The Information released a comprehensive report today detailing Apple CEO Tim Cook’s efforts to build strong relationships between Apple and Chinese government officials and agencies.
Citing both interviews and direct access to internal Apple documents about Cook’s repeated visits to China in the mid-2010s, the report details a $275 billion deal that saw Apple commit to investing heavily in technology infrastructure. and training in the country.
The non-binding five-year deal was signed by Cook during a visit in 2016, and was closed in part to mitigate or avoid regulatory action by the Chinese government that would have had significant negative impacts on Apple’s operations and operations in the country.
The information describes the nature of the Chinese government’s priorities contained in the 1250-word deal:
They include a pledge to help Chinese manufacturers develop “the most advanced manufacturing technologies” and “support the training of high-quality Chinese talents”.
In addition, Apple promised to use more components from Chinese suppliers in its devices, make deals with Chinese software companies, collaborate on technology with Chinese universities and invest directly in Chinese technology companies… Apple promised to invest “many billions of dollars more” than which the company has already spent annually in China. Some of that money would go toward building new stores, research and development centers and renewable energy projects, the agreement said.
To date, Apple has largely fulfilled its part of the deal, and the article describes exceptional cases where Apple has benefited from the strong relationship in successfully circumventing restrictions that would normally be imposed on foreign companies.
For example, the encryption keys for iCloud user data for the region are controlled by Apple, despite government efforts to encourage, pressure, or coerce foreign companies to transfer responsibility for that data to Chinese companies. On the other hand, a commitment from Apple to abide by Chinese government regulations and policies was part of the deal, and Apple has often complied with requests to remove apps and content that conflict with its priorities and policies. goals of the state.
China is one of the world’s largest and fastest-growing consumer markets, but its economy and government operate under very different rules and values than businesses face in capitalist Western democracies. As such, such deals are not uncommon for foreign companies operating in China, although they are not always so secretive.
Chinese officials have traditionally tried to emphasize the health of local and national businesses and have sometimes imposed or announced intentions to impose regulations that dramatically impede foreign businesses out of a desire to ensure success for Chinese businesses. Foreign companies often have to demonstrate strongly that their success will be shared with local companies to avoid these results.
Apple has outperformed most comparable US tech companies in China, with the report saying that this is largely due to Cook’s lobbying, deal making and relationship building. In fact, Cook’s strength in this area has been so critical to Apple’s global success that some members of Apple’s leadership are concerned about the company’s future if Cook resigned.
In other words, while Steve Jobs, former Apple CEO, is perhaps best known for his groundbreaking and popular new product categories, Cook will ultimately be most remembered for making Apple a more sophisticated, efficient and profitable global company than ever. before. If so, it would be thanks to these kinds of deals, as well as a strong mastery of supply-line logistics. (Cook was also the chief architect of Apple’s current product supply chain, which is deeply rooted in China.)
The Information notes that China represents 19 percent of Apple’s total revenue, up four points from a year earlier. It also cites data from Counterpoint Research stating that Apple has recently become China’s largest smartphone brand.