Apple’s Capitulation to China Has Come Up Short

NLPC has tried to warn Apple that relying on China too much for revenue growth will result in disappointment.

In 2023, our Corporate Integrity Project sponsored a proposal requesting the company to conduct an audit of the risks arising from its cozy relationship with the Chinese government and reliance on the region for revenue. Apple opposed the proposal, and NLPC filed a proxy memo with the Securities and Exchange Commission in response.

Our report cautioned Apple against excessively depending on growth in the Chinese market, as the Chinese Communist Party could find any number of excuses to crack down on the company’s operations there. But instead, Apple has given the CCP everything it asks for in hopes of cultivating favorable treatment. Apple has effectively sold its soul to the CCP by complying with its efforts to crack down on the freedoms of speech and assembly.

Apple appears to have received little in return. According to the New York Post:

Apple’s iPhone sales in China fell 24% year-on-year in the first six weeks of 2024, according to research firm Counterpoint, as the company faced increased competition from domestic rivals such as Huawei.

 

The tech giant’s chief competitor in China in premium smartphones, Huawei, saw unit sales rise by 64% in the period, according to the report.

 

This could fan fears of a slowdown in demand for the company, whose revenue forecast for the current quarter was $6 billion below Wall Street expectations.

The Chinese Communist Party provides support to Apple’s state-owned competitors, and Apple has had a hard time keeping up with their technological improvements. Larry Kudlow, the former Director of the National Economic Council, warned in 2019 that China was stealing intellectual property from Apple.

Further, the CCP banned government officials from purchasing iPhones as part of a broader policy to “Delete America” from its technology. Considering the government’s newfound animosity toward American technology companies, it is no surprise that Apple’s sales in the region are falling.