A Different View on Apple and China
Last week, a firestorm erupted over Apple’s decision to remove HKmap.live from the App Store in Hong Kong. Apple claimed the app, which mapped crowd-sourced information regarding police activity, broke App Store guidelines and local laws. Hours earlier, Apple had been threatened by China’s People’s Daily newspaper about continuing to make the app available.
In the past, such a decision would have been accompanied by a debate regarding Apple’s decision to continue to do business in China. However, things are different this time. Instead of a debate, virtue signaling is rampant. U.S. ideologies are being weaponized in a broader U.S. versus China debate, and Apple is finding itself caught in the middle.
Based on narratives in the U.S. press, Apple should become some type of political entity tasked with undermining political institutions. iPhones and iPads are to be used as indoctrination weapons for Apple’s beliefs. If such objectives represent Apple’s future, the company will first need new management, employees, customers, and a different board of directors, as Apple is not in the business of waging political wars.
How did we get to this point? Are we seeing a byproduct of U.S. and China trade tensions boil over? Did the NBA versus China clash a few days prior to Apple removing the app in Hong Kong touch a nerve in the U.S.?
Instead of publishing an article on Apple and China last week, I used the Above Avalon daily updates to share my initial thoughts on the developments. After sending out updates last Wednesday and Thursday, I received comments from Above Avalon members who live outside the U.S. They saw the situation from a different perspective. Simply put, they saw the complexity associated with the latest developments in Hong Kong and China. That same complexity is missing from U.S. press coverage of the situation.
There are pros and cons associated with Apple doing business in China just as there are pros and cons found with doing business in a long list of other countries. Even Apple’s decision to engage with the U.S. administration on certain issues can be debated. In some countries, like the U.S., Apple can discuss where it stands on social and political issues. In other countries, like China, such openness is not possible. This has led some to call Apple a hypocrite for “pontificating” on certain ideals only to be willing to do business in a country that doesn’t follow the same ideals.
Apple is no stranger to criticism regarding its decision to do business in China. Back in 2016, Cook said the following in response to critics who said he shouldn’t engage with the government:
“From my American mindset, I believe strongly in freedoms. They are at the core of what being an American is, and I have no confusion on that. But I also know that every country in the world decides their laws and regulations.”
Cook then alluded to “The Man in the Arena” passage from U.S. President Theodore Roosevelt’s “Citizenship in a Republic” speech:
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
In most politically dicey situations, Cook has followed Roosevelt’s advice and picked engagement. While Cook has become more comfortable talking about the ideals that guide Apple’s culture such as environmental responsibility, privacy, and equality, he doesn’t weaponize them to issue ultimatums to foreign governments. Instead, Cook uses his position as CEO to explain to the world which ideals guide Apple employees and the company’s mission to create tools for people.
This brings up a few questions: What drives Cook to follow Roosevelt’s advice and engage? Why does Apple put itself in what appears to be compromising positions in terms of doing business with certain countries if it doesn’t intend to leverage its position to push for immediate change?
My suspicion is that Cook doesn’t want Apple to become an idealistic mirage of itself with closed-mindedness reigning supreme. If Apple only did business in countries that have laws matching its beliefs, Apple would operate in just a handful of countries. Such a strategy would represent a big step back in Apple’s toolmaking mission as the biggest loser would be the Apple customer. In my view, that is a good enough reason for Apple to remain engaged with China and other countries rather than retreat into some kind of self-imposed bubble. The fact that the preceding opinion is now viewed as extremist in the U.S. shows just how far the narrative involving China has shifted. Ongoing issues between China and the U.S. regarding intellectual property theft and economic prowess have taken over the discussion, making Apple’s “engaged” strategy seem naive and out of date.
Another factor that likely plays a role in Cook’s engaged strategy is how Apple views its customers. I don’t think of Apple as a U.S. company. Instead, Apple is a global company headquartered in the U.S. That may seem like a subtle difference in terminology, but it speaks volumes. Apple doesn't look at its customers as Americans, Chinese, Russian, or German. Everyone is an Apple customer. This becomes apparent when attending an Apple product event at Apple Park. The cultural diversity found in the audience isn’t visible when watching the keynotes online. English ends up being just one of many different languages spoken at Apple events.
While governments around the world play a role in how Apple is able to reach its customers, as seen with Apple’s most recent app removal controversy in Hong Kong, that doesn’t take anything away from the ideals that guide Apple’s toolmaking mission. Those who think Apple should abandon China at whatever cost fail to recognize that China is now home to approximately 15% of Apple’s customers. Advocating that Apple should succumb to various pressures and shun anyone who may disagree with its ideals is the very definition of closed-mindedness.
As for the increasingly popular claim that Apple isn’t just doing business in China but is instead going so far as to kowtow to the government, the supporting evidence is underwhelming. Following local laws is not kowtowing. For example, removing an app that delivers news from a publication banned in a country is not kowtowing to China. Apple would do the same in any other country with similar laws. Instead, kowtowing would involve breaking other country’s laws merely because China told Apple to do so. Another example of kowtowing would be Apple telling its employees to change their ideals because China told them that is the only way to do business in the country. We simply don’t see Apple exhibiting such behavior, contrary to what is being reported in the U.S. press.
One example of kowtowing to China would be international companies agreeing to refer to Hong Kong, Macau, and Taiwan as part of China. However, the uniqueness found with that example is duly noted. Given how following economic sanctions imposed by the U.S on other countries end up being another example of companies kowtowing to a government, it’s clear that the topic deserves a much more nuanced debate.
While Apple executives struggle at times with how best to do business in China, the company has shown little to no hesitation in its broader engagement strategy. For example, Apple’s apparent final decision to pull HKmap.live from the App Store in Hong Kong took nearly a week to play itself out. Apple initially pulled the app only to reinstate the app and then pull the app again. However, at the end of the day, it was Cook who wrote a message to Apple employees explaining his decision - a decision that was met with intense skepticism by those in Hong Kong and the U.S.
There is no playbook for Apple management to follow when it comes to leading a trillion dollar company with a billion customers around the world. Cook’s decision to engage Apple will mean that there will be more controversies such as HKmap.live. Apple may not be completely ready for such controversies, but the company will likely be willing to confront them. Such a stance shouldn’t take anything away from Apple’s steadfast pursuit to leave the world a better place.
I don’t know what will unfold politically in China in a month, a year, or a decade from now. No one does, not even Apple. However, I am confident that Apple will continue to develop tools for improving people’s lives. It was this tool-making mission that initially led Cook to begin building Apple’s supply chain and manufacturing apparatus in China in the late 1990s. Cook saw how China, not the U.S., could support such a global apparatus capable of making a lot of high-quality products in a short amount of time.
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