“Apple seeks to escape the Chinese trap”


RThere’s nothing better to take your mind off things on the weekend than to go see a good film. Especially if your mind is upset. The film of the moment is the latest work by director Martin Scorsese, Killers of the Flower Moon. But Tim Cook has already seen it. The CEO of Apple is, in fact, the producer. We saw the discreet boss all smiles in a tuxedo on the steps of the Cannes Film Festival palace in May, where the film was previewed. A good media release in cinemas around the world is the best publicity for its Apple TV + site, which is trying to catch up with Disney and Netflix in the streaming race.

If Tim Cook is upset, it is not because of this but because of what is happening on the other side of the world, in China. On Wednesday October 18, the CEO of Apple met on site with the Minister of Commerce, Wang Wentao, who ured him that his country remained open to large multinationals like Apple. In September, well-maintained rumors reported a ban on iPhones for civil servants and executives of Chinese public companies. The government denied this while acknowledging that security flaws were a problem. Like a veiled threat…

Headwinds

Latest signal to date, the publication this Sunday, October 22, of an article in the state newspaper Global Times, a subsidiary of the People’s Daily, reporting multiple tax investigations in the giant factories of the Foxconn group, the leading manufacturer of the Apple firm’s telephones and computers and the country’s largest private employer. The company’s founder, Terry Gou, had the bad idea, in Beijing’s eyes, of running for Taiwan’s presidential election. Hence the administrative setbacks.

The subject is existential for Apple, because since its arrival in 1993, China has become the manufacturing base for its products which are embled there, mainly at Foxconn, and shipped directly around the world. An exceptional machine designed by a logistics artist who is none other than Tim Cook. Today, the Middle Kingdom is both its leading supplier and its largest foreign customer. The growing tension between Beijing and Washington is compromising this beautiful building. Especially since in terms of sales, its local rival, Huawei, came back ahead to everyone’s surprise thanks to its new 5G laptop. Beijing is jubilant.

Faced with these headwinds, Tim Cook is trying to diversify its production, particularly in Vietnam and India, with Foxconn and other partners. He is trying to escape the Chinese trap. But decoupling will take years. For the moment, he can count on the weight that the manufacturing of the Apple firm’s products represents in terms of labor and added value for the Chinese economy. The turnover of the Chinese company Luxshare, which has become Foxconn’s major competitor, depends, for example, more than 70% on Apple. The end of an era is emerging, that of China as America’s workshop. While waiting for this story to become a series on AppleTV+, Tim Cook will have his work cut out for him.



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