Apple CEO Tim Cook talks Chinese supply chain, censorship and more in interview

Posted:
in General Discussion edited December 2017
Apple CEO Tim Cook continued his China tour on Wednesday with an appearance at the Fortune Global Forum, where he discussed a range of topics from supply chain strategy to burgeoning markets to censorship.


Source: Fortune


This year's conference, held in Guangzhou from Dec. 6 to 8, kicked off with a day of interviews featuring Cook, Tencent co-founder Pony Ma, Ford Motor Company executive chairman Bill Ford and Foxconn founder and CEO Terry Gou. Highlighting the event was a special session with Alibaba founder Jack Ma.

In his interview, conducted by Fortune's Adam Lashinsky, Cook said China is a much different country than the developing nation he first visited some 25 years ago. Investments in education and infrastructure have propelled the world's most populous nation into a leadership position when it comes to advanced manufacturing.

Apple does not simply develop its products in the U.S. and hand over those designs for production. The process requires a "hand and glove" kind of partnership, Cook said. Aside from breakthroughs on the design side, manufacturers like Foxconn need to come up with innovative solutions to meet Apple's demanding standards.

It is a marriage of traditional craftsmanship and advanced technology that makes China's supply chain assets desirable, not pricing, according to Cook.

"There's a confusion about China," Cook said. "The popular conception is that companies come to China because of low labor costs. I'm not sure what part of China they go to, but the truth is China stopped being the low labor cost country years ago. That is not the reason to come to China from a supply point of view, the reason is because of the skill."

He went on to say the number one attraction is the "quality of people," a reference to highly skilled engineers who work hand-in-hand with counterparts in the U.S. to bring Apple products to market.

During his stay in China, Cook visited a number of Apple partners including ICT, a firm founded by a former Hon Hai line worker. The company initially supplied cables to Apple, but is now tasked with producing AirPods, a key product in the tech giant's lineup. Cook took time to point out that ICT treats its workers very well, an important consideration for Apple which is consistently hounded over its handling of supply chain partners who abuse labor laws.

Cook also visited a manufacturer that takes care of iPhone's front-facing camera, a few app developers and a company involved in gaming and e-sports.

On the topic of iPhone, Cook said competition in China is fierce, but reiterated Apple is focused on making the best, not the most. The oft-repeated refrain was followed by another frequently heard phrase.

"I could not be happier," Cook said about early iPhone X demand in China.

Apple currently holds about 15 percent of the smartphone market, a share Cook hopes to grow with an increasing number of Android switchers. When asked whether ubiquitous apps like Tencent's WeChat are detrimental to future growth, Cook said the opposite is true. Tencent is a great partner, Cook said, noting that WeChat in particular makes switching more manageable as user data is tied to a third-party platform, not an operating system like iOS or Android.

Lashinsky inevitably brought up the World Internet Conference, a state-sponsored event in which Cook and a number of other high-ranking Silicon Valley executives took part. Cook caught flak for attending the gathering, a move which critics equate to being complicit in the Chinese government's surveillance and censorship policies.

Cook, on the other hand, viewed the event as a chance to listen and learn about China's stance on hot button issues. In other words, he was there to participate.

"The thing that's missing in our society is there's not enough people that want to listen and understand and participate," Cook said. "They have a litmus test of, 'Do I agree with every single thing that person believes, and if not I don't want to talk to them and they're a bad person.' I've never seen the world that way."

Cook believes participation is key to effecting change. While the executive made clear he holds American tenets like freedom of expression in the highest regard, he understands that other countries view the same subjects in a different light. To smooth out differences, one must first find commonality, and that requires participation.

"Your choice is: do you participate, or do you stand on the sideline and yell at how things should be," he said. "And my own view very strongly is you show up and you participate, you get in the arena because nothing ever changes from the sideline."

Cook alluded to similar themes earlier in the interview. Specifically, Apple has been criticized for pulling certain apps from the Chinese App Store at the behest of government agencies. Apple maintains it was adhering with Chinese regulations, as it would the laws of any country in which the company operates.

Still, critics assert Apple and other firms are merely appeasing the government of a hugely important market, one that has no qualms about blackballing those who step out of line.

In addition to setting the record straight, Cook added he is optimistic that the apps Apple was forced to pull will one day return to the App Store.

Comments

  • Reply 1 of 9
    Tim, you're on the wrong themes. Apple CEO issues are: software stability, shipping products at launch times, bringing 10 thousands of patent into useful innovation and revive your sleeping computer industry or sell it. Leave the rest to politicians, or rather become one yourself
    edited December 2017 mobirdtzm41
  • Reply 2 of 9
    Good job Mr Tim. Keep it up,proud of you.
    randominternetpersonbadmonk
  • Reply 3 of 9
    nhtnht Posts: 4,052member
    What asshats don’t get is that criticizing Chinese security policy results in missing people.  Not Tim but Apple employees (or subsidiaries and support companies like foxconn) who are Chinese citizens will be made examples of as well as the usual “investigations”, fines, plant closures and product blocks when you annoy the PRC.

    As a Tawainese citizen Terry is vulnerable to such things at a level that Tim isn’t.  Ask Xiao Jian Hua and Wang Jian Lin. Two Chinese billionaires stopped for “questioning”.  If Tim crosses the line Terry and Foxconn has little choice but to run away from Apple as fast as possible.

    Let the State Department go down that path. 

    Apple and Tim are fighting the battles they can win like in worker benefits and safety.  They have moved the needle on those and given that increases stability for China it’s an area of improvement that isn’t likely to draw high level ire at the central committee level.
    randominternetpersonjdb8167SpamSandwich
  • Reply 4 of 9
    Nice write up.  Nothing earth shattering, but more revealing than the usual interview with Ive, for example.
    badmonk
  • Reply 5 of 9
    Bacillus3 said:
    Tim, you're on the wrong themes. Apple CEO issues are: software stability, shipping products at launch times, bringing 10 thousands of patent into useful innovation and revive your sleeping computer industry or sell it. Leave the rest to politicians, or rather become one yourself
    It was an interview about a trip to China.  You answer the questions your asked (if you want to) and they publish what they feel like publishing.  This says nothing about Apple priorities.  And you don't believe that playing the China game is one of the most important things for an Apple CEO to do, you don't understand global business.
    jdb8167tzm41jony0badmonk
  • Reply 6 of 9
    tzm41tzm41 Posts: 65member
    The stance he has about participating instead of yelling from outside is my exact thought. There is no change you can bring if you keep yourself separated from the reality. It is also very true that you need to listen to someone you don't 100% agree on. This is probably one lacking virtue that is making our society more and more divided. Venomously calling people Nazis or Libtards is not going to build the common ground.
    edited December 2017 jony0patchythepiratebadmonk
  • Reply 7 of 9
    nhtnht Posts: 4,052member
    tzm41 said:
    The stance he has about participating instead of yelling from outside is my exact thought. There is no change you can bring if you keep yourself separated from the reality. It is also very true that you need to listen to someone you don't 100% agree on. This is probably one lacking virtue that is making our society more and more divided. Venomously calling people Nazis or Libtards is not going to build the common ground.
    Except for when they are actually sporting swastikas at a rally...in which case calling them Nazis is well warranted...
    edited December 2017 jony0badmonk
  • Reply 8 of 9
    tzm41 said:
    The stance he has about participating instead of yelling from outside is my exact thought. There is no change you can bring if you keep yourself separated from the reality. It is also very true that you need to listen to someone you don't 100% agree on. This is probably one lacking virtue that is making our society more and more divided. Venomously calling people Nazis or Libtards is not going to build the common ground.
    Whoosh... (the sound of your comment going right over Nht's head, and 99% of the rest of the US, and increasingly, the world)

    We're doomed.
    edited December 2017
  • Reply 9 of 9
    Tribal thinking is the bane of our existence; an outdated paradigm which threatens our modern ways of life. Witness the chaos of the political system in the U.S., where discourse between political systems is nigh impossible, each side refusing to listen to, let alone consider, opposing viewpoints. What a mess!

    Kudos to Tim for working out that inclusiveness is the way forward. What an incredible balancing act he performs on a daily basis. Is there a CEO out there with more poise and grace under pressure?
    patchythepirate
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