Foreign Direct Investment (FDI) has allowed China and Apple to be benefit from each other. Definitely the story of success would have been different if Apple simply decided to export its products or to license its production in China or even franchise its operations.
The reports from BBC states that the market demand for apple products in China is massive and it has the largest phone market. One month ago large crowds have gathered overnight to buy Apple iPhone 4S in the Sanlitun area of Beijing at its launch. The company did not open its store due to the large crowd and for safety purposes.That ended up throwing eggs at the store. However it seems there is a good demand for Apple products in China for people to standup and wait overnight.
Why does a firm choose FDI over other options to expand business. In theory, there are many reasons. It could be for special raw materials, low production cost, to seek different knowledge, or to seek new markets. It could even be due to political stability.
However these strategies are also possible even without FDI, in the domestic markets. Choosing the best strategy depends ultimately on the basic long term shareholder wealth maximization. So why did Apple choose China? instead India? or may be another country in Europe? I suppose that its simply due to its potential large phone market and low cost labor. Apple could expand its market shares with a low cost reasonably due to the large population, advanced technology and emerging middle class sector in China.
However, after the allegations of apple worker abuse in china, its seems that apple has taken the advantage over Chinese labour. It seems that human cost is massively ignored by Apple. There are allegation of people even had died in this working environment.
Thus, probably that is why apple did not choose any other country to invest. It may be that apple new that Chinese labour market is the best for them to make more profits.