Cook discusses China investment, consumer rights, more with market regulator in Beijing

AppleInsider · October 18, 2019 3:53AM

Apple CEO Tim Cook met with China's minister of the State Administration of Market Regulation on Thursday to discuss a range of topics including the company's growing investment in the region.

Source: China State Administration of Market Regulation

Cook's meeting with chief market regulator Xiao Yaqing was announced in a post to the administration's website on Friday, reports Reuters.

Beyond noting that the sit-down talk took place on Thursday, the regulator's release fails to provide detailed information about the meeting. It did say Cook and Xiao discussed a wide range of topics including expanding investment and development in China, consumer rights and corporate responsibility issues.

Apple relies heavily on China-based partners to manufacture and assemble its catalog of products, from iPhones to Mac. In addition to production assets, the company's interest in China extends to the country's vast consumer market. During the last quarter, the Greater China region generated $9.2 billion for Apple, accounting for 17% of total net sales.

Through its partner manufacturers and direct contributions, Apple continues to invest heavily in China. Alongside business ventures, the company sponsors corporate responsibility initiatives like the China Clean Energy Fund and a sustainable forestry program.

The tech giant further takes suppliers to task in annual environmental and labor audits.

While it pushes Chinese companies toward responsible material sourcing, ethical labor policies and environmentally conscious production methods, Apple regularly comes under fire for kowtowing to China's regime. The company walks a tightrope between forwarding its social agendas and not running afoul of Chinese state policy.

Last week, for example, the iPhone maker pulled from the Chinese App Store a controversial app that reportedly helped Hong Kong protestors follow the movements of police.

Cook later defended the decision to acquiesce to Chinese government demands, saying the app in question, HKMap Live, was in violation of Hong Kong law. Critics, however, noted the title's core functionality did not contravene local regulations, nor did it break rules laid out in Apple's own App Store Guidelines.

Also related to Hong Kong, Apple quietly removed the Quartz news app from the App Store after the publication provided extensive coverage of still ongoing protests.

Apple's appeasement of Beijing, which often runs in contrast with its well-groomed image as a bastion of human rights, data privacy and free speech, has been a point of contention for years. In 2017, the company removed the New York Times app at the request of China's government, then moved iCloud data and cryptographic keys to servers in China a year later.

When questioned about the decisions, Apple contends it is simply following laws laid out by China's government.

Ciprol · October 18, 2019 4:25AM

Cook is above the political level and refuses to take side in meaningless geopolitical tussle. His job is to do the best for the global company, not as a weapon of the present US government as for Google.

fred stein · October 18, 2019 4:40AM

Disclosure: Fanboy, Long AAPL. Think that making Tim Cook CEO of Apple may be Steve Jobs most brilliant move - And that says a lot.

Does Apple give up anything to China? So far I don't see it. Happy to hear counter argument, as facts not opinions. Apple and China have great synergy. Apple gets the best manufacturers on the planet so that they can launch annual new iPhones at unprecedented quality and unit volume. Only Apple and China can do this. And of course China gets great ROI on their investments in people and manufacturing technology. But Apple sources components from all over the world, not just China.

More importantly, the real value of Apple's devices is the software. Make no mistake, Apple is a software company, not a hardware company. They design the chips. They don't make them. They design the devices. They don't assemble them. Design is SW. All the SW from FW to xxxKits to the Apps developed by over a million App developers to the music and video and magazines and games etc. are all SW. Even broadcasting a football game is SW, despite big guys giving each other concussions.

When we buy and iPhone, 60% of the cost is the software and it's worth every penny. The actual assembly and the parts made in China are around 10% (I made up these statistics, but who cares? They're close enough.)

And about HK? Yes it is bad. China is a bad actor. They steal trade and military secrets. They have unfair trade practices and manipulate their currency. The persecution of the Uigyur is worse than that is going on in HK, but our biases devalue the persecution of muslims. No one mentions what's going on in Myanmar.

Back to the main topic. Globalization is not stopping. Nor is capitalism. Nor is the digital transformation and the impact of AI. There are many negative aspects of all these. I'd rather have Tim Cook figuring this out than any one else.

radarthekat · October 18, 2019 5:02AM

fred stein said:

Disclosure: Fanboy, Long AAPL. Think that making Tim Cook CEO of Apple may be Steve Jobs most brilliant move - And that says a lot.

Does Apple give up anything to China? So far I don't see it. Happy to hear counter argument, as facts not opinions. Apple and China have great synergy. Apple gets the best manufacturers on the planet so that they can launch annual new iPhones at unprecedented quality and unit volume. Only Apple and China can do this. And of course China gets great ROI on their investments in people and manufacturing technology. But Apple sources components from all over the world, not just China.

More importantly, the real value of Apple's devices is the software. Make no mistake, Apple is a software company, not a hardware company. They design the chips. They don't make them. They design the devices. They don't assemble them. Design is SW. All the SW from FW to xxxKits to the Apps developed by over a million App developers to the music and video and magazines and games etc. are all SW. Even broadcasting a football game is SW, despite big guys giving each other concussions.

When we buy and iPhone, 60% of the cost is the software and it's worth every penny. The actual assembly and the parts made in China are around 10% (I made up these statistics, but who cares? They're close enough.)

And about HK? Yes it is bad. China is a bad actor. They steal trade and military secrets. They have unfair trade practices and manipulate their currency. The persecution of the Uigyur is worse than that is going on in HK, but our biases devalue the persecution of muslims. No one mentions what's going on in Myanmar.

Back to the main topic. Globalization is not stopping. Nor is capitalism. Nor is the digital transformation and the impact of AI. There are many negative aspects of all these. I'd rather have Tim Cook figuring this out than any one else.

I’ll take it a step farther. The more money Apple brings in, the more positive impact it can have on the environment and social goals. We should first concede that if Apple stopped producing smartphones today, there would still be about the same number sold over the next year versus if Apple stays in the game. And what is true of the entire world market is trie for any portion of it, like the Chinese market. If Apple pulled out other makers would fill the gap. But I’d rather have Apple engaged there, pushing on suppliers to be more environmentally positive, pushing as much as possible on other issues and pulling in a big chunk of the money spent there on smartphones and tablets and PCs and watches and software. Because I believe that money going into Apple’s coffers will ultimately have a better effect on the world than in someone else’s hands. That’s a perspective most don’t take into account when they look at the picture. It takes stepping back quite a distance to evaluate a business the size of Apple.

svanstrom · October 18, 2019 6:34AM

Ciprol said:

Cook is above the political level and refuses to take side in meaningless geopolitical tussle. His job is to do the best for the global company, not as a weapon of the present US government as for Google.

Valuing how people are treated isn’t “politics”; it’s baseline humanity…

When workers died at the factories making Apple products everyone was outraged, saying that Apple couldn’t be all about profit.

Now people are dying, and severely mistreated, for other reasons; and Apple is once again playing a part.

I expect people to once again value more than just profits.

charlesgres · October 18, 2019 7:58AM

svanstrom said:
Now people are dying, and severely mistreated, for other reasons; and Apple is once again playing a part.

I expect people to once again value more than just profits.

What part is Apple playing in the mistreatment of these people?

And what is Apple supposed to do about it?
What will e.g. pulling out of China accomplish?

EsquireCats · October 18, 2019 9:10AM

Furthering some of the comments here, and reflecting on Apple's recent actions in China.

To succeed in pushing your agenda, one must have nuance and flexibility - no progress can ever be made by exclusion or inaction. The only reward of such things is the ability to act morally sanctimonious. Remember that sudden large changes are just as easily reversed.

However the reality is that you can benefit the peoples' lives and environmental practices of China by being a participant, even if this appears superficially as acquiescing, because change occurs in the minutia.

foregoneconclusion · October 18, 2019 10:53AM

Diplomacy rarely involves "all or nothing" demands. That's more of a military maneuver, like Turkey demanding that the Kurds completely leave a specific area in Syria that they're invading and the White House acquiescing to their demands.

peteo · October 18, 2019 1:22PM

Ciprol said:

Cook is above the political level and refuses to take side in meaningless geopolitical tussle.

Yes Trumps trade war is a bad is way to negotiate trade. (let alone human rights which trump could give 2 sh*ts about) But really since apple takes a moral high ground their response with the attempted silencing of the hong kong uprising is disgusting. They are trying to have it both ways and no its not working.

peteo · October 18, 2019 1:31PM

charlesgres said:

svanstrom said:
Now people are dying, and severely mistreated, for other reasons; and Apple is once again playing a part.

I expect people to once again value more than just profits.

What part is Apple playing in the mistreatment of these people?

And what is Apple supposed to do about it?
What will e.g. pulling out of China accomplish?

It shows china and the people of hong kong that we (the US, apple is a US corp) stand with them and MONEY is not going to change that fact. I.E. it shows china that we will not just bow down to their demands even when money is involved. China also needs their people working or there will be unrest. Right now american companies sell a lot to the people of china. If these things were removed the chinese people might start to act to try and change things. China does not want unrest, it wants compliance. If no one says what you are doing is NOT OK nothing will change

foregoneconclusion · October 18, 2019 1:35PM

peteo said: But really since apple takes a moral high ground their response with the attempted silencing of the hong kong uprising is disgusting. They are trying to have it both ways and no its not working.

Does this really make any sense? Look at the issue from the opposite direction: the protestors in Hong Kong aren't protesting something that's happening to a different group of people on mainland China. They're protesting about something that directly involves their own lives and their own community. They have a direct self-interest in doing it. How often do you think these same protestors get involved in challenging the Chinese government about mainland China oppression? If they don't get involved that often, does that make them hypocrites?

Ciprol · October 18, 2019 1:44PM

svanstrom said:
Valuing how people are treated isn’t “politics”; it’s baseline humanity…

When workers died at the factories making Apple products everyone was outraged, saying that Apple couldn’t be all about profit.

Now people are dying, and severely mistreated, for other reasons; and Apple is once again playing a part.

I expect people to once again value more than just profits.

Unfortunately, certain sectors in the West have enjoyed the holier than thou mentality for too long. If one reads the media reports from both sides on numerous worldly events, including US-China events, it's amazing how different and how biased those US centric media have reported. Media in the West have now become the tool in the geopolitical tussle, evidence of such was clear even back in the GW Bush days with the reporting of non-existent WMD by the NYT. The bias is incredible but most in the West have accepted them as gospel, a condition that can be described as brainwashing. As for mistreating, well, industrialisation actually have to take steps. If all workers need to be paid at US, oops, US screws workers too, better to talk about European factory workers' rate, then no third world country will be able to industrialise as no businesses would go there without the financial incentive in this capitalistic world. But with investment to lower cost countries, it gives the people and workers there an opportunity to elevate themselves out of poverty. Of course, it also requires sound management by the government as what has happened in China. By next year, China will completely eradicate poverty in the country ie. 700+ million. That's real human rights! Here, Apple's engagement is the correct course both for its business as well as to recognise the strengths of China. People vs Profit, well, the wise will choose the best jurisdiction to have a balance of both. At present, China is the premium pick on this planet.

foregoneconclusion · October 18, 2019 1:59PM

Ciprol said: By next year, China will completely eradicate poverty in the country ie. 700+ million. That's real human rights!

This is the World Bank definition of "poverty" though, which is basically arbitrary. All it means is that a household in China is making more than the equivalent of $3.10 per day.

https://geopoliticalfutures.com/china-is-still-really-poor/

wizard69 · October 18, 2019 5:35PM

Ciprol said:

Cook is above the political level and refuses to take side in meaningless geopolitical tussle. His job is to do the best for the global company, not as a weapon of the present US government as for Google.

Non sense. Apple has actually fallen to the level of an wider of oppression in China. By doing business there they are complicit in genocide and other practices of the state. The stupidity of doing business in China has nothing to do with politics, the issue is the poor condition of human rights there.

jcc · October 18, 2019 8:42PM

fred stein said:

Disclosure: Fanboy, Long AAPL. Think that making Tim Cook CEO of Apple may be Steve Jobs most brilliant move - And that says a lot.

Does Apple give up anything to China? So far I don't see it. Happy to hear counter argument, as facts not opinions. Apple and China have great synergy. Apple gets the best manufacturers on the planet so that they can launch annual new iPhones at unprecedented quality and unit volume. Only Apple and China can do this. And of course China gets great ROI on their investments in people and manufacturing technology. But Apple sources components from all over the world, not just China.

More importantly, the real value of Apple's devices is the software. Make no mistake, Apple is a software company, not a hardware company. They design the chips. They don't make them. They design the devices. They don't assemble them. Design is SW. All the SW from FW to xxxKits to the Apps developed by over a million App developers to the music and video and magazines and games etc. are all SW. Even broadcasting a football game is SW, despite big guys giving each other concussions.

When we buy and iPhone, 60% of the cost is the software and it's worth every penny. The actual assembly and the parts made in China are around 10% (I made up these statistics, but who cares? They're close enough.)

And about HK? Yes it is bad. China is a bad actor. They steal trade and military secrets. They have unfair trade practices and manipulate their currency. The persecution of the Uigyur is worse than that is going on in HK, but our biases devalue the persecution of muslims. No one mentions what's going on in Myanmar.

Back to the main topic. Globalization is not stopping. Nor is capitalism. Nor is the digital transformation and the impact of AI. There are many negative aspects of all these. I'd rather have Tim Cook figuring this out than any one else.

I don’t think so. Steve would have been very upset at the state of Apple today. Steve had a singular focus, product. He has said that Cook is not a product guy. That’s why the product lineup is as weak as it is today. Instead of focusing on coming up with the next tent pole product, Cook jets around talking about human rights and environment. Jobs could care less about those things. Jobs has always said over and over that in order to succeed, you have to be picking about where you spend your time. You need to focus. Cook has lost the ability to focus or he’s not focused on the right things. Again, both product and senior management has been the weakest it’s ever been since shortly after Jobs’ second coming at Apple. The superstars have all left the campus.

Cook discusses China investment, consumer rights, more with market regulator in Beijing

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