The Chinese government has a problem with Apple, too. There’s that whole encryption and back door issue. Even the U.S. government has an issue with Apple about iPhone encryption. China is more totalitarian than either of the leading Republican presidential candidates, and that should worry Apple, and a worried Apple is worrying investors. What’s the problem?
Betwixt and Between
Chinese people love Apple’s products and pay a premium for the privilege to buy one in the very country where they’re manufactured. As long as China grows Apple should grow, but that’s no longer the case. The heat is on. China’s government doesn’t like iTunes and doesn’t like encryption because totalitarian regimes are like that.
On the other hand, China knows the tech industry– Apple, Samsung, and a gazillion other companies that use China’s cheap but well educated labor for fun and profits– helps to keep workers busy and a part of the growing economy. If China disrupts China then people could rebel and no government like rebellious citizens, right?
The Chinese government seems to be all herky-jerky about almost anything, and isn’t afraid of intervention, even against companies adored by the public. Corruption is just fine, thank you very much, but when it becomes public, heads will roll. Literally. China could shut down Apple with the snap of a finger but there would be consequences with a growing middle class that doesn’t want a Big Brother, and is suspicious of anything the government does. Apple could lose its prominence with both government and buying public and as such things go in China, it could happen overnight.
Sand In The Factory
What’s the plan for the future, dear Apple? For many years Apple ran a skunkworks project that kept OS X running on Intel CPUs, so when it came time for the company to dump the PowerPC consortium because it couldn’t keep up with the times, the company was ready to put Intel Inside and made the transition smoothly and almost effortlessly (from a public perspective).
What about China?
What manufacturing skunkworks does Apple have waiting in the wings to overcome the company’s obsession with Chinese manufacturing prowess? Is the a new factory somewhere that has sand coming in one door and new products going out at the other end of the factory floor? Steve Jobs once thought that could happen? Can it?
Manufacturing life is too complicated these days for Apple to go it alone and built their own devices from the ground up– literally; using ground (sand). Instead, the company must rely upon manufacturing partners; at times supplying them with investment money and engineering design to help with the volume of components that only Apple has to deal with. The Chinese government could put a monkey wrench into future plans, but that wrench would also assist in China’s public which fosters an ever growing discontent and distrust. Not of Apple. Of China.
It must pain the country’s leaders to see Apple take so much profit away from China, but how does the government exercise more control over the company without upsetting manufacturing and local customers, and without sending a strong signal overseas that the country can no longer be trusted? Look at Russia? Who trusts that country and is willing to make major investments now that Putin rules with an iron fist?
I suspect the leaders of China’s government are smarter than the Russians. They certainly know how to make money.