Apple in China, lessons for India

One company turned China into a manufacturing powerhouse. Now India must ride the diversification wave to do the same

- AKASH PRAKASH

I am in the middle of reading this fascinating book, Apple in China — The Capture of the World's Greatest Company. The book has been written by Patrick McGee, a Financial Times journalist based in San Francisco and responsible for covering Apple. The book tells two intersecting stories. First, how Apple moved from being just days away from bankruptcy in 1996 to becoming the most valuable company in the world within a span of 15 years. Second, it traces the contribution Apple has made to transforming China from a third-world, low-skill manufacturing base into the world's largest and most sophisticated manufacturing location — a hub for advanced manufacturing.

Apple began as a vertically integrated company that wanted to do its own manufacturing and control its destiny. Given cost pressures and the need to compete with others who had outsourced, however, it eventually offloaded its manufacturing.

The book traces how Apple was actually the last of the PC original equipment manufacturers to outsource manufacturing — initially to LG of Korea, with operations across Europe, Asia, and North America. You learn how Foxconn and Terry Gou enter the picture, and how manufacturing, starting from Taiwan, eventually becomes entirely consolidated in China. The author highlights the importance of Apple — and the iPhone specifically — in establishing China's manufacturing prowess and building a highly capable and sophisticated supply chain within the country.