China is now rapidly moving up the value chain. China's industries are expanding in the deep rather than in the broad. Instead of making ever larger volumes of iPhones and iPads China is now trying to increase the Chinese content of that iPhone and iPad. And they are doing that with some success as China now is taking away market share from the likes of Japan, Korea, Singapore, Taiwan and others. More of the profits are staying in China these days. That's one of the reasons why income and living standards in China are going up.
Absolutely correct. I would add that the reason why more % of components that make up products made in China's factories is because there is a conscious decision to build up a local supply chain. Previously, a lot of the components needed to be imported before shipped to the factory to be installed into that iPhone, but now there's a local version that is just as good but costs less (as it can be bought few miles down the road).
Therefore China is moving up the value chain in 2 ways:
1. Making more high tech products that are designed and manufactured in China.
2. Increasing local components within products made by multi-national corporations, which are then shipped overseas.
Win-win.
PS: This means that although factories can be moved to other areas, the supply chain cannot...which means the cost of moving said factories are even higher when considering the entire supply chain of that factory. E.g. Vietnam has significantly lower labour costs than China, why isn't there a dash to move Chinese factories there? Because the overall cost of making something in Vietnam may still be higher than making it in China...despite the much high labour costs.