Thus far, the company has retained an exalted status in China, avoiding the fate of other US tech titans, including Google, Meta, Twitter and Micron, which have seen products restricted or outright banned.
Cook, chief executive since 2011, has been praised as the “architect” of Apple’s production shift to China after originally being hired by Steve Jobs in 1998 to run worldwide operations.
Under Cook’s leadership, years of investment, marketing and careful corporate diplomacy allowed Apple to orchestrate a manufacturing powerhouse while generating more China-based profit than any other company, Western or Chinese.
Paul Triolo, an associate partner at advisery group Albright Stonebridge, said the company “invested a lot in its relationships with both the central ... and municipal governments, particularly in Zhengzhou”, where it has partnered with Foxconn and created hundreds of thousands of jobs.
He added that Apple had been “very careful” to abide by local regulations, taking down politically sensitive apps.
Along with concerns over possible curbs on Apple products, a fresh competitive threat has emerged with the unexpected launch of a new Huawei smartphone in China at the end of August.
The Mate 60 Pro sold out immediately on a patriotic wave of enthusiasm, as teardown experts revealed it was running advanced Chinese chips inside. US sanctions against Huawei had previously crippled the capabilities of its handsets and enabled Apple to dominate sales of high-end smartphones in China.
Apple shares fell further after the less-than-overwhelming launch on Tuesday of the iPhone 15 series, but industry experts said the recent share falls due to events in China were overdone.
Gene Munster, managing partner at Deepwater Asset Management, said a “worst case” was that the ban inside government would cut global iPhone sales by 2 per cent and overall revenues by 1 per cent in 2024.
The Financial Times previously reported that restrictions on government employees using Apple devices already stretched back several years.
“Beijing will be very reluctant to take further actions that weaken Apple’s position in China because this would have a very negative impact on the business climate,” said Triolo.
The Apple-China relationship had been a “win-win” for both parties, he added. Apple had upgraded Chinese manufacturers’ production standards and processes while protecting its intellectual property by diversifying its supply chain to ensure no one supplier could replicate its products.
Three former Apple employees with experience in China suggested the company was unlikely to be worried and suggested Beijing appeared to be engaging in some tit-for-tat action to counter the US’s hardening anti-China policies.
“This shot across the bow wasn’t really to Apple,” one of the people said. “It was to the US government. This is China flexing.”
China’s lack of any public directive against Apple also contrasts its explicit stance when it banned US memory-chip maker Micron from key infrastructure in May, saying it posed “serious network security risks”.
Even so, Cook faces a “delicate balancing act” to diversify more production outside of China while maintaining close ties with Beijing, said one former executive of Foxconn, the Taiwanese company that assembles the bulk of Apple’s iPhones in China.
Apple has 14,000 direct employees in China, but experts estimate it supports more than 1.5 million jobs in the country. Under the strain of US-China tensions, Apple has begun shifting parts of its production to Vietnam and India.
Against this backdrop, experts said Beijing would be keen to support home-grown alternatives to Apple such as Huawei — which was briefly the biggest-selling phonemaker in the world before US sanctions banned it from accessing certain foreign components, forcing it to discontinue sales of its 5G smartphones.
The Shenzhen-based company’s China sales are now supported by its perceived status as a “national champion” by consumers, but even its top-of-the-range Mate Pro still lags the iPhone in technical aspects.
“Huawei has delivered something that is a generation behind. They’re going to be playing catch-up for a long time,” said Ivan Lam, an analyst at Counterpoint Research in Hong Kong, who added that Apple had 80 per cent of the market for phones priced at more than US$800.
“For Huawei to convert that back to 50:50 will be very challenging, or not even possible.”
Written by: Patrick McGee and Eleanor Olcott.
Additional reporting by Joe Leahy in Beijing.
© Financial Times
