After facing political attacks, Apple realized its retail sales were not its main leverage with Beijing. Its real power was its massive, multi-billion dollar investment in training hundreds of local suppliers. This positioned Apple as the single largest contributor to China's high-end electronics capabilities, a key government priority.

China offers a hyper-concentrated manufacturing ecosystem where suppliers are neighbors, supported by world-class infrastructure. This dramatically speeds up prototyping and production, turning complex international logistics into a simple "walk down the street."

To compete with China in manufacturing, the US can't rely on labor volume but on productivity from AI and robotics. This requires eliminating the friction of distance between R&D talent (in the Bay Area) and factory floors, making talent-proximate manufacturing parks a strategic necessity.

China's durable advantage isn't just its massive workforce but the collective "process knowledge" generated on factory floors. This expertise in solving countless small manufacturing problems cannot be easily written down or encoded in equipment, creating a powerful, hard-to-replicate competitive moat.

Apple's deep reliance on China is not just about cost but a 25-year investment in a manufacturing ecosystem that can produce complex products at immense scale and quality. Replicating this unique combination in India or elsewhere is considered fanciful.

Dan Wong argues that the West wrongly separates 'innovation' (its domain) from 'scaling' (China's domain). Chinese workers innovate daily on factory floors, giving them a practical edge. For instance, Tesla's Shanghai Gigafactory workers are over twice as productive as their California counterparts due to superior automation and process improvements.

The belief that China's manufacturing advantage is cheap labor is dangerously outdated. Its true dominance lies in a 20-year head start on manufacturing autonomy, with production for complex products like the PlayStation 5 being 90% automated. The US outsourced innovation instead of automating domestically.

Apple wasn't a visionary in offshoring; it was a laggard. Its move to China was driven by the inability to manufacture the radically different iMac, a product designed to save the company. This desperation forced it to abandon its long-held control over manufacturing and partner with Asian suppliers.

The common practice of offshoring manufacturing, exemplified by Apple, creates a critical flaw by severing the feedback loop between designers and producers. This leads to suboptimal product design and simultaneously transfers advanced manufacturing skills and capabilities to other nations, like China.