Apple made secret 5-year $275B deal with Chinese government

Posted:
in General Discussion edited December 2021
Apple's success in China is allegedly down to an agreement with the country's government to help develop its economy, with a report claiming CEO Tim Cook personally lobbied officials to get the best deal for the company.

Tim Cook speaking to China Vice Premier Sun Chunlan in March 2019.
Tim Cook speaking to China Vice Premier Sun Chunlan in March 2019.


Apple considers China to be a major market, with the iPhone maker expending considerable effort to make headway, both in generating custom and in its extensive supply chain operations. The success in China has been a turnaround years in the making, and it seems that a secret agreement may have greased the wheels.

A report on Tuesday claims that, during a period when Apple was dealing with a rash of regulatory activity in China, Tim Cook paid a visit to the country in 2016. During that visit, he signed an agreement with the Chinese government, according to The Information.

The deal would have Apple working to improve China's economy and technological profile with investments, training up its workforce, and various beneficial business deals. It is alleged that the total value of the five-year agreement was worth $275 billion.

At the time, Apple was viewed by Chinese officials as not doing enough to help the local economy, internal documents supposedly state. With regulatory scrutiny at an all-time high, Apple executives were having trouble trying to turn the Chinese opinion of the company around.

Over multiple visits, Cook is said to have lobbied officials on behalf of Apple, as well as signing the deal with a Chinese government agency. The lobbying against various threats hat would've affected the App Store, Apple Pay, and other products was mostly successful, if unreported at the time.

The deal was kept secret both by the company's own culture and by the opaque workings of the Chinese government, and was politically wise according to political economist Victor Shih. It is thought that as Apple has to appease China as both a major market and a manufacturing base, it had to keep the government happy while also not appearing to other countries as appeasing China.

"Apple likely wanted to avoid the optics of groveling to the Chinese government," said Shih.

The key deal was a 1,250-word agreement created by Apple's government affairs, which it thought could improve its relations with the government and potentially let Apple get the ear of senior leaders. The memorandum of understanding with the National Development and Reform Commission was signed shortly after Cook announced a $1 billion investment in Didi Chuxing in May.

As part of the agreement, Apple pledged to work with Chinese manufacturers to create "the most advanced manufacturing technologies" and "support the training of high-quality Chinese talents." This was accompanied by promises to increase its use of Chinese suppliers for device components, to work with Chinese software firms and invest in tech companies, and to work with Chinese universities on new technologies.

Apple also said it would invest "many billions of dollars more" than its existing annual spend in the country, towards R&D centers, renewable energy projects, and retail outlets.

The agreement was set to run for five years, including Apple's spending pledge of more than $275 billion over the period. However, the deal had the option to be extended for an extra year, to May 2022, if neither China nor Apple objected.

Apple would also agree to "strictly abide by Chinese laws and regulations," a phrase that would occasionally resurface when Apple discussed privacy issues in China, such as its move of Chinese customer data in iCloud to a Chinese company.

While Apple's tasks were outlined in detail, China had more ambiguous obligations, in that it would give Apple "necessary support and assistance."

Tim Cook's lobbying with high-ranking officials and other areas of the Chinese government oddly caused more concern among Apple's China-based executives. Cook's famous ability to generate rapport with leaders led some Apple executives to believe the company could be vulnerable unless local managers could form their own relationships, according to one internal document.

With Cook saying in April that he would leave the role in the next decade, there's more pressure for those managers to improve their connection with officials.

Read on AppleInsider
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Comments

  • Reply 1 of 127
    crowleycrowley Posts: 9,319member
    Worth $275bn to who?
    beowulfschmidtspock1234
  • Reply 2 of 127
    Money, money, money… 😤
    iOS_Guy80
  • Reply 3 of 127
    crowley said:
    Worth $275bn to who?
    I’m certain this mainly benefited the Chinese government since the article speaks to the Chinese economy needing help. 
    darkvadercornchipcuriousrun8killroyharrywinter
  • Reply 4 of 127
    Go figure. Apple. That's why CCP leaves Apple alone vs. other U.S. companies. To do business in Asia, all you have to do is bribe to get your place secured.
    darkvaderwilliamlondonkillroyharrywinter
  • Reply 5 of 127
    Let's see. Invest in training for workers to develop cutting edge production and supply chain technologies. Invest in transitioning suppliers to renewable and cleaner energy sources. Sounds like something the U.S. should be interested in but Apple's not in the Military/Oil/Coal/Pharma industries so U.S. Gov doesn't care.
    GeorgeBMacjas99hammeroftruthOferkurai_kageronngeorgie01Alex_VGraeme000badmonk
  • Reply 6 of 127
    GeorgeBMacGeorgeBMac Posts: 11,037member
    factsonly said:
    crowley said:
    Worth $275bn to who?
    I’m certain this mainly benefited the Chinese government since the article speaks to the Chinese economy needing help. 

    Huh?
  • Reply 7 of 127
    GeorgeBMacGeorgeBMac Posts: 11,037member
    Go figure. Apple. That's why CCP leaves Apple alone vs. other U.S. companies. To do business in Asia, all you have to do is bribe to get your place secured.

    So where's the bribe?  This was a smart business deal that both sides benefited from.
    MacProCheeseFreezekurai_kageanantksundaramviclauyycradarthekatmacplusplusdavenspock1234
  • Reply 8 of 127
    sdw2001sdw2001 Posts: 17,780member
    On one hand, I don't blame Apple for threading the needle with the CCP in order to get access to a market with 5 times the population of U.S.   But on the other, that's a lot of money and resources that are building Communist China instead of the United States.  China is a major competitor, biggest trade partner, and #1 threat to the U.S. all at the same time.  Their government's goal is to be the world superpower by 2050.  This was a long-term plan started in the 1970's.  We dismissed them for decades, thought we "free" trade could liberalize the CCP, and their military was subpar compared to ours.  All that has changed in the last 20 years.  While we still have a superior military, they have the capability to win a battle (for example, Taiwan) before we can respond with full force.  They also have sophisticated enough equipment (planes, missiles, anti-satellite etc.) to give us real problems.  






    Ofergeorgie01darkvaderpatchythepirateentropyskillroyelijahgwatto_cobraharrywinter
  • Reply 9 of 127
    Go figure. Apple. That's why CCP leaves Apple alone vs. other U.S. companies. To do business in Asia, all you have to do is bribe to get your place secured.

    So where's the bribe?  This was a smart business deal that both sides benefited from.
    Not really a bribe, but definitely in the realm of pay-to-play. 
    ravnorodomkillroyharrywinter
  • Reply 10 of 127
    GeorgeBMacGeorgeBMac Posts: 11,037member
    This is consistent.
    China encourages and supports capitalistic ventures -- as long as they benefit China and its people -- and especially if they do not threaten the stability and growth of the country.

    It's a win-win strategy.
    in this case:
    Apple wins, China wins, and the Chinese people win -- and we win because we get great iPhones at prices we can afford.
    MacProravnorodom9secondkox2viclauyycradarthekatargonautmacpluspluswatto_cobra
  • Reply 11 of 127
    Meanwhile outspoken tennis star Peng Shuai is still imprisoned. Slave run factories crank out goods. Reeducation camps are filled up with dissidents. China threatens Taiwan with routine incursions into Taiwanese air space. Reefs are destroyed in the South China Sea to build military bases. The Uyghur Muslims are imprisoned in camps. Hypersonic weapons to attack the US are developed. Espionage in the US stealing and replicating advanced technology continues. Internet filtering and content control, digital spying on citizens and foreign companies is a daily norm. Apple’s investments in China is all about money. They are so proud of their environmentalism because it doesn’t cost them that much money to be green. It’s easy to be green and it doesn’t require any political capital to be green. But it takes balls to take a stand against political and governing malfeasance. Tim Cook is a hypocrite. Embracing the easy political causes of environmentalism, LBGTQ support, education and others. But when it comes to standing up against a totalitarian regime he shows no strength. Look at NBA star Enes Kanter Freedom for the example of a man willing to sacrifice his own financial well being to protest The Chinese government and their way of crushing the freedoms of their people.
    techriderOfermuthuk_vanalingamdarkvader9secondkox2patchythepirate12Strangersfahlmanargonautelijahg
  • Reply 12 of 127
    Go figure. Apple. That's why CCP leaves Apple alone vs. other U.S. companies. To do business in Asia, all you have to do is bribe to get your place secured.

    So where's the bribe?  This was a smart business deal that both sides benefited from.
    it is a 'legal bribe'. It is. And it's true, to win in China you need connections and deals like these. It's not 'honest' competition.
    edited December 2021 ravnorodomdarkvader9secondkox2killroyelijahgharrywinter
  • Reply 13 of 127
    sbdudesbdude Posts: 126member
    Can't wait to see if this is actually substantiated.
    ronnwilliamlondon9secondkox2
  • Reply 14 of 127
    This is a giant bribe to the corrupt Chinese government officials. Apple values human rights a lot less than virtue signaling about the environment and global warming. By paying off Xi and his crew, Apple thinks that it can guarantee that it will be left alone to manufacture and sell as many iPhones as it can in China without any more government or court interference. This was kept a secret for a reason. I don't think the Chinese people will be happy to learn that their leaders just pocketed over a quarter of a trillion dollars. Never forget: China is currently engaged in genocide.
    edited December 2021 ravnorodomdarkvaderpatchythepirate9secondkox212StrangersargonautCheeseFreezeelijahgharrywinter
  • Reply 15 of 127
    ronnronn Posts: 477member
    This wouldn't be so worrisome if the Trans-Pacific Partnership (TPP) hadn't been shredded with no viable replacement. And with the Build Back Better Act facing an extremely uphill battle in the Senate, the US will continue to struggle while China eats its lunch (hell, it's breakfast, dinner and all snacks as well!). Wouldn't surprise me that the agreement has been extended and we won't know for some time.
    ravnorodomgrayfox691GeorgeBMacbadmonk9secondkox2argonautelijahgharrywinter
  • Reply 16 of 127
    Or Apple could have looked at the bigger picture rather than their own growth. Helping the Chinese Communist Party is not in the world’s interest.

    It always amazes me how complacent people in the US have become. We’ve had such tremendous success that we believe it’ll just keep being this good, and that we’ll always know who the bad people are because they have orange skin. That we can ignore the founders’ vision and ideals because we know so much better than they did even though we’ve had relatively zero hardships (in terms of tyrants and oppressive governments).

    At least more people are waking up to the reality of the threat from China (not the Chinese people necessarily, but the CCP).
    edited December 2021 darkvader9secondkox2patchythepirateelijahg
  • Reply 17 of 127
    Does Information get paid by the $1.5 billion fund US government allocated for the media to write negative articles about China? LOL
    GeorgeBMac9secondkox2killroy
  • Reply 18 of 127
    It's hard to feel anything but bad about this. That's the problem with multi national companies being a thing these days. There is no loyalty nor sense of community for these companies. Apple, much like other huge International corporations prioritize its current and future wellbeing without any thought given to where they came from. Apple will continue to play all sides in order to get favor with whom ever it needs to increase its revenue and influence. I don't know what the answer is to all of this but at the end of the day I think companies like Apple, Microsoft, Google, and others have too much power. I don't like the idea of not sharing the wealth but at the same time as an American company I'd like to see apple spend some of its resources to balance that equation with (for example) some effort on improving its manufacturing footprint in the US. China won't be cheep forever. 
    williamlondon9secondkox2patchythepirate12Strangerskillroyargonautelijahgharrywinter
  • Reply 19 of 127
    Samsung was the largest competitor to Apple. It has factories in China. 
    GeorgeBMackillroy
  • Reply 20 of 127
    It's hard to feel anything but bad about this. That's the problem with multi national companies being a thing these days. There is no loyalty nor sense of community for these companies. Apple, much like other huge International corporations prioritize its current and future wellbeing without any thought given to where they came from. Apple will continue to play all sides in order to get favor with whom ever it needs to increase its revenue and influence. I don't know what the answer is to all of this but at the end of the day I think companies like Apple, Microsoft, Google, and others have too much power. I don't like the idea of not sharing the wealth but at the same time as an American company I'd like to see apple spend some of its resources to balance that equation with (for example) some effort on improving its manufacturing footprint in the US. China won't be cheep forever. 
    In theory at least - over the long term there will be balance - as China becomes more expensive and their citizens expect more, the viability of manufacturing will shift elsewhere - maybe even back to the west, as long as the incentives (or bribes) are there.
    waveparticlecornchipkillroy
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