China is the second market for Apple after the United States. iPhone is the best-selling smartphone in China. But it was not always so. Since 2016, Apple has done a great job of rapprochement with the Chinese authorities, found common ground with local regulators and improved the company's public image. In 2016, Apple ran into trouble in China. Local regulators have squeezed all sides of Apple's business, interfering with Apple Pay, iCloud, the App Store, and iTunes. I had to negotiate. Tim Cook personally met with top officials and signed a +1200 word memorandum with the local economic planning agency.
Apple has made a bunch of commitments:
help Chinese manufacturers develop advanced manufacturing technologies;
to provide training of highly qualified personnel;
use more Chinese components;
cooperate with Chinese software companies and technological universities;
invest in Chinese tech companies (Apple had already invested $ 1 billion in Didi, a competitor to Uber, the most expensive Chinese startup at the time).
In total, Apple has pledged to invest more than $ 275 billion in the Chinese economy over five years. The state, for its part, has promised to provide "the necessary support". Similar memorandums were previously signed by other companies with production and R&D in China - Microsoft, Cisco, Intel. These are not contracts, they are not technically binding, but they are taken seriously in China. For large foreign companies, this is a way to get the favor of the country's leadership, i.e. make sure that companies do not get in the way.
In the text, there are a lot of points on which Apple had to bend or managed to agree.
China has made the disputed Senkaku Islands appear larger than they should on Apple Maps. Without this, the company was not allowed to sell Apple Watch in the country.
The regulator closed iTunes in China due to the fact that Apple did not have the necessary licenses for the content, and Apple refused to co-operate with a local company and censor the content.
The regulator blocked the operation of servers that stored Apple Pay encryption keys for Chinese users. The problem was solved by involving third-party experts who explained that everything is ok with the servers, everything is secure.
The authorities demanded that a local partner be allowed to serve iCloud (foreign companies in China cannot serve cloud services). Apple bargained, eventually building data centers in regions with weak local authorities, with which it is easier to negotiate. The strategy worked - the key hardware is controlled by Apple, and Chinese companies do not have access to encryption keys.
Chinese telecom operators - China Telecom, China Mobile - also had their interest in this big game. The authorities tried to squeeze them into the iCloud datacenters and the App Store. Apple executives suspected that the operators had lobbied for these proposals through officials.
Smartphone manufacturers have been obliged to enable users to remove pre-installed applications. Apple has lobbied for changes to the text of the law, thanks to which iCloud was removed from this norm. The topic was raised to the level of Cook's meetings with the country's prime minister.
Cook also agreed that the authorities would stop demanding the iOS source code from Apple.
Cook's personal diplomacy with Chinese top officials generally held a huge part of the company's relations with China. In this regard, the top Apple in China expressed concern - they say, Cook makes all contacts on himself instead of involving other leaders in solving issues. Other minor issues: scrutiny of Apple Pay, delays in deliveries from South Korea at customs after the Koreans agreed to deploy US air defenses, and Apple's corporate social responsibility.
Cook was dragged into a conference by the main local Internet regulator, i.e. the agency responsible for monitoring and censoring the network. Apple entered into a project with a wind turbine manufacturer, opened new R&D and data centers, appointed a top manager for China, established a $ 300 million clean energy fund and a research center at the university, opened 11 new stores, and deepened cooperation with Chinese contractors who assemble smartphones. The company complies with Chinese laws - stores data domestically, blocks news apps, VPNs and LGBT apps in the Chinese App Store. And even partners with companies that use Uyghur forced labor.
For fiscal 2021, Apple set a record for sales in China - $ 68 billion. That's all, draw your own conclusions.
For those who want to know more
AI-GULAG: How Artificial Intelligence Helps Re-educate Dissent in China
Modern China with your own eyes
Polite and agreeable: how an internet troll factory works in China
Big brother will not keep up: how the world learned to deceive face recognition systems
9 stories of technology in China that cause paranoia
The big exodus: where are electronics manufacturers fleeing from China and how it will affect us
AFFILIATE DISCLOSURE Some posts may contain affiliate links. Gagadget.com is a participant in the Amazon Services LLC Associates
Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking