How China Captured Apple — with Patrick McGee

24:52But reshoring isn't going to happen for a company the size of Apple. We'll be right back after a quick break.

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26:31You made a really interesting connection here that by empowering or kind of upskilling Chinese manufacturing base, we've increased unwittingly, I would imagine, the likelihood of an invasion of Taiwan. Help make that connection for us. Let me back up a little bit. What everyone knows about Apple is industrial design. That's Johnny Ive creating the look, feel, and substance of a product. But Apple operates in a pyramid structure. And as the pyramid goes wider, the more and more employees you have. I mean, it's been described as an upside-down funnel rather than a pyramid. So the very top, two dozen people maximum, is Johnny Ives' team coming up with a translucent iMac, coming up with, you know, multi-touch glass for the phone, that sort of thing.

27:14They sort of throw it over the fence to product design or PD. These are geniuses of a different sort who have to sort of respond to Johnny Ives' godlike demands and make sure that all the components and everything fit into the very thing that he has dictated, right? And so that's its own problem. What we don't know is sort of the next level of the pyramid. This is manufacturing design, or MD. These are the people who then make sure that that prototype can actually be built at scale. And so in order to do that, they go to Asia, primarily China today, but historically Asia, to work hand in glove with dozens and later hundreds of factories to actually build the capabilities that are there.

27:53So in a sense, a key contention of my book, and it's really demonstrated rather than really argued, is that China doesn't have the tech competence in the early 2000s to respond to what Johnny Ive Studio is coming out with. That's not a knock against China. Nobody had that. Nobody had the tech competence to respond to what they were doing. And so Apple had to go build it there. And because volumes of the iPod go from a few million to dozens of millions, and then you get the iPhone where you go from 5 million in 2007 to a quarter billion by 2015, the numbers are just staggering. and Apple is maniacally obsessed about quality in a way that really no other company is.

28:31So you've got that combination of insane world-beating quantity with insane world-beating quality. And in order to actually execute the plans coming out of Steve Jobs and Johnny Ives' minds, you need someone like Tim Cook to operationally scale it, right? So my line about this is like Johnny Ives and Steve Jobs are what make Apple products unique. Tim Cook is what makes Apple products ubiquitous. And this manufacturing design element of the pyramid is a part of operations, which is in the product cycle, the fourth element of the pyramid. So then someone like Tim Cook and his team take what MD has created in Asia, and they get other factories involved to build resiliency and to push down costs and drive competition between suppliers.

29:08So they have this huge, huge impact. Okay, now here's where this goes. Once you are teaching a supplier how to do advanced electronics in any number of degrees, they're not necessarily going to stay with building smartphones. I mean, first of all, that is what they do in the first stage. And so you see this huge, you know, localized smartphone ecosystem build up, not just for Western companies, but for Chinese companies. So Huawei, Xiaomi, Oppo, Vivo now have 55 % global market share. I mean, really, the only companies in the world doing smartphones are Samsung from Korea, iPhone from America, and a bunch of Chinese companies.

29:42Pixel and everyone else is so small that they get categorized as other. But once you have those skills, what else do you do with them? Well, you do the most sort of obvious adjacent tasks in electronics, right? The same skill sets will help build you drones. The same skill sets will help you build military weaponry. I mean, chips are the foundation of the modern world, and Apple helps these companies with chips. And to the degree that Congress has had to basically intervene, Marco Rubio a few years ago, threatening them with, you know, fire and fury, essentially, if they continued working with a company called YTMC, which was making memory.

30:12And Apple wanted those chips to be in its own smartphones for China. So I guess just to simplify, once you understand how intolerant of defects Apple culture is and that they are not working with suppliers who are already competent and they are not going after price, they are going after quality and they are sending people by the literal plane load to four different industrial clusters in China to do all of this, you'll begin to sort of understand how they have such an impact on the country. And then they're not really in control of what the country does with those skill sets afterwards. And so, of course, China has funneled it into other things that they're interested in, which is electric vehicles, drones and military weaponry.

30:51I'll put forward a thesis and you respond to it. I think these Apple tariffs or threats of tariffs on Apple are nonsense. And the idea of the relationship between Apple and China somehow devolving and digressing to a point of no return, I don't think either of those are realistic. My sense is that Apple in many ways is bigger than China or the U.S. right now, or bigger than Trump and Xi. And that is, I don't know if Xi can afford to lose Apple. And I don't think Trump can challenge the cult of iOS. I think it's bigger than MAGA. Your thoughts? Well, I think you're getting really towards my thesis, which is that Apple is stuck here.

31:32I mean, there is no obvious move where they're going to move to India or move to the US, particularly because neither of the superpowers wants them to do that, right? Xi Jinping can easily put up lockers for Chinese visas that would be required for people to go to India to sort of replicate this skill set in India. And he also put up lockers for Chinese-made machinery to go to the Indian production lines. Meanwhile, Trump has just made it clear in sort of less sophisticated sense of just, I don't want you doing that. So, you know, the thesis of the book is really that Apple is stuck. It's stuck in a quagmire of its own making to some degree.

32:07I wouldn't quite agree that Apple is sort of bigger than either of those companies, I think if it's a bargaining chip between them, it's Beijing's bargaining chip rather than Washington's, which maybe takes a moment to digest. But that's an astonishing state of affairs. It's not really an astonishing statement. It's a banal statement, but it's an astonishing state of affairs that America's greatest company is really more in the hands of our greatest adversary than anyone else. But I really don't know what the counter argument would be. I mean, 90 % of the production is in China. But it strikes me that if we just start to game theory this out, the pivot point here, the fulcrum or the agent of chaos here is Trump.

32:44Apple's humming along. They have kind of a mutually beneficial ecosystem or relationship with Xi and China. Yeah. Actually, something that, if I read your stuff correctly, has been enormously mutual beneficial. Probably the most productive, profitable form of capitalism in history is the one between Apple and an autocracy. It's created the most profitable product in history that each brought unique skills to IP design on the part of Apple and advanced manufacturing capability to scale. we've never seen before in any other product. I'm not even sure World War II could match some of the production capabilities that have been demonstrated by Apple in China.

33:26And that Tim Cook, let me ask you this, I'm getting into geopolitics right now, but we're talking about what is oftentimes or has been the world's most valuable company. Isn't Tim Cook's play here just to kiss his ass or pretend to kiss Trump's ass and wait him out and everything stays the same? so certainly i mean that was trump's that was cook's strategy in trump 1.0 right uh trump sort of famously said that cook had promised three big beautiful plants in america um you know it's been what eight years zero zero such plants have emerged so he just ran out the clock on trump's presidency and i think that's what they're trying to do again because you know if you're copertino i think you realize to some extent that um that trump is a is a press release sort of uh president He likes the optics of things.

34:12He doesn't necessarily need to be patient and wait for the reality of it. So in February, getting ahead of the tariffs, Tim Cook and Apple put out a statement saying they were investing$500 billion in America. This is basically nonsense. I don't know how exactly it is nonsense, but my running theory is that what they are counting as$500 billion includes buybacks and dividends. So if you look at how big Apple is, they literally spend more than$100 billion of their own money each year on share buybacks. So you multiply that by four, you've already accounted for 80 % of the investment. Now, maybe they have to do some math to figure out what 65%, 70 % of shareholders are in America, so it doesn't count for that whole figure.

34:53But there's way less than meets the eye than the idea of$500 billion being reinvested in America to reshore jobs here. If that were a figure that was as clear as the White House has taken it to be, right? Howard Lutnick, Scott Bessent, the White House press secretary, and Trump have all said that this is quite a coin of change. What's the change of coin? I'm trying to think of what the press secretary said. She's a chunk of change, chunk of change, she said. It's quite a chunk of change, right, for Apple to be investing in America. So in other words, they have very much taken it to be a half trillion dollar investment in the country for reshoring jobs.

35:30The press release is very careful. It never actually says that. But unless you're reading it with an air of there's something off here, that is the message you would come away thinking. And it's not the first such press release. A few years before that, Apple had said they would spend $430 billion on the same thing. So I'm just mentioning that because it's not a factor of, oh, we'll just give them some time. It's only been a few months. If this number was credible, you'd see Apple factories and entire industrial clusters being brought up here, there, everywhere, probably needing so many jobs that people would be like, you know, flooding into the country.

35:58I mean, none of this is happening. And so if my buybacks theory is wrong, fine, tell me what the other theory is because the math doesn't add up. My sense is that if you look at Apple stock, All right. Since the election, it's, okay, inauguration. So it's off about 15%. I think it was about 20%. So it has taken a hit since Trump became elected. And some of that is the broader market, but some of it is also the existential risk to Apple. But if you really think about what would be involved, it sounds to me like almost near impossible for Apple to divest from China at this point. And that if they were forced to do that, or if his largest market, which I think is like half the revenue, Apple's half the revenue is U.S., if I just don't think the market is taking Trump that seriously right now.

36:49For me, I look at how the market's reacting and the market is saying, yeah, this is a pain in the ass. It's a distraction. It'll cost them some share and some valuable management bandwidth. But we don't believe this is really an existential threat, that the economics here are so lucrative and that Trump has such a lack of focus and will given, oh, it's 145 % on China. Just kidding. It's 30%. That the market seems to be saying, yeah, this is a nuisance and annoyance, but it's not really an existential threat to Apple. Your thoughts? I agree. But, you know, I caught someone saying the relationship Apple has with China could blow up any day.

37:30Well, good luck sort of pricing that into your models because we don't know when it's going to blow up. And Trump's such an erratic character that, I mean, honestly, how do you put him into an Excel sheet of what the value should be in a year? I mean, the scariest thing, in a sense, of Trump's tweet the other day, or Truth Social, when he talked about 25 % tariffs on a specific product, you know, the iPhone, I don't think that's ever been done in history before, was at least 25%. In other words, if Tim Cook isn't playing ball, then the figure could go up quite a bit. And obviously, you know, Trump has, to some extent, added credibility to that claim by playing with tariffs so much.

38:06To some extent, of course, he's also destroyed that claim by offering 90-day reprieves and such. And, I mean, Tim Cook is in such a bind here because you've got to remember a couple things. Like, one, Trump has said that this will take place, I think, at the end of June. I mean, supply chains do not move at the speed of weeks. I mean, this is a ludicrous demand. Obviously, I mean, I assume the Trump administration doesn't actually expect the factories to be built by then so much as there's a there's a concept of a plan to use Trump's language by then. But the other thing is that Apple doesn't manufacture anything themselves.

38:35So it's not only that you have to convince Tim Cook, it's that Tim Cook would have to convince Foxconn and probably hundreds of other suppliers if you genuinely wanted to build things here. And of course, none of them see the certainty of, you know, the Trump presidency lasting of the tariffs on China lasting or any number of things. And they would know that we're not going to be our factories if they're placed in Pittsburgh, because that's nothing like Zhengzhou or Shenzhen or Suzhou. So there's just so many complicated factors here that basically favor the status quo, I suppose you could say.

39:06And I guess the timing of my book, which obviously not through anything I did, is sort of insane, is that I'm pointing out that not only are the business ties between Apple and China unbreakable, but the political ties are totally untenable. I mean, your average American just should not be happy with the idea that we are still sending America's best engineers to hundreds of factories across the country to train them up on a host of electronics, which, as we've already spoke about, can go well beyond China's dominance in EVs and iPhones and a number of other things. So what are they supposed to do here that's at all a good move?

39:46And if you'd like an analogy that I'm sort of stealing from Henry Kissinger, he points out that Westerners play chess. And when you play chess, you do something like Trump did about Huawei, right? He tried to go after Huawei, sort of take out China's biggest company, deprive them of 5G access, deprive them of Google services. And that company nearly collapsed, but unfortunately came back with a vengeance for the current administration. But China plays a game called Go. And in Go, there is no final move. You instead encircle your enemy to such a degree that they're basically unable to make any meaningful moves.

40:17And that is where I see Tim Cook and Apple right now. They do not have any meaningful moods other than digest a 25 % tariff and hope that Trump doesn't raise it even further. You brought up something I hadn't considered, and that is China might get or is getting in the way of a transition of any production to India. And my understanding is China sees themselves as a very strong ally of Pakistan, India less so. I would imagine that China and India see themselves as the same type of competitive threat as the U.S. now perceives China. I hadn't considered that. So China is purposely getting in the way of the transition of manufacturing capability to India.

40:54And how real or illusory or jazz hands is Apple's statement that they're trying to divest out of China into India? So a couple of things to unpack there. So the reporting that China was putting up all these blockers came out of publications like Rest of World and Bloomberg in January. So that's certainly happening. The line that I would use is that China wants technology transfer to be a one-way gate. The information comes in. It does not leave. Insofar as it leaves at all, they want it to be Chinese companies like Luxshare, Gore-Tec, BYD. Those are the companies that are doing some work in India, but even them, they are not really finding it all that easy to do.

41:35So there's that. And then when we're talking about iPhone assembly going to India, people are often conflating. And Apple, in a sense, I think knows that they're going to conflate this and therefore it helps their PR. They're conflating assembly with genuine production. So if there are a thousand steps in building an iPhone and the final one is now happening in India, that is enough legally to say made in India on the box. All you need is a substantive change to the product for that to be the case. But the phone is not any less dependent on the China-centric supply chain than any other iPhone you've ever seen or purchased.

42:14So this is really just about tariff reduction. And Apple has been doing iPhone assembly in India since 2017. That was always about tariff reduction. It was just about Narendra Modi's tariffs on products coming to China. And now it's about Donald Trump's tariffs. But if you're looking for real substantive moves that demonstrate Apple understands there's a geopolitical threat in Xi Jinping and they've de-risked, honestly, there is nothing. There's tariff reduction and there's moving some assembly to Vietnam because it's cheaper and they faced some labor issues a decade ago. But in terms of have they really de-risked because they see a threat, I don't see any meaningful moves anywhere.

42:56We'll be right back.

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45:34We're back with more from Patrick McGee. So I'm fascinated with the notion, and it seems obvious in hindsight or in plain sight now, that this incredible upskilling of the Chinese manufacturing base under the behest of Apple's incredible investment in an unbelievable complex product that we taught them how to fish, so to speak. I'm curious if and how you can make the connection between Apple or Apple's upskilling of the Chinese manufacturing base and what is, from what I understand, delivering on the promise of Tesla, but isn't in fact Tesla, it's BYD. Is there a direct connection between this upskilling and BYD?

46:21Yes, short answer. So when Tesla wants to expand manufacturing to Shanghai in particular, they propose, this is in the book, by the way, we'll build a factory in 24 months. And the mayor of Shanghai says, essentially, make it 12. We'll do whatever we can to accelerate this shift. This is all happening within 24 months of Tim Cook explaining to top leaders in China just how the Apple model works and why it is superior to the joint venture model. So Shanghai officials basically want Tesla to be the apple of the electric vehicle world. Sometimes when people push back about this, they'll say, that doesn't make sense.

47:02You didn't need Tesla for the EV market in China. EVs go back to 2001 in China. And that's true, they do. Not successfully. By 2012, 2013, there are something like 30 ,000 EV buses in Shenzhen alone. So one city has more EV buses than the rest of really the world. I mean, certainly there's not anything like that in North America or Europe at the time. But even by 2019, the share of EVs for the China market is less than 5%. So EVs might have a long history in China. They don't have a successful history. What really changes the game is that Tesla adopts the Apple model. I speak to someone that runs Capex for the Shanghai Gigafactory in the book, who specifically says he hired Apple people to execute the same playbook.

47:45And they go to a whole bunch of factories to improve and localize the supply chain. BYD is one of those suppliers. CATL, Battery Giant, is one of those suppliers. And so they train them how to do everything that's necessary to build a Tesla. And then those companies use the upskilling that they've received to improve the rest of the Chinese market. So in China, this is actually called the catfish effect. It's sort of misleading, but it's interesting enough that I'll quickly go through it for you. So the idea, it's sort of based on a myth, is that a Norwegian fisherman realized that catfish, no, am I getting this right?

48:17Have you read the book? Now I'm wondering if I'm getting it wrong. catfish and no sardines. Okay. So sardines, if they're kept alive, when you, when you catch them and bring them back to shore, um, are tastier and therefore more expensive if they're, if they're kept alive. The problem is they just sit in a tank and die as you take them back. So the catfish effect is throwing a catfish into the tank and then they sort of Darwinian style struggle for their own survival, keep themselves alive. Um, and therefore they're, they're, they're a tastier bet. So the catfish effect in China is why don't we throw Tesla into the mix and through a sort of inspiration of doing a better job, they will improve the whole ecosystem.

48:51Great analogy. I think it's somewhat misleading because it's missing the fact that this isn't just inspiration. This isn't just people think EVs writ large are cool because Tesla's cool. They're missing the Apple playbook, which is that Tesla is literally upskilling all of the suppliers and then, frankly, for its own benefit, but then it benefits the entire ecosystem. So at what point do EVs really take off? It's within 24 months of Tesla setting up the Shanghai Gigafactory to such a degree that even before tariff man became president, Biden put 100 % tariffs on Chinese EVs. So in other words, the influence of Apple and Tesla on the EV sector, I think, is deserving of academic scrutiny and so forth.

49:29And I would love for someone to be able to pinpoint it more, but I think it's extraordinary. I mean, it all comes down to this tension between short-term capitalism or believing in free trade and thinking that you want China to succeed and that if they can make products more inexpensively and we can focus on the IP. The average assembly worker, I think at Foxconn makes, I don't know, five or six grand a year or 10 grand. And the average person at Apple makes 200 grand a year, that this is a mutually beneficial ecosystem with comparative advantage. Or, and I'm curious if you were advising U.S. policy, or we are trading off long-term strategic advantage by upskilling an adversary, and we should bite the bullet and have higher costs and maintain that IP and that manufacturing domain expertise domestically, or at least amongst, you know, as you said, French shoring.

50:20Like, what would you advise? Because I can argue both, and I mean this sincerely. I'm asking this question to learn, not because I have a viewpoint here. I see really solid arguments on both sides. So, if you look back at the last 20 years, it really has been the golden age where a company like Apple can work on the design, you know, the software and outsource all of their hardware manufacturing to a company, sorry, a country and many companies ready and willing and able to do it. The problem is the Chinese, and obviously, I mean, you can't begrudge them for this, have no desire to stay at the low end value of everything, right?

50:54So if people are familiar with the smiley curve of product development, this is where like the two ends of the smile are, you know, product conception and design, and then you dip down into all the low value manufacturing stuff, and then it comes back up for retail and branding and so forth. Well, the Chinese don't want to just stay at those levels. And so they're not, right? So that's why you have companies like Huawei that now do brilliant industrial design on par with and perhaps better than what you're getting out of Apple. And we can come back to that if we need to. And so if we are just doing the design and the branding, but all of our manufacturing is dependent on a belligerent country who would rather be hosting the whole supply chain, the whole smile, if you will, it puts Apple in a really precarious position because, you know, if new roadblocks come up for Apple production or, you know, things we've seen like Chinese officials aren't supposed to use the iPhone, like Apple is just in such a place where at any given point, if the Chinese leadership really wants their own companies to be dominant, not just in China, but globally, there's not a hell of a lot stopping them.

51:59And Apple really does have no plan B. And if you think of India as plan B, but understand that actually it's a bunch of sub-assembled phones from China just being put in for final assembly, that's not really a plan B at all. Now, maybe that's the first step. And in five, 10 years, they have a plan B, except the problem, of course, is that Beijing knows this. And so Beijing is going to make it difficult for them to do it. So they're in a really difficult spot. I think I had a second answer to that, which is that on the one hand, you've got the 20-year look back. And on the other hand, Oh, yeah.

52:28This is where I get back to the integrationist world. I mean, I don't have an issue at all with Apple or any number of multinationals working with India, with Taiwan, with South Korea, with Mexico. I mean, that's fantastic. I think it's a total fantasy that we're going to sort of vertically integrate all this stuff just in America. but America is a nation that has many allies and free trade is a great thing. The trouble is you're doing free trade with a company that sort of uses and abuses free trade, you know, exploits their own workers and treats these individuals as second-class citizens. And Apple is sort of doing this for the benefit of its own company.

53:02But yeah, at the absolute long-term loss of all these skills. I mean, I quote someone in the book, Michael Hillman, saying, Apple has done a tremendous job of maintaining the experiential know-how. I mean, they know how to build this stuff. They've got proprietary processes for it. The trouble is the only place to actually execute the plans are in China. So I don't think it's a big deal if the plans are sort of like resiliently based in India and Taiwan, sort of allied nations where we can use Apple's presence as a sort of bargaining chip and hopefully get Narendra Modi to stop playing footsie with Putin, things like that.

53:32But when everything's in China, I mean, not only is it a belligerent nation, but it's so large that it doesn't participate in Pax Americana. It seeks to overthrow it. By virtue of this book, I would argue have some domain expertise into U.S. industry, Chinese industry, companies that leverage both to their advantage. Generally speaking, and I don't want you to make a stock prediction here, but what do you, coming out of this book, do you feel more bullish or bearish on the U.S. or the Chinese stock market or business more generally? Oh, it's an easy question, except that you're throwing on stock market.

54:1220 years henceforth, are you bearish or bullish on China? And then the same question on U.S. industry. So I'm super bullish on Chinese industry. I'm super bullish on their market share. But they practice a form of capitalism that doesn't prioritize profits. They prioritize control. So BYD is actually collapsing its prices right now, even though they are at a point where they probably could be raising them. So what does that mean for BYD stock price? Long term, I don't know. It fell on the news of them sinking prices the other day. So what I'm saying is I'm bullish on the Chinese industrial sector taking more and more share.

54:49I'm bullish on Chinese taking share from iPhone within Apple. from Apple. However, I don't know what that means for the stock price of Xiaomi because it's different and it's not their goal. And in fact, I would say to sort of Western listeners, stop looking at industries, looking at the share of American profit and saying, look at how good we're doing. You need to be looking at things like market share because that's what the Chinese are trying to control. They're not interested in profit in the way that we are. They have a drive for indigenous innovation and control. And by offering cutthroat prices, they're effectively deindustrializing all national competitors.

55:28So Apple seems to be the tip of the spear, at least from a perception standpoint, that when Trump wakes up with the wrong blood sugar, he goes after Apple and gets angry. It seemed like Biden was putting tariffs on Chinese EVs. We've talked a little bit about Tesla and some of that technology spillover or domain expertise spillover, I think you've said, is also occurring among the Chinese EV market. What are companies three, four, and five, or do you know them, American companies that have really developed a sophisticated supply chain in China? My focus has been so much on Apple, but I'm not sure.

56:03I mean, Tesla would certainly be one of them. Tesla's in a better position because they do build cars. First of all, they do stuff on their own, right? So yes, they have a supply chain, but they also have a lot of the IP. They actually do build stuff in a way that of course Apple doesn't. But, you know, Gigafactory in Shanghai is their most important factory and it accounts for 50 % of output, But they do have a localized supply chain in the US. They do have a localized supply chain in Germany. So they're far less exposed. They're really the most, the closest to Apple. I mean, A, they adopted the strategy, but B, they're a hardware company, you know, worth a trillion dollars.

56:34You don't really have any other examples of that, right? Amazon, Google, Meta, these are companies built on things like digital advertising. In the case of Amazon, obviously just selling lots of stuff and being a logistics powerhouse, but nobody else rises to the level that Apple has, right? So when people say, why are you picking on Apple? Well, it's the only company with$400 billion of revenue. 80 % of it is hardware and 90 % of that is in China. Find me another company I should be picking on of that size. make some predictions here and i won't we won't hold you to them but what if you were to say in one to three years we make predictions every year and by the way we always say we get a lot of them wrong but if you were to try and say okay i'm i'm willing to make a couple of speculative bets here about what happens and this can be about apple or any other companies but you i was saying i've written a lot of books at the end of the book i feel like for about 10 minutes i know more about one very narrow topic than anyone in the world.

57:30And then within 11 minutes, someone else has written something else that I didn't see. You right now are at the helm of the bobsled, looking at the intersection between the U.S. and the Chinese economies and our most important companies. Any thoughts on how you see this playing out? So the ones that I think are clearest, where I don't have to be too crystal ball-like, is that Apple's market share in China is going to fall. It already is on track for a third year of declining share right now. The reasons are actually more to do with AI than anything else, because Apple is not allowed to use ChatGPT, and Siri is, to quote Sachin and Della, dumb as a rock.

58:08So they need a local partner in China, but the local partners, like the likes of Baidu and Alibaba, are going to work more sort of seamlessly and hand-in-hand with the Chinese competitors. And the Chinese competitors with or without AI are really good. I mean, the best phone in the world today is a$2 ,800 Huawei Mate XT, and it's a little bit thicker than an iPhone, but it unfolds twice into a 10.2-inch tablet. Apple doesn't have a single foldable phone. Huawei's got a double fold, right? Tri-fold is called, but it unfolds twice. I mean, it's just a marvel of industrial engineering. And the fact that it's$2 ,800 has led critics to say, like, oh, no one's going to buy this thing.

58:48And like they're just missing the whole point. It was only 11 years ago when Johnny I was complaining about Chinese mimicry. The Chinese have really gone from mimicry to doing a better job on both industrial design and manufacturing than Apple. That's a remarkable change in just such a short period. So Chinese market share for Apple will decline. That's prediction one. Prediction two, I mean, honestly, I think it's a status quo in terms of where Apple is building their stuff. because the most obvious thing that Apple should be doing is doing more assembly in India. And they need to be building out the quantities, the depth and breadth of the supply chain with India in itself.

59:24I think Apple's sort of pretending to do that rather than really doing it the way that people seem to think. But because Trump is against it, imagine what Tim Cook's options are here. It's A, like give up because you don't want the political backlash from Washington. Well, that's sort of a terrible idea. or contravene the president who has any number of things he can do against you, even if it's just, you know, tweeting bad stuff about you on Truth Social. So that's a bad decision too. So I think the status quo is most likely just in terms of everything will still be built in China and America will continue to be hollowed out and de-industrialized by lacking the sort of expertise here.

1:00:01Patrick McGee is an award-winning journalist who covered Apple for the Financial Times from 2019 to 2023. Previously, Patrick was a Bond reporter at The Wall Street Journal. His book, Apple in China, The Capture of the World's Greatest Company, is out now. Patrick, really enjoyed this conversation. Also, I got such a kick out of seeing you on The Daily Show and all the tension. It's a nice moment for you. You seem like this really hardworking, super smart young man. It's just nice to see people like you succeeding and getting your kind of moment in the summer. What is the first of many moments?

1:00:34Oh, thank you. I mean, that was absolutely my career highlight. We had seven people with VIP tickets that had all flown in from Canada. This isn't your career highlight, Patrick. This isn't it right here. Close second. Close second. Maybe it was in person or something. Maybe that would change things. Anyways, Patrick, really appreciate your time. Congrats on the book. Thanks, Scott. Appreciate it.

1:01:06Algebra of happiness, you're not your kid's friend. I'm struggling a little bit with my boys, or I should say I'm not struggling with them. I'm struggling with me as it relates to my boys. And that is, I had this vision of what fatherhood would be like, that I'd be their best buddy and that they would come to me for advice. Kind of I'd be like Phil and Luke on Modern Family. My boys are fortunately a little bit more clued in than Luke. And I'm not nearly as likable as Phil. But I sort of imagine that kind of relationship where they would be fascinated by World War II history and CrossFit and want to watch movies with me because it was a chance to hang out with dad.

1:01:39And my kids of 14 and 17, quite frankly, are just dramatically less interested in hanging out with me than they used to be or that I would like. And quite frankly, it's hurtful. It's upsetting. And what I've realized, and I'm trying to, you know, the bottom line is I'm not their friend. I'm their dad. I'm there to be a consistent source of comfort and security and love and to model good behavior and to provide discipline and hopefully some learnings. But the fact that they're venturing out on their own and into their own things and kind of rolling their eyes a lot at what I do and say, that's healthy.

1:02:15There's a natural instinct across kids as they start getting to the point where they're supposed to separate from the pack, where they start finding everything you do ridiculously fucking lame. And we have definitely checked that box. But what Michelle Obama said, that you're not your kid's friend, is really true. And I'm trying to take it to heart because it has been difficult for me. And what I would say to dads out there, as long as you're present, as long as you're a source of unconditional love, as long as you're a provider, it's okay if they're kind of finding their own gig and they find other things more interesting.

1:02:46You want that. You don't want a kid who is too dependent upon their friendship with you, the crowds out, or that you're sort of the only person they're comfortable around. I don't think that's, I absolutely don't think that's what you want. In sum, you're dad. You're not their best friend. You're their father. And I'm also hopeful that my kids, when they get a little bit older, will sort of come back, if you will. What I think what I'm struggling a little bit with is that I don't get as much garbage time with them because I don't take them to school or they're not as sequestered or trapped with me as they used to be.

1:03:20But in sum, if your kids are, quote unquote, leaving you with you a little bit from an emotional or a present standpoint, that's probably a good thing. It means that they're developing into their own men. And that's OK. You're their dad, not their friend. This episode was produced by Jennifer Sanchez. Our intern is Dan Chalon. Drew Burrows is our technical director. Thank you for listening to the Prop G pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our Prop G Markets pod wherever you get your pods for new episodes every Monday and Thursday.

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