How Apple Gave 'The Gift of Fire' to Chinese Electronics Firms

A new book explains how Apple's obsession with sleek design and efficiency supercharged China's electronics sector — and why decoupling may be impossible.

- Lin Suling

It was Christmas 1998, and a secret commercial experiment was underway in an Apple facility in Ang Mo Kio.

A team of over 20 employees had just flown in. Over the next few months, they would toil six days a week, sometimes up to 15 hours a day, to master a single task: learning how to assemble Apple's brightly colored iMac, which came with a chunky cathode ray tube monitor imported from LG in South Korea.

But Apple's ambitions went far beyond assembling computers in Singapore.

The real goal was to pilot a new manufacturing model—the final assembly, testing and packaging (FATP) of its computers, a process involving over 100 steps and stringent quality checks—and outsource this to contract manufacturers. The aim: to lower costs and achieve economies of scale.

1998 was the year Apple launched its first iMac after Steve Jobs' return. Apple would go on to sell six million units and see its stock price triple. But manufacturing bottlenecks had blunted the company's edge.

Consider the cautionary tale of 1989. Apple had been burned trying to build the Macintosh Portable, its first laptop, in-house. Manufacturing delays turned the revolutionary into the obsolete. By the time it hit shelves, nearly three years after its conception, it had lost its edge.

That little experiment in Singapore, as Financial Times journalist Patrick McGee details in his new book Apple in China: The Capture of the World's Greatest Company, would reshape global supply chains and lay the groundwork for China's transformation into the world's factory and an electronics powerhouse.

That has profound implications today amid intensifying US-China tensions. Or as Mr. McGee told me: "Manufacturing was really important to national identity and national defense. But in the last few decades, (America) has outsourced and basically given that gift to a giant rival."

APPLE'S LONG ROAD TO CHINA