Apple relies on China for its huge production capacity. Majority of the Apple products are still manufactured in China. However, over the last few years, Apple has been facing issues in China due to political tensions between the US and China, along with the COVID-19 outbreak. Therefore, the brand has been slowly shifting its production to countries like India.

Despite these issues, Apple is currently the most profitable corporation in China. The pandemic’s effects on lifestyle allowed Apple’s China business to expand quickly; s its operational earnings increased by 104% over 24 months to $31.2B in the fiscal year ending in September. According to an estimate from FinanceTimes, Apple is currently worth more than Tencent and Alibaba put together ($15.2 billion and $13.5 billion, respectively).

Apple

According to the article, Apple and China reached a deal that allowed the iPhone manufacturer to escape a “crackdown on local IT firms,” which is how the profits came about. The agreements, which were made as a result of CEO Tim Cook’s repeated diplomatic visits to the nation over the years, have greatly strengthened Apple’s supply chain in the area. The agreement enables Apple to keep “unrestricted access” to affordable labor and manufacturing, which are crucial to its success.

However, critics argue that Apple’s proximity to the government and access to resources has made it more willing to comply with administrative demands. This includes storing Chinese user data in a data center owned by a provincial government, removing thousands of apps from the App Store, and avoiding controversial topics.

Other advantages of diplomacy for Apple include a significant weakening of Huawei. In 2019, Chinese citizens aided in the purchase of Huawei smartphones, propelling the local manufacturer past Apple in global sales that year. Now, Apple practically owns China’s $600+ smartphone market, with only few competitors able to compete at that level.

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