Patrick McGee

And it's this moment where Apple begins to worry that its products might be blacklisted in the country, which was no sort of idle threat.

Facebook and Google were both already blacklisted.

And so Apple basically begins to court local politicians, federal politicians.

to basically get people off of their backs.

And the result of that was that in May 2016, Tim Cook and a trio of top executives at Apple go to Zhongnanhai, which you could consider the equivalent of the White House.

And they basically make this enormous pledge to spend and invest $275 billion into Chinese factories over the following five years.

So Apple's influence on China is just absolutely enormous and I think pretty unheralded.

Because Apple is such a secretive company that not even Beijing understood what Apple's impact in the country was.

So, for instance, Foxconn, which is the Taiwanese assembler of most Apple products, it was actually a larger company, both in terms of profit margins and absolute profits in dollars in the first four years of their partnership in the early 21st century.

Then the iPod Nano takes off and Apple margins within a decade go from about 1% to 26%.

And Foxconn margins go from double digits to about 3%, right?

So one company's margins go up by 25 times, the others fall by two thirds.

So if you are Xi Jinping's lawyer, you're thinking, well, this is a company that's just absolutely taking advantage of us and exploiting us at every turn.

And so this accusation essentially puts Apple on the back foot.

And they're the ones who then come up with the idea of, let's do our own supply chain study to analyze what our impact in the country is.

And then they're able to basically turn the tables on the argument and say, look,

You have no idea how much we're impacting the country.

We're sending America's top engineers.

We're basically having them sleep on the factory floor.

And the result is that the entire smartphone competence that Apple has embedded, basically, is giving rise to China's own global leading companies.