On Their Knees For China
Fast Company isn't the only media publication to decry Apple's recent capitulation to China, but I think they have the best and most detailed take on the hows and whys. Just in case you have a normal life and don't follow tech news, here's the precis: For a few years now, Apple has sold deliberately crippled versions of its core products to Chinese customers. The China-spec stuff is unable to get around the "Great Firewall" that separates Chinese citizens from the Internet at large.
Some savvy customers have gotten around this restriction with vaguely-named apps that create VPN connections to out-of-China proxies, allowing them to see the outside world and encrypting the communication so the government can't see their thoughtcrime. But those apps are no longer available through Apple's App Store, because the company has yet again bowed to pressure from the Chinese government. Apple willingly does everything the Chinese government demands, including sending Tim Cook to literally dance on stage like a monkey for the amusement of high-ranking Party members.
That's the same Tim Cook who has weaponized Apple's products and bankroll for social justice here in the US. Cook and his PR flacks never tire of criticizing Donald Trump, the Republican Party, and Christians who don't share his opinion of gay marriage. Yet China is decades behind the United States in everything from gay marriage (hell no!) to showing gay people on TV (not permitted in some cases) to the jailing, torture, and murder of political dissidents. So why is Cook absolutely fierce about Trump but feeble about Chinese abuses?
The Fast Company story buries the lede about twenty paragraphs down: Tim Cook dances like a puppet in China because China has an iron fist around Apple's supply chain. Nearly every single piece of hardware Apple sells is actually manufactured in China by companies in which Apple has either a nominal share or no share at all. It is within the Chinese government's power to simply halt Apple's operations tomorrow. There would be no recourse, not for Apple and not for its partners. Nor does the prospect of losing Apple's business, no matter how substantial, particularly daunt the country's leadership. This is a place where forty-five million people were killed by Mao, and where 250 million people are currently being forcibly relocated from their family farms into the urban unskilled-labor pool.
This is the dark side of the "efficient" and "cost-effective" move to Chinese manufacturing that is regularly praised by everyone from the Wall Street Journal to the Stockholm-syndrome HailCorporate types on TTAC. The American people have been conditioned to think of China as a magic black hole that accepts CAD files and returns shiny new products at pennies on the dollar --- but the Chinese people have their own agency and their own agenda. This is why you keep your manufacturing in the United States: because if it you own a factory here, you really own it.
Yet even if Apple was not under a production guillotine, they'd still get on their knees to China, and it's easy to understand why. Think of Apple as a married woman, the United States as the henpecked husband, and China as the devil-may-care boyfriend. Anybody who has been in that situation as any of the parties knows that wife has completely different expectations for each of her partners. The boyfriend can stand her up, "forget" his wallet at dinner, force her to take compromising photos, you name it. The husband gets screamed at because he missed an item on his grocery-shopping list.
What's the difference between these two? It's simple. The husband has shown, time and time again, that he can be bullied. The boyfriend hasn't. So the wife treats her boyfriend with deference and her husband with contempt.
In this analogy, the United States is obviously the husband. Tim Cook and his crew has learned that there is no abuse too strong for American governments and citizens to accept. Multi-million-dollar subsidies for a local presence? Done! A winking acceptance of billion-dollar tax evasion? No problem! Send those profits overseas! How about lecturing the entire country on Silicon Valley morality and forcing people to bake that cake? Of course! There's no reason that Apple shouldn't be setting moral standards in a country where they build almost nothing, pay almost no taxes, and cheerfully vacuum billions of dollars out of the economy every year so they can send the revenue to China and the profit to a tiny island in the English Channel!
China, just as obviously, is the boyfriend. Apple will get on its knees for China. They know their place. They would never dare to criticize the government, nor will they ever attempt to make policy. They'll teach their Chinese partners how to build iPhones and hand over the intellectual property on a platter. And in the unlikely case that a few Chinese citizens manage to use an Apple product to get some news about the world outside the nine-dash line, Apple will SHUT IT DOWN. Here in the United States, Apple will lecture the FCC about net neutrality. In China, however, Apple is an active and servile partner in state-sponsored censorship.
What's to be done? In a perfect world, we'd have some shareholder activism, demanding that Apple clean up its act, diversify its production, and stop bowing to the Chinese at every opportunity. In this world, we're probably going to need someone in the American government to stand up to Apple and speak to them in the same terms that the Chinese do: Pay your taxes, build your stuff here, stop trying to remake the entire United States in the image of the Castro, don't fire your diversity officer because she admits that diversity is about more than just color and sex. It won't happen overnight. Ask any husband who has managed to fix his marriage and get rid of a boyfriend. It's a long process. But it starts when you adopt a fighter's mindset. Did we do that when we elected President Trump? I hope that's the case. Apple might be comfortable kneeling before China, but the United States should think about getting back on its feet. Sooner rather than later.