How Apple has played the numbers game in China

CEO Cook’s alleged ‘secret $275 billion deal’ with Chinese officials could trigger fresh security concerns in the US

Listen to article

Apple is on the verge of becoming the first US$3 trillion company after taking a massive bite out of China’s market.

The American tech giant edged past the $1 trillion mark in 2018 before hitting the $2 trillion high-point for a publicly-listed company two years later. Now, it is close to ringing up another milestone, boosted by its presence in the world’s second-largest economy.

Already Apple’s iPhone is the top-selling smartphone in China, a move masterminded by Chief Executive Tim Cook.

“The company owes much of that success to Cook, who laid the foundation years ago by secretly signing an agreement, estimated to be worth more than $275 billion, with Chinese officials,” The Information reported last week.

“[He did this by] promising Apple would do its part to develop China’s economy and technological prowess through investments, business deals, and worker training,” the technology publication based in San Francisco said.

The deal could trigger fresh scrutiny in the United States as the tech war between Washington and Beijing escalates. At the time of going to press, Apple had yet to respond to media requests for comment.

Promised land:

  • CEO Cook allegedly pushed for the “five-year agreement in 2016,” according to The Information.
  • It “was during the first of a series of in-person visits he made” to China, the American publication stated.
  • According to internal Apple documents viewed by The Information, Cook acted after “a sudden burst of regulatory action against” the company’s business.
  • “Amid the government crackdown and the bad publicity that accompanied it, iPhone sales plummeted,” the American publication claimed.
  • “Chinese officials” felt “Apple wasn’t contributing enough to the local economy, the documents show,” The Information said.

What was said: “The promised investment included using more components from Chinese suppliers, signing deals with Chinese software companies, collaborating with Chinese universities in research and development, and investing directly in Chinese tech firms, according to The Information, citing internal documents and interviews,” the South China Morning Post reported.

Delve deeper: Last month, Cook made it clear that Apple has a “responsibility” to do business in places such as China. “World peace through world trade,” he said at The New York Times‘ virtual DealBook conference as reported by Business Insider.

Big picture: President Xi Jinping’s ruling Communist Party has an appalling human rights record. “At least two million Muslims, including Uighurs, Kazakhs, and Uzbeks, are locked in ‘re-education camps’ in China,” a coalition of 200 global campaign groups said in a September statement.

Civil rights: In a damning report, Amnesty International has painted a picture of political persecution in Hong Kong that “violates human rights.” Freedom of speech in the city has been muzzled by a Beijing-imposed National Security Law. Mass arrests have followed with major pro-democracy activists imprisoned.

Police state? “In one year, the National Security Law has put Hong Kong on a rapid path to becoming a police state and created a human rights emergency for the people living there,” Yamini Mishra, the Asia-Pacific regional director at Amnesty International, said in the summer.

All about the numbers: It is against this backdrop that Apple continues to ramp up its operations in China. The Reuters news agency reported that the California-based company posted a staggering 83% annual sales growth in the country in its fiscal fourth quarter.

China Factor comment: Most of Apple’s products are produced in China. That says it all.