Apple most profitable

Apple most profitable in China, thanks to US sanctions and Cook’s diplomacy

A new report released today says Apple is now the most profitable company in China, thanks to a suite of US sanctions against Huawei, and CEO Tim Cook’s diplomacy with the government.

The iPhone maker has weathered the Chinese government’s crackdown on other tech companies in the country, thanks to the symbiotic relationship between the two…

a financial times The analysis suggests that Apple now makes more money than domestic tech giants Alibaba and Tencent combined. She says that’s partly because Apple enjoyed a double win.

Impact of US sanctions on Huawei

Huawei was once the default choice of Chinese consumers when it came to buying a premium smartphone.

It was like a ‘national factory’ – Chinese people wanted to show how much they love the country and went out to buy Huawei smartphones, said Archie Zhang, an analyst at Counterpoint.

This changed dramatically when the US government imposed sanctions on Huawei, preventing US companies from selling key technology to the Chinese telecom giant. The action followed allegations that the company installed spyware on mobile infrastructure products sold to US airlines, and called for financial support to Iran.

Sanctions have proven devastating to Huawei by making it difficult for the company to buy key technology such as 5G chips, but most importantly the smartphone company losing its Android license. Without this, he can no longer sell new Android phones.

Apple evading technological oppression

The Chinese government is imposing severe restrictions on most technology companies – both domestic and foreign – over fears that they have become too powerful, and pose a threat to the government.

However, Apple has been almost unique in escaping these limitations. The F He points out that this is a combination of corporate diplomacy by CEO Tim Cook, and a symbiotic relationship between Apple and the Chinese system.

Cook, whose regular visits to Beijing in pre-pandemic times, including meetings with Xi along with other tech executives, helped avoid the fate of other Western tech companies.

This included Apple complying with a range of strict laws, from blocking VPNs, multiple news apps and more — to requiring user data to be stored on servers operated by government-owned companies. The Cupertino company says it has no choice but to comply with local laws in each of the countries in which it operates, but many have criticized it for putting itself in a situation where it needs to act in direct conflict with its purported values.

The mutually beneficial relationship between the two companies also means that neither of them wants to put it at risk. Apple of course relies heavily on China as its production hub, as well as its second largest market. The Chinese government benefits from hundreds of thousands of relatively well-paid jobs that benefit the economy as a whole.

It is clear to Beijing that this is a two-way street. They’re getting a big payoff – lots of jobs and prestige,” said Brian Merchant, author of the book. The One Device: The Secret History of the iPhone“Salaries and standards are better for companies that contract with Apple. This has helped raise salaries for the middle class.”

Photo: Apple Store Sanlitun/apple

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