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September 2010 - October 2021

China

China has been fundamental to Apple’s historical success, but is also arguably the greatest risk to the company’s future.

Why are most Apple products made in China?

Although everyone assumes Apple products are made in China because labor is cheap there, that’s only part of the story – and an increasingly small part, as the company’s assembly partners move toward increasingly automated operations.

Steve Jobs originally transferred most Apple manufacturing to China because it was the only country in the world with a huge ready-made supply-chain network, and the ability to scale up production almost overnight. There are three main reasons China – and specifically the Shenzhen area – is such a powerful manufacturing center.

First, the city is strategically placed, serving as the gateway between mainland China and Hong Kong. It is one of the largest shipping centers in the world, with a massive container port.

Second, the Chinese government established Shenzhen as the first Special Economic Zone (SEZ) in the country. SEZs are designed to encourage enterprise through relaxed planning regulations and generous tax incentives – and crucially, to facilitate foreign investment in local companies. It is this, as much as its geographical advantages, which has enabled it to grow at such a pace.

Third, that SEZ was established way back in 1980, meaning that the city has had over 40 years to grow into the manufacturing center of the tech world. Apple relies on a huge network of suppliers and sub-contractors, some of which may make just a single tiny component. The majority of them are based in Shenzhen and its immediate surrounds, so the logistics of bringing everything together in one place for assembly are straightforward.

What are the risk factors with China?

Being over-dependent on China carries a number of risks.

First, there is the generic one: Being overly dependent on any one country is a strategic risk. For example, the COVID-19 pandemic originated there, and had a massive impact on manufacturing capacity. Anything from a natural disaster to political upheaval could disrupt operations within a single country, so it is always wise to have a diverse range of manufacturing centers around the world.

Second, the relationship between the US and China has often been fraught. The trade war started by the previous US administration was a particularly low point, but continued tensions mean that there is always a risk of disruptions to trade between the two countries.

Third, it is increasingly damaging to Apple’s reputation to be so closely associated with a country that has a worsening human rights record – especially when the iPhone maker has no choice but to comply with local laws, however much they may conflict with the company’s own values. Apple has been required to remove VPN and a variety of other apps from the Chinese App Store, allow the iCloud data of Chinese customers to be stored on government-controlled servers, and more. Additionally, there have been growing reports of forced labor in China, including within many different areas of Apple’s supply chain.

What is Apple doing about it?

Apple has been working for a long time on diversifying its manufacturing operations, and has in recent years accelerated the pace at which it is doing so.

As explained above, this is far from an easy undertaking, but Apple now has major manufacturing operations in India, Thailand, Malaysia, and the Philippines, among other countries. In India in particular, we are seeing the very early stages of a complete supply-chain infrastructure as the government uses a mix of carrot and stick to encourage companies to manufacture more of their components within the country – namely, tariffs on imports of components and tax breaks for local production.

china Stories October 15

A popular Quran app has been removed from Apple’s Chinese App Store at the request of the government, according to a new report today.

The removal of the Quran Majeed app was first noticed by a site called Apple Censorship

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china Stories October 12

Apple’s dependence on China has been a recurring concern, with trade wars, COVID-19-related supply constraints, and human rights abuses all being highlighted at different times. Now a group of public advocacy groups has written to congressional house leaders to flag their own worries.

The letter was written in response to claims that US antitrust legislation would disadvantage American companies, and even pose national security risks …

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china Stories October 8

A report last month described problems caused by power outages in China, and a new one today describes Apple suppliers struggling to keep production on track.

We previously described three reasons for the increasingly common electricity restrictions in the country …

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china Stories October 5

A Chinese consumer has been given the go-ahead to take an “Apple tax” antitrust case to court, as China’s Supreme Court rejected Apple’s call for the lawsuit to be thrown out.

A local report says that this is a small legal loss, but could have big implications for the Cupertino company …

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china Stories September 27

A crackdown on energy usage in China has seen a number of key Apple suppliers halt production, according to a new report today.

One supplier to both Apple and Tesla said that it had been forced to suspend production from Sunday until this coming Friday, while another said it would need to cease production in two cities until the end of the month …

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china Stories September 8

A Chinese company has filed a lawsuit as it seeks an injunction to stop iPhone production in China, including the upcoming iPhone 13.

Xiao-i (whose full name is Shanghai Zhizhen Network Technology Co) previously made an unsuccessful attempt to block sales of all devices with Siri in China, claiming that Apple’s intelligent assistant (IA) violated a “chat robot” patent the company owns …

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china Stories August 19

The Apple engraving service – available as a free option when ordering one of six product categories direct from Apple – has been accused of political censorship in China, Hong Kong, and Taiwan.

Apple aims to ban offensive words and phrases, and in the US bans 170 words. In China, however, the number of banned words and phrases is more than a thousand, and includes many political references…

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china Stories July 12

Update: The vaccine purchase has now been made.

Apple suppliers TSMC and Foxconn are working on buying millions of doses of COVID-19 vaccines for Taiwan. The plan is for the two companies to buy the vaccines, then donate them to the government for distribution to the people of the island nation.

The indirect arrangement, where the government authorizes private companies to buy vaccines on behalf of the country, is designed to thwart Chinese interference …

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china Stories July 5

Apple has successfully defeated an attempt by TikTok and others to bypass App Tracking Transparency in China.

Chinese tech giants believed that Apple wouldn’t dare to block popular apps like TikTok and QQ, but Apple apparently called their bluff …

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china Stories July 1

Chinese iPhone sales got a welcome boost last month thanks to Apple’s decision to participate in one of the country’s annual “shopping festivals.”

The 618 Shopping Festival peaks around June 18, with many retailers and e-commerce firms offering significant discounts …

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china Stories June 25

China has officially approved the Apple Watch electrocardiogram (ECG) feature that first arrived with the Series 4 wearable. The regulatory green light means Apple could launch the functionality with a software update for users in the country any time now.

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china Stories June 18

A Chinese app ban in the US is still very much on the cards, despite President Biden overturning the previous administration’s planned bans on WeChat and TikTok.

Biden replaced the specific executive orders with a more general one designed to protect the data of US citizens, and a report today says early indications point to some Chinese apps remaining at strong risk …

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china Stories June 11

A “cold tech war” between the US and China could still leave Apple in the firing line, argues Wedbush, even after the Biden administration rolled back some of the Trump-era policies.

President Biden this week revoked the scheduled US bans on TikTok and WeChat, and has generally been taking a less aggressive stance with China, but there is still plenty of potential for trouble ahead …

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china Stories June 8

A review of job ads placed by Apple suppliers in China found that over a hundred ads across more than 30 companies were illegally discriminating against Muslim Uyghurs.

Other forms of discrimination found in ads that explicitly stated that the work was for Apple included age limits and bans on dyed hair and tattoos …

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china Stories May 21

Four members of Congress have accused Apple of being “a pawn in China’s malfeasance” in putting the privacy of customer data at risk in the country.

They have urged Apple to reassess its business practices in the country, and its relationship with the Chinese government …

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china Stories April 26

Apple TV could launch soon in China following government approval

China could see the first Apple TV being launched in the country in more than 15 years, according to Chinese blog Sina and Weibo leaker Voooolks.

china Stories April 19

We will see different countries around the world battle for Apple’s business throughout the 2020s, suggests a respected analyst, as the Cupertino company continues its efforts to reduce its manufacturing dependence on China.

The report notes that we currently see four variations of the familiar “Designed by Apple in California, Assembled in China” label…

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china Stories March 26

A new report from The Information this morning highlights that Apple is hosting a number of apps on the App Store made by a Chinese paramilitary group that’s been blacklisted by the US government. Apple says that it’s complying with US law but the news comes as the company is facing more pressure to cut any possible ties to abuse and genocide against the Uyghur Muslim people in the Xinjiang region.

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china Stories March 16

ByteDance, TikTok’s owner; Tencent; and other tech giants in China are testing a tool to bypass Apple’s new privacy rules and continue to track iPhone users without their consent. The feature in question here is the App Tracking Transparency privacy protection capability.

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The Chinese government appears to have blocked access to the Signal app. China yesterday banned the website, and the app is today unavailable within the country.

It follows similar blocks on other messaging apps that offer end-to-end encryption, including WhatsApp and Telegram

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china Stories March 15

As Apple continues to navigate its tricky relationship with China, Tim Cook is set to attend this year’s China Development Forum (CDF) put on by the Chinese government. The 2021 CDF is expected to see its biggest ever foreign attendance hinting that despite political turbulence and some companies moving manufacturing out of the country, China remains a powerful hub for global business.

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A survey of 1,500 tech employees found that 77% of them think that Apple, Amazon, Google, and Facebook have too much power. Only 8% disagreed.

Tech workers were also asked about a wide range of other tech issues, including working with law enforcement, China, and legislating AI…

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china Stories February 24

The possibility of iPad production in India got a step closer today, as the government approved a proposal to offer a billion dollars’ worth of incentives. The production-linked incentive (PLI) plan is specifically aimed at manufacturing tablets and computing equipment.

A previous report said that Apple was interested in using the incentives to begin iPad assembly there…

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china Stories February 19

In a new interview on the Chinese video-sharing platform Bilibili, Apple CEO Tim Cook talks with a 22-year-old Chinese student-turned-video creator.

Cook discusses Apple’s recipe for innovation, the influence of China on iDevice features, his two most-used apps, the importance of education and his driving force…

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