries where I live with Singapore, Japan, and Taiwan. What was the world like for Apple before going to China in supply chain?
Patrick McGee: The thing, so I hate that you're calling it supply chain just because I feel like we're losing the reader.
Bernard Leong: No, no, no, no, no. It's interesting because the way I read the book was that it's like the history of Asia's manufacturing told through Apple's lens, which I thought is a very interesting perspective from my point, which just as I think Chris Miller's book "Chip War" was about this history of semiconductor from Asia's point of view.
Patrick McGee: No, absolutely. If you don't know, Chris Miller and I share an agent, a publisher and an editor. He was the person who said, you should turn this into a book. I took that very seriously. We've never met, and yet I would still consider him a mentor. I mean, "Chip War" is a fantastic book, so if listeners haven't listened to it or read it, they absolutely should.
Bernard Leong: He [Chris Miller] was on the show, by the way, just to let you know.
Patrick McGee: I know. But that doesn't mean everyone's read it. Fantastic book. The thing that people need to remember is that Apple manufactured its own products from the founding of the two Steves in a garage in 1976. Really up until around 2003, when they closed their factories in California, basically closed their factory in Ireland and more or less closed their factory in Singapore.
So what that means is that given like Steve Wozniak's genius of being able to disassemble a computer, improve it and then reassemble it, and Steve Jobs' visionary appeal and marketing prowess. I mean, that is the origins of the company. Manufacturing is baked into the DNA of Apple.
The companies that are founded 10 years later that are replicating what IBM has done in the PC do not have that same ethos. Because what's happened in that interim period is that the IBM PC has come out and then been cloned and famously, except that it's really not all that well known, but this is like the birth of contract manufacturing in the West.
I mean, this is Foxconn technically exists, but you have western companies like SCI, Jabil Electronics, Celestica. There's this interesting thing that happens where everybody's using Windows, everybody's using Intel and the way that you get market share is just through boring stuff about cutting cost and cutting margin.
So it's really a boring war over distribution, logistics and manufacturing efficiencies. Apple isn't really part of this battle. They're certainly not leading it. They're trying to do everything themselves at a time when IBM and everyone else is beginning to outsource first the manufacturing of the circuit board, but then the assembly of the entire computer.
As those companies go to war with each other for market share, because it's all low margin, so it's all about high volume, they're the ones who shift to Asia. This is really like the rise of Taiwan as an electronics powerhouse. Same with Japan. So Apple is nearly bankrupt as a result of not playing this game by 1996.
So they have to sell their own facility in Colorado in spring 1996. They're literally days away from bankruptcy. I had to tell this story because you need to understand that DNA of Apple is manufacturing. So when they go into manufacturing through outsourcers, they are orchestrating the process in a level of maniacal detail and without any tolerance for defects in a way that none of the other companies are.
Because most of these other companies never had manufacturing as part of their DNA. So I don't even think outsourcing is the right term because Apple takes such control of its supply chain, really down four tiers, that they're not just handing over blueprints and saying, here's our design. Build this for us. Let us know when it's done. They are sending plane loads of engineers to those factories and today, hundreds of factories in China to get it all done. This is the wild story, the missing topography of Apple that I don't think anybody really understands.
Bernard Leong: That comes to the point: we are often told about the successful partnership between Steve Jobs and Jonny Ive, who lead the industrial design or ID team. The story that is not told is how that design is being translated into production. I think in the early days there was this point where the new iMac was un-manufacturable. There is something to learn from that episode. What did Apple do to correct itself that issue later on because it was very difficult to manufacture? So they had a lot of conflict between the industrial design team and the production team.
Patrick McGee: I mean this is the secret sauce of Apple, which is that they have this pyramid structure where ID sits at the top, that's industrial design. So Jonny Ive's team, only about two dozen people are putting together like the look form factor and feel of product. So why is the iMac translucent and Bondi blue?
It's because a bunch of guys on ID all thought that was gonna be the best way to do it. They send it over the fence, if you will, throw it over the fence to PD or product design, which is another level of genius, but it's a different team and they have to make sure that we can actually fit in the electronics and the circuit board and everything like that.
It really is worth knowing those guys are geniuses as well. It's just a different level of genius. They throw it over the fence to manufacturing design. This is an instrumental group of people at Apple that has given, has honestly no ink has been shared on them before.
So MD, way back in the time. By the way, they're called supply-based engineers. MD comes later to give them like the congruence of like medical doctor is actually part of it because they're feeling under-appreciated. So they're given this two letter abbreviation just like ID and PD.
That's much later. But nevertheless, the position itself already exists. These are the people who go, as I said, by the plane load to factories at first in places like LG in Gumi, Korea, to really teach all of the manufacturing partners how to give a shit, to quote Steve Jobs.
There's a Chinese phrase, I don't speak Mandarin, but it's just about good enough. Apple is never about good enough. They care about the back of computer. They care about the design of the inside of the computer. This isn't intuitive. This needed to be taught. So Jonny Ive and team were really redefining the aesthetics of at first desktop computers, but then later handheld items like the iPod, and they needed partners that would live up to Apple's quality.
So what's really crazy is that I think anyone who's read the full book gets to an understanding that actually what I'm saying is kind of commonsensical, even though if you hear a 92-second soundbite of me talking, it can sound like I'm totally unhinged because the numbers are just unfathomable and we'll get to that.
But the reason why it's commonsensical is because there are Hollywood movies about Steve Jobs going on a tirade and lifting up all of the people around him in terms of what they're capable of. Yet we've somehow missed that if you take that culture, if you take that mentality and then you build 230 million iPhones a year someplace else, of course that culture has to be transplanted into another country.
So unless you think that China had that culture in the late nineties and early two thousands, and obviously it didn't, then of course Apple had this massive impact because there's literally 1,700 facilities in the Apple supply chain. You needed to inculcate that culture into all of them to make things at all, and especially to make things in the volumes that they've created. So the book is about China, but it is really just a manufacturing-led history of Apple, which sounds boring until you realize that it's a character-driven narrative with all kinds of fascinating people.
Bernard Leong: That also explains why a lot of people in Asia are reading that book because it really tells a very important story of what happened in the last few decades that leads to the rise of the region, but...
Patrick McGee: Can I just jump in just to say one thing is that sometimes the perception of the book probably, because it has a dragon eating an apple on the cover, is that it's anti-China and it's like, if anything I'm saying Apple doesn't give China enough credit. China is absolutely paramount to Apple's success.
Bernard Leong: I totally agree with you on that. I think that the caricature of the book was wrongly interpreted. It's actually telling you a lot. Why is it so difficult to decouple from China? Not just because Apple is innovative, but the Chinese are also innovative at the same time with the manufacturing process.
One interesting part of this puzzle is Terry Gou, the founder of Foxconn, otherwise known as Uncle Terry in the book, and then there is this very famous phone call to an important executive where he says, "I can fix this." Who is this important executive and what it meant for Foxconn to become an important contract manufacturer for Apple moving forward, specifically in the Apple development cycle, which is the pyramid structure you talk about with Jonny Ive from the top.
Patrick McGee: Okay. So to give 15 seconds of context here, LG is so successful building the translucent iMac out of Korea, that Apple basically decides to take themselves out of the equation and put all final assembly for the product into LG. This is the first Apple product to be given to an outsourcer like this.
But Apple has, as we talked about earlier, operations in three continents. So basically asks LG to do the same thing. So LG sets up operations in Mexico and in Wales. I feel like, I don't care how much you think you know about Apple. Like you don't know the details about what happens in Wales and Mexico.
This has just never been written about before and short. Long story short, it's a disaster. It's a great strategy. It doesn't work out at all. For whatever reason, the LG executives just are not able to make this strategy work. Terry Gou calls up Tim Cook, senior vice president of operations and says "I can fix this. Give me a chance."
The relationship there really matters. So Tim Cook is mostly known as an IBM executive, but at the time he was at Compaq and Compaq in the late nineties was the king of the clones, most successful PC company on the planet at the time. So Foxconn and Compaq actually had this relationship.
So Terry Gou and Tim Cook already know each other. Why Tim Cook would leave the most successful company for Apple, which was basically on the verge of bankruptcy, is a real mystery. I think Terry Gou gets intrigued by that, because Tim Cook, I would describe as competence incarnate.
The idea that he's gonna go to this fledgling company to make a difference is intriguing to him. So he senses opportunity. Terry Gou really understands more than anybody else that the value of working with Apple is that they're doing these incredibly different designs. They're not big in volumes.
You're certainly not making much money from them. They will really negotiate the hell with you to get the best deal for them and not for you, and yet to understand their designs and to fulfil their orders, they will train your entire workforce by having America's best engineers, right? Apple's engineers come train you. So Terry Gou is brilliant at this. I have this funny anecdote from Tony Fadell, for instance, where the Apple engineers would show up one day after training someone for three months or whatever, and they would find that they don't know anybody in the room.
It's because Terry Gou had taken all the engineers who had done like a semester of training with Apple and then just moved them onto the Dell line, moved them onto the Compaq line where they can use those skills and actually make money. He just put a whole bunch of new students in front of Apple as if a new semester had started and Apple just had to put up with him, be like, well, train these people well.
So, no, absolutely. I mean, look, Terry Gou is the equivalent of Henry Ford, a century ago in America. It's hard to overstate his importance on turning Shenzhen from a series of fishing villages into the megapolis it is today. But the thing that I'm emphasizing is that Apple has been Foxconn's biggest client since 2000.
Bernard Leong: It is Taiwanese.
Patrick McGee: It's Taiwanese and the fact that Taiwanese and the role of the Taishang, the Taiwanese entrepreneur is building up mainland China is absolutely instrumental to the rise of China and absolutely instrumental to the rise of Apple.
Bernard Leong: The template which Apple will eventually use in China is to send their teams in Cupertino to China, where they'll share the knowledge on manufacturing with the local manufacturers and even co-creating the techniques with the supply chain. I think Foxconn's education by Apple is probably the most important stepping stone that's eventually brought to China.
Can you talk about the process in how Foxconn distinguishes itself against the other contract manufacturers in the ASEAN markets, for example, the Korean and the Japanese. I think that is the real difference when that got moved to China.
Patrick McGee: The OEM [Original Equipment Manufacturer] versus ODM [Original Design Manufacturer] distinction.
Bernard Leong: That's right.
Patrick McGee: I don't wanna lose your audience because I think it's a little bit wonky, but...
Bernard Leong: My audience is very wonky.
Patrick McGee: All right. If you need to fast forward, go through it. Okay. So in the late 1990s, really what the Taiwanese were trying to do, companies like Asus, the predecessor organization of Pegatron, companies like Quanta, they're all trying to be ODMs original design manufacturers.
The reason why is that it's really low value to just do assembly. But if you can tell a Western corporation, look, we're actually gonna take over your design and take over your R&D, we will do that stuff. Then you can basically pick a computer out of a catalog and we'll just badge it with your brand name.
That's higher margin for them. They can get paid more for that. Terry Gou does something different, which is that he only is interested in being an OEM original equipment manufacturer, which means that he's never gonna compete with you. He's just gonna take your designs and move heaven and earth to get it done.
But the significance of this is basically the politics. Because in order to be a successful OEM, you're not just wanting to do the final assembly. You wanna do all the adjacent tasks. You wanna be as vertically integrated as possible. You want to do the metal stamping, the plastic injection molding, all the tooling you wanna set up, the production line, et cetera.
Right? So none of that's R&D. None of that's the high end engineering and yet it's instrumental for what Apple needs. In order to do that well, you need labor intensity. You need a lot of people, which means you need a lot of space. You need a lot of real estate. So Terry Gou isn't just brilliant at manufacturing, he's brilliant at parlaying Apple's orders into political deals with local officials to get the land and to get the migrant labor.
He begins in the 1980s building dormitories for the migrant laborers to have a place to stay. Because you have to understand like the people that are working in Shenzhen aren't locals to Shenzhen, right? They are coming from the west, not really as part of a political program under Deng Xiaoping.
It's really just something like, they're like fleeing to go sense opportunity. The communist power almost has to put up with this in a certain way. I mean, that probably needs to be more history written on this subject. So it's kind of fascinating. Apple is just able to take advantage of the situation better than anybody else.
So they are late to China. I mean, that's worth knowing. In the same way that they are late to MP3 players or they are late to smartphones, but they do it better than everybody else. They are late to outsourcing. They're late to China, but they do better than everybody else. So the way that I explain it is that someone like Dell or HP, they see China for its scale and for its low cost, right?
A way of saying they see it for its margins or maybe even it's just lower customer prices. Apple sees the same dynamics and understands that they've got unconstrained design potential that no matter what Jonny Ive comes up with, if you've got people earning less than 50 cents an hour, hardworking people that will work 12 hours a day in factories the size of football fields with world class machinery purchased by the Chinese government because Foxconn's Terry Gou is a genius in getting all that stuff.
Then you can build anything and that's really what gives birth to the iPod and the iPhone.
Bernard Leong: So Foxconn has managed to use Shenzhen in China as a base and eventually scale the manufacturing to what we call China speed: an ability to get things done in China at a rapid pace beyond the comprehension of Western visitors. In fact, now China speed is almost everything, including AI as well. How did Apple eventually transport all that manufacturing into China and created that dependency for themselves?
Patrick McGee: Well, okay, so the standard narrative would tell you that Tim Cook comes in 1998. He moves everything and closes Apple factories. I think this is basically dead wrong. He is not the architect of the move to China, and it's not that somebody else is the architect. There is no architect. You have to understand that the contract manufacturers and the assemblers are in fierce competition with each other, and they are the ones who are moving to Asia.
Then once they're in Asia, they are the ones moving to mainland China, right? In other words, in order to win orders, in order to win volume and in order to do so at profitable levels, they are the ones who quote unquote discover China, especially after China has entered the World Trade Organization and has these bonded zones, right?
These tax exempt areas where you can import things without tariffs and you can export things without duties and such. So it's state directed from the get go because to get migrant laborers to your factories, it's often the state that's literally going out to these villages in state sponsored buses and then bringing people to the factories.
Tim Cook's not the architect, it's just that everything in China begins to look more efficient, more price competitive and so forth. So if you have, as Apple did, I mean in 2000, Apple is building products in Singapore, California, Wales, Czech Republic, Korea, like two other places.
But China is just beginning to look like the place for every single product. So there's no grand strategy. It's just that like everything you're building, whether it's a laptop or the iPod or a desktop. Every decision is just leading you to China. So what's really interesting here is I think you have this dynamic where the Western company thinks, wow, we're powerful suppliers are doing anything to win these orders.
I think it's 20/20 hindsight that it's like, no, we're witnessing the emergence of a superpower, the siren call of an emerging superpower luring in these companies because they understand from the get go and they've got joint venture models going back to the 1980s. That if western companies are here, if they're operating here, there is just an implicit transfer of knowledge where our workers learn these skills and then we can thrive on our own.
So that's the story of many a company, many an industry high speed rail or what have you in China. That's the story over a longer period with Apple, I mean Apple's like the king of all companies that has ever quote unquote like conquered the Chinese market but then found itself in competition with the very suppliers that it built up.
Bernard Leong: So one colourful character from this story that you're telling is this guy called Tony Blevins and how he negotiates. The other thing that I also like about the book is what I call the phenomenal Apple squeeze on Apple's suppliers. With this mantra, "we won't pay you much, but the experience will be invaluable."
Can you talk about Tony's negotiating style and a famous Apple squeeze? I think what is really funny is the irony on how the Chinese government used it back on Apple later in the relationship.
Patrick McGee: Okay. Remind me of the second half of that question in a minute. So, it's funny, I haven't been asked about Tony Blevins in an interview and he's just an amazing character. I mean, he's someone who grows up in a really impoverished zip code in America in North Carolina. He's just clearly very talented.
He's very smart, but he is not book smart. I don't know that he reads much at all, but he's got real street smarts and his father has a side hustle selling used cars. He and his brother have like a competition every month when they're teenagers. The competition is who can sell the shittiest car for the most money, right?
So he has the mentality of, I won't have a penny wasted in negotiation. He's just absolutely ruthless. He would argue as he does, and you could find this on YouTube for instance, that you either had to be ruthless or you weren't in the game at all. I mean, I quote somebody who says, looking back 20 years, the only companies that could negotiate with Apple were themselves assholes.
If they weren't assholes, they don't exist anymore. I mean, that's the nature of the game. So he embodies this temperament. My opening scene with him is that he goes to these lawyers at Inventec when they're wanting to build the first iPod, which is built in Taiwan, not China, as most people think.
He basically says, "Here's the contract. We don't have time for you to read the contract. You just need to sign it now. We'll give you the deal."
Of course, they're aghast, they're thinking, multiple lawyers need to read the contract and need to go through it with a fine tooth comb and all that. It gets them to sign it without even doing it. I only use that as one anecdote when I was trying to fact check that I talked to somebody that was pretty senior and they were like, oh my God, Tony did that all the time. The kind of power he had. I mean, he just knew how hungry the contract manufacturers were for Apple orders.
So that ends up being instrumental there to their success. The Apple squeeze is my coinage, and I'm not trying to boast about it. I'm trying distinguish it from some reviewers who think that it's the term used within Cupertino and it's not, or if it is, it's quite the coincidence because I made it that myself. The Apple squeeze is basically like, well, to give it a bit of context, in 2013 when Xi Jinping, as we discussed, goes after Apple, he goes after them because it looks like this exploitative company. Because the more a company like Foxconn works with Apple, the lower their margins are.
I mean, Apple makes less money in pure dollars than Foxconn for the first four years of their partnership from 2000 to 2003. Right. Foxconn makes more money and has higher margin. I mean, that's incredible. But by 2012, Foxconn's margins have collapsed by about two thirds, Apple's have gone up by 25 times from 1% to 25%.
So there's all kinds of reasons why you would look at that and say, Apple's an exploitative power. They're not in China for China, they don't seem to be helping indigenous innovation. Apple flips this on its head by explaining what I call the Apple squeeze to Chinese officials in May, 2016, when Tim Cook himself goes to Zhongnanhai and speaks to the high powers of the CCP leadership at their citadel of communist power.
The Apple squeeze is my coinage for how Apple would say to their suppliers. Look, you are not gonna make a lot of money from us. You might even lose money at times. You're gonna earn 1%. Maybe if things are really efficient, you'll earn 2%, but we are gonna train the hell out of your whole team.
What you do with those skills afterwards is up to you. So it's kind of this amazing thing where they're having to tell Chinese officials, you have no idea what impact we're having on your country, and the numbers they come up with themselves internally are insane. So the numbers that I keep using on the speaker circuit here is that by Apple's own estimate, they have trained 28 million people, so greater than the labor force of California.
What's the population of Singapore?
Bernard Leong: Well, five million.
Patrick McGee: Okay, so way bigger than the entire population of Singapore. I mean, just consider like if everyone in Singapore had been trained by Apple, like that would be significant. It's six times that.
Bernard Leong: I would rather they have that actually.
Patrick McGee: Okay. But it's really hard to get your mind about that. Then Apple does its own internal study and realizes that they're investing $55 billion a year into Chinese factories, which is such a large figure that I couldn't find any corporate equivalent. So I had to go to government efforts. The comparisons I use, I think I use four. But the two that people like are, I wanted to compare it to the Marshall Plan just because it seemed like a nation building effort in terms of the impact they were having.
That's what I was getting. Like anecdotally, I didn't think the numbers would actually match. So when I went to go look at how much the Marshall Plan was and converted it to 2015 dollars, I expected it to be quite a lot, quite a bit larger than what Apple was spending in China. In fact, Apple was spending double the annual expenditure of the Marshall Plan.
If readers don't know, Marshall Plan is like the American led effort to help revitalize 16 countries after World War II. For a single corporation to be spending double that amount in a single country with the ruthless efficiencies that Apple has and in the targeted area of high tech electronics, which is Xi Jinping's most desirable thing for China to be good at.
I mean, that's just incredible and that's where it's very much like chip war in the same way that Chris Miller tells the story of an industry. But it gets geopolitical because of the nature of how the manufacturing gets diffused around the world. My history becomes geopolitical because Apple is just such a major presence and they end up having this enormous influence, not really on China, the entire country, but on four major industrial clusters where by Tim Cook's estimate, they have 3 million people working on Apple products within any given 12 month period.
So just enormous influence and somehow this story hadn't been told.
Bernard Leong: So I'm gonna get to the interlude. So what is the one thing you know about Apple in China that very few do?
Patrick McGee: Well, it's gonna be different now that the book is published. I would've had a much better answer five weeks ago.
Bernard Leong: Probably. But if, let's say you were to rewind back to the five weeks, what would you think?
Patrick McGee: Oh, I mean, it would just be what I just said essentially. I mean, sorry to give you a disappointing answer, but the idea that Apple had a nation building like influence on China is I think a narrative that unless you have the context sounds just insane. But I haven't come across a single person that has read through the whole book and then says, I think you're overstating your case, or I think you're wrong.
A whole bunch of people that worked at Apple who I never had any contact with, including people that I tried to reach out to who never responded, having the past month read the book and said like, you nailed it. Like you got this right. That is the influence we had. Or I've had people say, I always thought we had the power.
I didn't know that there was a longer term strategy being used against us, but nobody has said, you're doing the math wrong, or something like that, which is maybe what my biggest worry was that I was somehow missing something because it's a ludicrous thing to conclude.
Bernard Leong: I find it very surprisingly that the critics of the book keep disputing their number. It is not important. It's actually the kind of expertise that Apple has brought to train China. So I want to get to the second half of the story.
Patrick McGee: Just to round out that point. The numbers are the easiest thing to convince you we're in the ballpark of being correct, but actually the anecdotes and the efficiency and the other things like that I think are actually more important. The numbers actually aren't that important. They're just indicative that we're in the right ballpark.
Bernard Leong: It is the right narrative to place. I want to get to the next half of the story. So after the 2013 moment, what are the steps that Apple takes to resolve those issues that is brought up by the Chinese government? I think you talk about they started a proper way of messaging to the Chinese government. That was the first step.
Patrick McGee: So it's worth knowing that in 2013, 2014, I mean, Apple is seeing a bunch of problems in China. I mean, laws are being introduced that are like existential to how Apple does its operation. So for instance, Apple often relies on temporary workers. What's called the dispatch labor system in China.
This is migrant labor that is larger than 300 million people in the country. So it's just a larger labor force than the United States. They're hard to get your head around that. But the laws exist federally, but the enforcement is local. So Apple begins to understand the way out of this isn't to upend our operations and not rely on temp labor.
It's to do wink wink arrangements with the mayor of the city where we're developing things because it's not supposed to be enforced. That is not the point of the law. The point of the law is for Apple to be put in a bind where the use of the law could be used against them, but it won't be if you just act the right way and you demonstrate the way that you're helping the local cadres.
So that's kind of fascinating. So it's worth knowing, just like other companies are really being put in a bind here. So I rely on a Reuters report that, for instance, 30 different companies were all in a room together, like the representatives and some Chinese officials said like, we're issuing anti-trust investigations against all of you effectively.
If you put up a fight, we'll double or triple your fines. The example that I go into is Qualcomm, which has a three year antitrust battle with China, and eventually signs up for a joint venture. Okay? So, gives Beijing what it wants and pays a billion dollars. The quote I have from somebody is something like, they stole our intellectual property and made us pay them a billion dollars.
But at least we didn't lose our business. Shit hits the fan so much for Qualcomm that they actually refuse to send people to China because they worry they're gonna be kidnapped. I mean, this is the climate that Apple finds itself in. So they hire or name eight people who call themselves the gang of eight very senior.
These are the first senior people living in the country and because they worried their products are gonna be blacklisted. So for the first time ever, they have people running from within the country, government relations, Apple University procurement operations, third party channel sales, Apple retail, et cetera.
You have like two vice presidents in the group and a number of directors. They're supposed to be the eyes and ears of Cupertino on the ground. They're the ones who basically come up with what I've called the Apple squeeze, where they basically recommend that Apple get outside of its own worldview, which is very secretive, and instead sing from the hilltops if necessary, so that every official in China realizes we are having a dramatic influence on what Beijing calls indigenous innovation.
This is my wording of course, but Apple realizes in the course of their own study, we are the biggest supporter of Made in China 2025, which is an enormous claim because Made in China 2025, when it came out 10 years ago, it was considered immediately by Congress and by Washington writ large, this anti-Western plan where China was going to sever itself, sever its reliance from the West to be self-sufficient in robotics, in automation and everything. The idea that Western companies are helping it at all is a big claim. The idea that Apple more than any other entity on the globe is the biggest supporter, the biggest cheerleader of Made in China 2025.
It's hard to overstate what I'm alleging there.
Bernard Leong: So one key member from the Gang of Eight is a person by the name of Doug Guthrie, I think. What did the Apple executives get right and wrong about China before he joined? I think one of the most interesting part is how did he educate the Apple executives in Cupertino, which is in the headquarters on China.
Patrick McGee: So we all know that Foxconn is the main assembly partner to Apple. I think what people don't know, and what I certainly didn't know as an Apple reporter is that before 2013, before Consumer Day Foxconn is also the company that Apple has outsourced its government politicking to, in other words, Foxconn, because it's the final assembly group.
It's the center of the industrial cluster. Then what you have around it is the companies, some of them Foxconn subsidiaries, but some sometimes not, that are doing things like the glass, I don't know the memory, anything you can think of in the phone, right? The chassis, the plastic injection molding, et cetera.
So they have all kinds of enormous influence. I've got this great anecdote from 2010, for instance, when Terry Gou is meeting Tim Cook and they're discussing two breakthrough products, the first iPad and the iPhone 4. Terry Gou is essentially more bullish about both of these products than Tim Cook is.
I mean, Tim Cook's a smart guy, but he hates inventory. He doesn't want to overproduce these things. Terry Gou basically makes a bet with him on the spot and says, I think you're way off with your estimates. I think the volume of these products is going to go exponentially larger than you think.
Here's what I propose. I'm gonna build two entire campuses for you. One in Chengdu today known as iPad City, and one in Zhengzhou named iPhone City. If I'm right about the orders, like we win the orders, like no going to Pegatron, no going to anybody else. If we get this right, we get the products and it's a historic bet on the part of Terry Gou.
He does it. Going back to Foxconn's politicking, the reason why he's wanting to move to these inland cities is because Beijing has these five year plans, right? One of them, especially after the global financial crisis, is that they're really worried about the incredibly hot growth of the coastal cities like Shenzhen and Shanghai, and what a dichotomy there is between that and the rather poor growth inland in the country.
Foxconn has its own selfish reasons, right? Which is that this is after the issue with the suicides, for instance, right? Where people jumped to their death off the roofs of Foxconn buildings, terrible PR for Foxconn. I mean, even today, and this was 15 years ago, right? It's like the one thing people know about Foxconn, rather things, right?
They'll say, A, they assemble iPhones B they had some suicide problem at some point. That's what people know about Foxconn, which is unfortunate because it's a really stunning company in some respects, in really all respects I should say. So he is able to direct Foxconn business toward the inland because he understands that people wanna be closer to their villages that they've come from.
They don't want to have to take a 20 hour train journey to Suzhou or to Shenzhen. So he's brilliant doing it for his own purposes, but he is also understanding like the way the winds blow at the highest level of politics and especially the local level of politics. Because China's a lot more decentralized than Westerners understand.
Bernard Leong: Which is actually one of the big things I don't think the West really understand. They're very decentralized to the cities.
Patrick McGee: It's because you call the country communist and so a Westerner lazily thinks, oh, it's a top down system just like Moscow. It really isn't. I describe this through, I think, the lens of Doug Guthrie because he's this China expert who gets hired by Apple.
I describe it as federalism on steroids where the local cadres are incentivized to get growth in their areas at the expense of another region in China. So they act more like a venture capitalist does to sit on the board, draw in orders and drive growth really. So Foxconn's Terry Gou really understands the politics and by understanding the politics, he's able to gear Apple's manufacturing in certain directions and Apple, and he does such a good job effectively, that Apple doesn't feel the need to have people on the ground and it doesn't feel the need to really, I don't know, contradict him or do anything themselves.
This is actually understandable if you realize how small the Apple business is in China in 2008. But then it absolutely explodes. I think it goes up by around 2,800%, the greater China revenues between 2008 and 2012, if that's right.
Bernard Leong: There was the surprise as well that really China becomes such a big market and essentially became the second largest market, I think after the US.
Patrick McGee: My favourite part of the narrative, and we probably don't have to go into it, but let's just say for the listener, it involves organized crime. It involves all kinds of crazy narratives within China that really, it's, I mean, that chapter that's part four really, so four or five chapters, that's probably the chapter that's most educational for me as the writer, but educational for the reader in understanding various aspects of how China works and what the culture of China is, and so forth.
I mean, so it's a fascinating lens into China, just through the lens of Apple and the growth years of the iPhone.
Bernard Leong: I think eventually Apple did succumb to the power of the Chinese government and eventually they conform towards what the government wanted. Of course now led to this pretty untenable situation. I think. Let's reflect a little bit. So I think Apple has helped the Chinese supply chain to develop capabilities in smartphone manufacturing.
They eventually give China a competitive edge. Do you think Huawei, Xiaomi, and others are the beneficiaries of these competencies and also explains that why Apple is now being challenged by them?
Patrick McGee: I don't even think you could. What would be the counter argument?
Bernard Leong: Would you see the same story happen to Tesla as well? I mean, it is already happening anyway. I don't think Elon doesn't realize that.
Patrick McGee: That's a good question. Let's stick with Apple and then we can come back to Tesla. But Tesla is a section in the book just for listeners don't know what Bernard is referring to. It's because Tesla effectively adopts the Apple model and convinces public officials that they'll do for EVs what Apple did for smartphones. It's only a few pages, but I think they're very profound, those pages. It was quite the insight.
Bernard Leong: It has a very good connection to what Tesla's gonna face very soon.
Patrick McGee: Absolutely. I mean, look, the basic stats are that Huawei, Oppo, Xiaomi, Vivo with a couple other brands have more than 55% market share globally in smartphones. Smartphone's the most iconic device of the 21st century. The reason why they're so good at making smartphones is that Apple taught all of their suppliers.
I don't know what the counter narrative would be. I mean, those companies in terms of their electronics prowess and making smartphones, I mean, they basically don't exist without Apple's operational paradigm operating in China. The cultural transplant of Cupertino.
The DNA, if you will, of going to these four major industrial clusters is just instrumental to the rise of China. Not as a manufacturing powerhouse, but in particular as a advanced electronics powerhouse. I mean, I don't think any company comes close to China, going from made in China, feeling like synonymous with cheap quality to made in China being world leading.
I think China's so damn good at advanced manufacturing today that experts fathom to even comprehend, just how many industrial robots they have. Just how complex and efficient the topography of Chinese manufacturing is and so forth. I would argue, I don't even think Apple fully understands it.
In other words, Apple people are going in and out of these factories all the time, but I think they attribute so much of China's success to their own merit that they think they can go replicate this in India. I hope I'm wrong about this, but I think China did so much.
Because it wasn't just the factories, right? It was the eight lane highways between the factories. It was the high speed rail train that does the freight. It's like the 20 some ports that China has so that if there's a rainstorm in one place, you just ship it from another one. I mean, that's not true in Vietnam.
If you have a rainstorm in Vietnam, it's like the whole country's covered in rain, like it's just too small of a country. China doesn't have that problem. I'm going off on tangents, but...
Bernard Leong: Then the question is how does that now go to Tesla? Right. I mean, you see what Apple has gotten, actually, I've seen this I think about probably a decade ago, and I had the conversation with Horace Dediu, who's been on my show at least six times.
Patrick McGee: Oh, wow.
Bernard Leong: Do you think the story will play out with Tesla as well?
Patrick McGee: I think it's already playing out. Now look to contradict myself first, I would say I don't know that it's so meaningful that BYD sells more cars than Tesla. What I mean by that is that Apple was panicking is maybe too strong a word, but in 2010, Apple didn't realize what we would take as common sense today, which is that they own the richest quintile of users on the planet.
So 2010 is the year that Android overtakes iPhone, I believe. 80% market share, 20% market share. So Apple is, I mean, this is when they're suing Samsung, right? I mean, they're panicking that the designs that they've created are going to be replicated and taken over by somebody else. Instead, history to some extent is very kind to Apple, which is that Apple basically just is able to develop a moat by having iOS and some other key features.
For the iPhone 4, the quote from someone from manufacturing design is that we are going to make the iPhone 4 so damn difficult to replicate that companies trying to rival us will either go broke or go nuts trying to do it. So Apple's able to establish itself as the premium leader, right?
So where, what I'm drawing from this is that in retrospect, it didn't matter that Android takes over the market, right? Android is 80% of the market today. Apple is 20%, and yet the margins are flipped, right? Apple has 20% market share and 80% of the industry profits. I mean, again, pause the podcast and try to think about that.
Find me another industry anywhere remotely close to it. So it is possible that Tesla is able to be a premium car maker that makes far more profit than BYD in the long run and has a brand image that's associated with all kinds of various strengths or whatever that others don't come up with.
On the other hand, as far as I can tell from some experts I know in the field of self-driving, it's the Chinese who are doing far better with self-driving than even Tesla and Tesla's renowned for self-driving capabilities. So, I guess what I'm trying to say is I don't know that history is set.
I don't know that Tesla is gonna be outcompeted by all of its Chinese rivals, but the best EVs in the world, certainly in terms of value are all made in China right now. I do think Tesla played a pretty instrumental role catalyzing that by training a bunch of their suppliers, which we're going through shortly here, but it's in the book in a little bit more detail.
Bernard Leong: If you ever come to Southeast Asia, you just see how much the BYD have just swept the entire market in like two years. I barely used to see at least one Tesla. Now it's one Tesla with five BYDs running on the road.
Patrick McGee: But this is where you're grappling with the differences in state led capitalism because BYD just cut the prices of its cars something of an average $8,000 or something. That is so difficult for a company like Tesla to contend with because they prioritize shareholder returns and reinvesting the dividends of what they're able to make.
The Chinese competitors are just so large that they have the impact of de-industrialized rival nations. So unless I'm mistaken in this, I believe Chinese automakers in the aggregate can produce 60 million cars a year. That is two out of three for the whole planet. So that's why even someone like Joe Biden had to put a hundred percent tariffs on EVs. I mean, that's panicking Western nations, that's panicking countries like Germany. That's really hard to grapple with.
Bernard Leong: So there was just two more things I wanted to get to, which I hope to get in the next couple minutes. But of course, the story of how Apple worked with TSMC also came through our good friend Uncle Terry as well. How do you see the current situation of Taiwan where 90% of the semiconductor manufacturing is also concentrated there?
I think it's actually presented what I call a double whammy for Apple as an existential risk.
Patrick McGee: I don't know that I have to say much more than what you just said. I mean, I quote Nicholas Kristof saying: TSMC is the first company in the world where if they were to stop producing the consequence would be a global recession. It's hard to overstate the importance of TSMC for the modern world.
Just for what you just said, 90% of advanced chips are made on this small island by this large company, small island. Taiwan is of course not a geopolitical threat. It is a fantastic ally. The trouble is that Xi Jinping has said, we want to annex Taiwan. It's part of our country, and we're not gonna leave this for the next generation.
So in terms of Apple's business, if that happens, it's the equivalent of a meteor strike. I mean, if that sounds too hyperbolic, let me just point out that Warren Buffett invested around $5 billion in TSMC and then divested all of it within a matter of months and basically said, I love the company. I don't like its location, so I had to reconsider my investment.
Warren Buffett is Apple's single biggest investor, and while I was writing the book, he divested two thirds of his investment in Apple, and he hasn't explained why, but I believe the logic that he had for divesting from TSMC applies 100% to Apple without TSMC, there is no iPhone. I mean as simple as that for multiple years.
So a double whammy is saying it in the lightest way possible.
Bernard Leong: That comes to this question then now of course to recently to navigate the current tensions between China and the U.S. Apple is going to move their supply chain to India. Based on my understanding of the India supply chain, the manufacturing costs are actually, it's gonna be five to 8% higher than in China, which actually is a surprise to me.
The difference rising to something about 10%. I quote this number from Reuters actually. So we are not even talking about the supplier and components sourcing and the transfer of engineering capabilities from China to India. I think you kind of alluded to it, but I just want to get your point of view again, from your perspective.
Can Apple make it work in India?
Patrick McGee: I would love to be wrong, but no is the short answer. If it can happen, it's a 15 year effort. But before we even involve what China would do if Apple was making that move, let's just talk about India in particular. The similarities that people point to between China and India are really superficial.
In other words, both have 1.4 billion people. So it's like, oh, great, well that's perfect. The differences between the cultures are profound and something as simple as you don't have migrant labor going from one side of the country to another. In India, I quote a study that looked at 84 countries in terms of internal migration and India was dead last.
That's not a knock against the culture, it's just not part of the culture that young women in particular leave home at 17, go to the other side of the country and work in a factory. You don't have that. So what's the phrase culture eats strategy for breakfast? Apple might have a plan, but good luck upending 5,000 years of Indian culture to make it happen.
There's so many reasons it can't happen. One of them is that India is a democracy. I hate to say it because I'm pro-democracy, but the way that Beijing comes up with a five-year plan and everybody clicks their heels and tries to do it in some way or shape or fashion, I mean that it is a decentralized model in how they go about it. But there's no questioning the plan. In India, there's all kinds of questioning of the plan. I mean, there is no top down method for getting every province to compete against one another to get this all done. There's no incentivizing of the local cadres down the line to build factories and everything.
So sometimes people hear the latest announcements and they think it's a big deal. Like Foxconn, a few weeks ago, announced a $1.5 billion investment in India with 30,000 employees that are gonna be working at a factory. 30,000 employees is 1% of the number of people in the Chinese supply chain. So you can have two things in your mind at the same time.
Right? Which 30,000 is a lot of people and versus the Chinese supply chain, it's almost nothing. So it's really hard to understand just how large the Chinese supply chain is and how world competitive it is. So just on the pure merits of can India replicate what China did, unfortunately, I'm very pessimistic.
On top of that, China doesn't wanna let it happen. China wants technology transfer to be one way gate, which means the technology information comes in, but it doesn't leave. So they're really in a prime position to basically have the lights go out, have the electricity go out at certain factories.
If they need to show Apple that they don't like the latest press release, they don't like the latest Tim Cook's comments about India, because Apple is so wedded to China and their very success in China is their vulnerability. So we've already seen this in the last couple of months where India needs a whole bunch of people that are from China, that have the experiential know-how, and Beijing is just blocking their visas of going to India.
Apple needs a bunch of Chinese made machinery to go to the Indian production lines. Beijing has just said, well, we're not sending it. That's a really difficult conundrum to get past and we're only talking about Beijing. There's also the problem that Apple has a $70 billion business from Chinese consumers, and they rightly see the iPhone as an indigenous product.
Right? If Apple becomes the poster boy for decoupling from China, derisking from China. Those people start buying Xiaomi and Huawei phones in much, much bigger numbers. So Apple has to do this very, very slow movement where if they're, it's like they can't go too fast. I'm quoting someone in the book here, Jay Goldberg, they go too fast, they risk the ire of Beijing and Chinese consumers.
If they go too slow, they remain stuck. So they have to find this perfect pace, a light jog, if you will, to get to India. There's no guarantee it'll work at all. China can put up roadblocks whenever it sees fit. So I wish it wasn't the case, but I'm like a friendly Canadian golden retriever, but on this issue, I'm really pessimistic.
I don't see a way out.
Bernard Leong: Okay. So what is the one question that you wish more people would ask you about your book?
Patrick McGee: It might be about the characters. I mean, nobody has ever asked me about Jackie Haynes ever.
Bernard Leong: Tell me about Jackie Haynes.
Patrick McGee: So I have a mini tragedy within the book, which is the story of Jackie Haynes. I say tragedy because, so she's someone that worked with Tim Cook at three different companies going back to the early 1980s at IBM. After Foxconn has these suicides and stuff, she comes out of retirement after working with Apple for about eight years to lead supplier responsibility.
Apple really has an effort, like we are going to improve the lives of our workers. Jackie refers to Foxconn workers and others as her clients, and she's really there to make things better. I mean, Apple wants to be a shining light for others to follow. Tim Cook says as much in an interview in 2013.
It doesn't go as planned is the short answer. She runs up against two major problems. One is the operational demands of Apple's culture. So when suppliers are trying to respond to Apple, they're just not able to prioritize worker rights the way that they would like to because Apple and the chapter is called cognitive dissonance.
Is basically demanding one thing and asking for another at the same time, and they're directly opposed to each other. The suppliers are always gonna prioritize meeting Apple's demands rather than making sure that the conditions are right.
The other thing probably just as consequential is that this coincides with the end of Xi Jinping's first term and the beginning of his second term where he's really going after civil society groups in China, really flexing his muscles and making it difficult for people protesting in the streets, demanding worker rights, demanding reforms and saying like, we're Marxists, like this is what you taught us in school and we demand better lives and better conditions in Chinese factories.
Xi Jinping basically just makes that impossible. So the things that Jackie Haynes is trying to do, basically are not able to be possible because of both Apple and Beijing. She basically has to move on to other products. Then she dies a few years later, having failed at this project.
So, I guess I would wanna talk more about that. I'd wanna talk more about Isabel Mahe, the head of Apple China for the last seven years.
Bernard Leong: So, that comes to my traditional closing question. What would be the key takeaways you want the readers to gain from your book, such as is a success to you?
Patrick McGee: I guess what I told John Stewart is that I want the book to be a Trojan horse, wherein I think more people need to understand the fragility and resilience of supply chains. They need to understand more the U.S. China tech rivalry and why that will determine hegemony in the 21st century. They just need to know more about Chinese history.
Because Chinese history is fascinating and it's consequential and it's tough for the lay person to read books that are gonna get them up to speed on those subjects because they're often a little bit dry, they're a little bit dull, and we all live busy lives. So it's just not a common thing to see just someone on the train, just reading of the latest history of China.
I wanted to package all those important themes into a book about the sexy product that you stare at for four hours a day. The sex appeal of the book was Apple's products, characters like Jonny Ive, but I'm tricking you in a way that actually what you're learning about is it's Apple history, but it's all these other things.
But if I said, Bernard, I've got a great book about supply chain, like you wouldn't have me on the show.
Bernard Leong: I would have you on my show because it's talking about exactly what is happening in Asia.
Patrick McGee: Okay. Well, most people wouldn't. I mean, there's a reason why the subtitle is not why supply chains matter or something like that. I mean, nobody would read that. So I hope I've answered your question, but I mean, that's the takeaway that I want people to be more conversant on these issues, and I really, the goal was selfish.
I wanted to be more conversant on these issues, but the way to do it was through Apple, was through Tesla, et cetera.
Bernard Leong: So Patrick, many thanks for coming on the show. Just two quick things. Any recommendations which have inspired you recently?
Patrick McGee: The two best books I've read in the last five years are both by the same author. He's Chilean and his name is Benjamin Labatut. I'm probably getting the pronunciation wrong. There's a decent chance it's Benjamin rather than Benjamin, but it's L-A-B-A-T-U-T.
One of them is called "When We Cease to Understand the World" It's on the birth of quantum mechanics and on the, his book is really about like the best thinkers in the world and how like the height of knowledge blurs into madness. So it's really freely a gripping read. He uses the tools of a novelist to tell nonfiction stories.
The other one's called "The Maniac" I didn't love the title until I realized that Maniac was an acronym for a computer. It's kind of a biography of John von Neumann, who he basically says is the most like, interesting and consequential mind of the 20th century, which is quite a big claim. But the final third is actually about the birth of AI.
John von Neumann's the godfather of AI. But the final third of the book is actually about AlphaGo, the DeepMind Project on the biggest players in Go. So it's actually like a great and gripping introduction to artificial intelligence in a historical sense. But again, he's telling biography, but like he's doing so through the lens of fiction.
So he tells the biography of John von Neumann through the voice of his wife, his daughter, his colleagues, and so forth. So it is just a gripping read. I wish I had half the writing skill that he has. It's just amazing.
Bernard Leong: How do my audience find you then?
Patrick McGee: You know, appleinchina.com. I believe that domain was available, but it was, that's probably the best place to go.
Bernard Leong: Good. That was actually how I also look for it as well. I just only have one little acknowledgement to make. I want to thank Lionel Barber, author of "Gambling Man" that helped me to connect to you and I didn't realize we have so many connections in between. So, Patrick, many thanks for being on the show and I look forward to speaking to you again.
Patrick McGee: Thanks Bernard. I hope I'm in Singapore soon and I'd love to see you in person.
Podcast Information: Bernard Leong (@bernardleong, Linkedin) hosts and produces the show. Proper credits for the intro and end music: "Energetic Sports Drive" and the episode is mixed & edited in both video and audio format by G. Thomas Craig (@gthomascraig, LinkedIn). Here are the links to watch or listen to our podcast.
