Apple sells iPhones all over the world, but it builds them in China with the help of manufacturing companies like Foxconn and Pegatron. A particular Foxconn facility in the city of Zhengzhou, China, is the subject of a lengthy report in The New York Times today. The report details the complex series of tax breaks, subsidies, and other incentives that makes the Zhengzhou facility so uniquely suited to Foxconn's and Apple's needs.

Confidential government records obtained by the Times reveal, among other things, that the city of Zhengzhou helped finance the construction of Foxconn's factory and housing for its workers; that it provides discounted energy and constructed power generators and other infrastructure to support the facility; that it has waived and deeply cut corporate and value-added taxes; that it helps Foxconn hire and train workers; that it put its factory inside a "bonded zone" that made selling devices within China easier; and that it spent a total of $10 billion to upgrade an airport to make exporting products from China quicker and easier for Apple and other companies.

The report also highlights just how important Foxconn is to Apple and vice-versa. Apple relies on Foxconn to keep its costs down and profit margins up, and Foxconn relies on orders from Apple to maintain the size and clout that makes it possible for Foxconn to cut such favorable deals in the first place. The Zhengzhou plant can build as many as 500,000 iPhones in a day. While Foxconn also manufactures electronics for other companies, the bulk of the work is being done on Apple's behalf.

Factors could disrupt this arrangement, however. In particular, the Chinese government is increasingly interested in backing Chinese companies, which could keep cities like Zhengzhou from offering such attractive deals to companies based in the US and elsewhere. President-elect Donald Trump has also threatened to impose heavy taxes on Chinese imports, which could kick off a trade war and change the financial calculus significantly.

The entire piece is worth a read, especially in light of the rhetoric about trade and jobs we heard throughout the US presidential election. Trump asserted on the campaign trail that he would “get Apple to start building their damn computers and things in this country, instead of in other countries.” Since the election he has spoken with Apple CEO Tim Cook about building “a big plant” in the US. The Times report highlights just how difficult it would be (and how long it would take) to recreate those incentives and move those manufacturing jobs to the United States or anywhere else.