The Chinese Communist Party (CCP) banned officials at central government agencies in China from using Apple iPhones and other foreign-branded devices for work or bringing them into the office.
Yoko Kubota for The Wall Street Journal:
The directive is the latest step in Beijing’s campaign to cut reliance on foreign technology and enhance cybersecurity, and comes amid a campaign to limit flows of sensitive information outside of China’s borders.
The move by Beijing could have a chilling effect for foreign brands in China, including Apple. Apple dominates the high-end smartphone market in the country and counts China as one of its biggest markets, relying on it for about 19% of its overall revenue.
It wasn’t clear how widely the orders were being distributed, but similar messages were communicated to employees at some central government regulators.
Beijing has for years restricted government officials at some agencies from using iPhones for work, but the order has now been widened, the people said. The latest order also signals an intensified effort by Beijing to ensure its rules are strictly enforced.
MacDailyNews Take: As we wrote last November:
In 2016, Apple’s “Operations Genius,” Tim Cook, secretly signed a secret agreement with the human rights-abusing Chinese Communist Party estimated to be worth more than $275 billion. Cook promised that Apple would do its part to develop China’s economy and technological prowess via infrastructure investments, business deals, and worker training in exchange for the CCP quashing its surge of what promised to be crippling regulatory actions against Apple, The Information reported last December.
Many years before that, some two decades ago, it was Cook who spearheaded Apple’s move to make products “Designed in California,” but “Assembled in China.”
Since Cook, 62, made his $275 billion secret deal with the CCP five years ago, and as he now nears retirement age, Apple has made precious little headway in diversifying its production away from capricious, authoritarian China.
Why?
If the $275 billion wasn’t to buy Apple half a decade to free itself by diversifying its production away from China, mitigating risk, what was it for?
Longtime Apple analyst Gene Munster [in November 2022] estimated that it would take as long as a decade for Apple to reduce its current near-total reliance on China to meaningful levels.
At the current rate, it doesn’t look like Apple has 10 months, much less 10 years to extricate itself from China.
Tim Cook painted Apple into this corner. It worked marvelously well, until it didn’t.
A publicly traded company CEO’s job is to act in the best interest of its shareholders.
But, Apple’s operations don’t scream “genius” today. They scream “RISK!” But, you know, the market just loooves risk.
Apple shareholders and, in turn, Apple’s rubber-stamping Board of Lackeys, should hold one person responsible if this spiraling China dilemma continues deteriorate: Timothy D. Cook.
So, what’s Cook’s plan for getting the company out of this boxed-in predicament into which he placed it? Certainly Apple shareholders have a right to know. Hopefully, Cook has a better plan than simply cashing out and dumping this nightmarish quandary into the lap of Apple’s next CEO.
See also: Tim Cook firmly latched Apple onto China’s CCP teat. What’s his plan for weaning it off? – November 2, 2022
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This non-news may push AAPL lower for a few days. However, as the article specifies, the law stipulates that iPhones are “restricted” to “government officials at some [now many] agencies from using iPhones for WORK” (emphasis mine). I suspect that its quantitative effect on worldwide sales will be miniscule.
But, as it can go, if this insignificant news flash gets legs, there could be a sizable fraction of investors who will be scared off. That’s life.
isn’t it interesting though, how the jealousy of governments and supra-government bodies (viz., the EU) can have a profound effect on the success of targeted private corporations, sometimes overriding the inherent technological success of the underlying products.
For many years Apple has slowly been moving production out of China into Vietnam, India, and other countries. Apple isn’t starting now. Apple isn’t starting in the near future. Yes, it takes time to build factories and staff them. Yes, it takes time to get the quality assurance up to what is necessary even after the non China factories are up and running.
However, it is absolutely ridiculous for MDN to paint this and a new crisis. Tim Cook did what was best for Apple (NOT AAPL!) 18 years ago. That was even supported by Steve Jobs. Tim Cook has seen the writing on the wall for several years and has been acting accordingly.
As M’RM states the impact of sales of Apple’s iPhones due to many Chinese government workers not being iPhones for government work will be minimal. Many of those workers will use an inferior Chinese government sanctioned phone for government work AND have an iPhone for their personal use. Hell, even in the U.S. many government workers have two phones: one for government work and one for personal use.
I can agree with your point affected workers will simply have to purchase an alternative phone (most likely Android) for work use.
The question of scope probably depends on what constitutes a government worker in China where many companies are ultimately State owned.
I’m convinced that the issue is not “to limit flows of sensitive information outside of China’s borders” but because the Chinese government can’t as readily spy on their “officials” that use Apple’s products. They’re forcing easily hackable/trackable Android software on their masses, because they are a surveillance State. I’m sure that the ‘droid foisted upon bureaucrats will be left at work when they go home …
What a bunch of cook ccp boot lickers.
MDN take is on the money. Yes, this doesn’t mean big loss of revenue in the near term, but the evil awful ccp just turned up the heat in cooking the frog in its hot tub. If you don’t see that, you’re dismissed from the adult’s table.
China is a communist humanity destroying s’ hole, and apple should have diversified long ago. Apple should make 10% of products in the USA, 20% in Europe. 20% in South America. 15% in Japan and South Korea. And maybe 35% split between china and India.
Cook failed at business 101. Diversification of markets. Yes Steve hired cook to bring manufacturing to china, but not only bring all its manufacturing eggs into one hostile communist hellhole. And china was far different when jobs pushed for entry there at behest of cook, the biggest operational failure in business history.
Apple needs a master chef, unfortunately and instead, they have a lousy cook.