The greed for rich consumer base in China has swayed the tech giants to take bad long term decisions. However, while many companies have had limits to their greed, Apple has stooped to paying bribes to the Chinese Communist Party (CCP) for keeping its business prospects alive. Reports of a previously undisclosed agreement between Apple and China have surfaced. Tim Cook, Apple’s CEO, signed the deal in 2016, which is expected to be valued at around $275 billion. This covert pact is now being blamed for the iPhone’s rapid rise to the top-selling smartphone in China, the country’s second-largest market.
According to reports, the five-year agreement was reached when Cook conducted visits to China in 2016 to quell a slew of regulatory actions against the business. According to the story, Cook persuaded Chinese officials, who feared Apple was not contributing enough to the local economy, and signed the agreement with a Chinese government agency, making concessions to Beijing and gaining significant legal exemptions.
Some of Apple’s investment in China would go toward building new retail stores, research and development centers, and renewable energy projects, the report said, citing the agreement.
Apple’s rising profits in China:
Apple’s resurgence as China’s top smartphone brand comes almost six years after it was last in the top spot. This was owing to the iPhone 13 series’ strong performance in October, which boosted sales by 46% month over month. This performance is even more amazing when you consider the Chinese market’s modest 2% growth over the same time period.
Vivo and OPPO, two local Chinese original equipment manufacturers (OEMs), were the top OEMs in 2021 before Apple’s arrival. For half the price of Apple’s top-end handsets, these companies provide flagship smartphones with similar build and quality. Due to the rise of Chinese phone firms such as Xiaomi, OPPO, Vivo, and Huawei, the iPhone’s prior supremacy has been challenged. However, as more Chinese consumers chose the iPhones, their sales began to decline.
The action by Apple proves it is the most sinicised American company:
During a series of travels to China, Tim Cook was at the forefront of securing the agreement. Apple officials, on the other hand, saw the necessity for these visits and, as a result, a contract as a way to quell all of the negative headlines in China and repair relationships with Chinese officials who believed Apple was not doing enough to support the country’s economy. Cook “personally persuaded officials”, according to internal papers, to calm anxieties about Apple Pay, iCloud, and the App Store.
According to the article, Cook requested a memorandum of understanding (MoU) between Apple and China’s National Development and Reform Commission in exchange for exemptions from the country’s imminent rules against Apple services. The agreement was roughly 1250 words lengthy, and produced by Apple China’s government affairs team, but Cook was in charge of it.
According to the article, the transaction includes a $1 billion investment in China’s Didi Chuxing ride-hailing business to please the authorities. As the agreement progressed, Apple was able to stifle the rules that China was threatening to enact against the iPhone maker. Apple’s operations in China were also put back on track as a result of the agreement.
Apple promised to assist Chinese manufacturers in developing “the most advanced manufacturing technologies”, to support “the training of high-quality Chinese talents”, to use more components from Chinese suppliers, to sign agreements with Chinese software companies, to collaborate with research at Chinese universities, and to invest directly in Chinese tech companies. Apple was also urged to help a dozen public initiatives by the government.
The pact also included a clause that stated that if neither party, which included Apple and the Chinese government, objected, the arrangement would be extended for another year until May 2022. These developments show how much Apple is willing to let go of its ethical standards just to appease the Chinese Communist Party.