Tim Cook, CEO of American tech behemoth Apple, made a trip to China in late March amidst falling product sales and increased competition from Chinese tech rivals. Cook’s visit coincided with the opening of a major new location in Shanghai and high-profile meetings with American business leaders and Chinese officials; it also, however, comes at a time when the company is attempting to navigate a supply chain shift away from China.
Apple’s China Troubles
In 2023, Apple captured the top spot in China’s smartphone market for the first time, edging out rival tech companies like Huawei and OPPO with a record 17.3% market share. However, according to a report by Counterpoint Technology Market Research, iPhone sales fell dramatically by 24% during the first six weeks of 2024, while Huawei surged with a 64% increase in market share. Senior Counterpoint analyst Mengmeng Zhang explained that Apple “faced stiff competition at the high end from a resurgent Huawei while getting squeezed in the middle on aggressive pricing from the likes of OPPO, Vivo, and Xiaomi.”
In recent history, Apple’s CEO has made overtures to China to bolster the company’s ties to local partners: in late March 2023, Cook traveled to Shanghai to meet with award-winning Chinese mobile game developer miHoYo, whose hit game Genshin Impact won the “iPhone Game of the Year” award in 2020 and has continuously topped the Apple Store charts in revenue. Later in the year, Cook made a surprise October 2023 visit to Chengdu to ostensibly promote the Apple Vision Pro, the company’s new virtual and augmented reality headset, though his trip also came at a time when the sales of the newly launched iPhone 15 were trailing behind those of its predecessor and competitors. At the time, the US government’s restrictions on China’s access to foreign semiconductor technology had caused a patriotic blowback within the Chinese smartphone market, leading Chinese consumers to gravitate towards domestic alternatives like Huawei’s Mate 60 Pro. Given that the Chinese market is Apple’s second largest in the world, this most recent charm offensive of Cook’s comes as no surprise.
Cook Pays China a Visit
On Wednesday, March 20th, Cook announced his most recent visit to China through a post on the Chinese social media platform Weibo. A video attached to the post showed him in Shanghai, taking a morning stroll alongside the city’s famous Bund waterfront and enjoying soup dumplings with Chinese actor and television personality Zheng Kai.
“I’m always so happy to be back in this remarkable city,” remarked Cook in the 22-second video, which he followed up with several more posts. In one, Cook shared that he stopped by a studio of a local director who used various Apple products for her film’s creative process, from storyboarding with an iPad to editing with a MacBook Pro. In another, he spotlighted Chinese mobile games developer Papergames and noted that the graphics and performance of their games “show the power of Apple silicon chips in [the] iPhone and [the] iPad.” The mentions of Apple’s involvements hint towards the nature and purpose of Cook’s visit: emphasizing Apple’s presence in China and regaining confidence among its consumer base and partners.
To that end, Cook’s sojourn in Shanghai spotlighted the inauguration of a new Apple store on Thursday, March 21st, the largest of its kind in China and second only to Apple’s flagship location in New York. The opening of Apple Jing’an – named after the nearby Jing’an Temple – served as the springboard for the six-week “Let Diverse Creativity Bloom in Jing’an,” which aims to showcase Shanghai’s growing creator scene and the “groundbreaking” capabilities of the iPhone 15.
Beyond appeals to consumers, Cook’s trip also included meetings with industry leaders. “There’s no supply chain more critical to Apple than China,” proclaimed Cook at a March 20th information sharing session with three of Apple’s chief suppliers: BYD Electronics, Lens Technology, and Everwin Precision Technology. At a private 1-on-1 meeting with Wang Chuanfu – founder and chairman of BYD, the world’s largest electric vehicle maker – he praised Chinese suppliers as having “the most advanced manufacturing in the world.”
Cook capped off his visit with the China Development Forum, a top annual gathering of senior Chinese officials, heads of multinationals, and representatives from international organizations that he also attended as part of his March 2023 trip. Over 81 other American CEOs attended this year’s forum, where PRC Premier Li Qiang delivered a hopeful keynote address on China’s economic trajectory. Li’s remarks were met with approval, with Pfizer CEO Albert Bourla praising China’s leadership for having a “coherent, cohesive plan” and Nestle CEO Ulf Mark Schneider saying China’s plans to increase access for international companies and revamp domestic consumption were “music to our ears.” Cook joined his peers in applauding China’s business potential: “It’s so vibrant and dynamic here,” he told journalists at the forum’s opening session. “Innovation is developing rapidly in China, and I believe it will further accelerate.”
American Business Leaders Flock to China
While Cook returned to the United States shortly after the China Development Forum, other American CEOs and business leaders flocked to China for a meeting with President Xi Jinping. Among those in attendance were Blackstone founder Stephen Schwarzman, FedEx President Rajesh Subramaniam, Qualcomm President and CEO Cristiano Amon, Chubb Ltd. CEO Evan Greenberg, National Committee of US-China Relations CEO Stephen Orlins, US-China Business Council President Craig Allen, and Bloomberg Inc. Chairman Mark Carney. Throughout 2023, a bevy of American CEOs visited China: in June of 2023, Bill Gates, the co-founder of US tech giant Microsoft, was received in Beijing by Chinese President Xi Jinping; at the end of May 2023, Elon Musk, co-founder of Tesla, also visited China.
All those who were present at the meeting have strategic interests in Beijing, whether it be deepening business ties or enhancing educational exchange. For example, Qualcomm, an American tech company that produces technologies like modems and software, has integrated its products into the Chinese market for years. Qualcomm is nearing dependency on China for sales: in 2023, Qualcomm made 63.6% of its sales in mainland China and Hong Kong. On the sidelines of former President Donald Trump’s visit in 2017, Qualcomm signed $12 billion worth of deals with three Chinese mobile handset makers. In the words of the CEO Stephen Amon, “if you have a leading technology, you’re going to have a big business in China.”
In a similar vein, FedEx’s Subramaniam has clear reasons to be in China. Since entering the Chinese market in 1984, FedEx has 11,000 employees in China and has established 102 branches and over 100 ground delivery facilities across China. Earlier this year, the company opened its new and expanded headquarters in Shanghai. Blackstone founder Stephen Schwarzman was also present; Schwarzman is the creator of the eponymous Schwarzman Scholarship, a fully-funded master’s program at Tsinghua University in Beijing that aims to bridge the knowledge gap between China and the rest of the world. In 2013, Schwarzman donated 100 million USD to fund the endeavor and ease tensions between the two superpowers.
During the meeting, Xi stated that he did not see the need for Washington and Beijing to decouple and spoke about avoiding a “Thucydides Trap” by balancing their competition “with recognition that each nation’s survival requires that they simultaneously cooperate.”
Apple’s Future in the Indo-Pacific
Despite hopeful outlooks on business in China from CCP officials and American CEOs alike – Cook promised the rollout of the Apple Vision Pro in China later this year, for example – Apple has been eyeing alternate sources of iPhone production in the region. Most notably, in the last fiscal year, suppliers in India produced roughly 1 in 7 of all iPhones, amounting to $14 billion worth of Apple’s signature products. Major Taiwanese electronics producers Foxconn Technology Group and Pegatron assembled almost 67% and about 17% of iPhones in India, respectively. The remaining iPhones were made in fellow Taiwanese producer Wistron’s plant in Karnataka state, which Tata Group – the largest conglomerate in India – took over last year. India-based production has increased sixfold since 2022, doubling since Cook met with Indian Prime Minister Narendra Modi in April 2023 to discuss expanding Apple’s footprint in the country.
Aside from India, Apple has also been making strong inroads into Vietnam, where central planning policies aiming to ease business and attract investment have resulted in a fourfold increase over the last decade in the number of companies assembling Apple products there. Cook visited the country in mid-April 2024, weeks after touring China, and pledged on April 15th to “increase spending on suppliers” like Foxconn, Luxshare Precision, LG Electronics, and Samsung. Apple’s investments into Vietnamese manufacturing plants have totaled nearly 400 trillion Vietnamese dong (16 billion USD) since 2019, directly created over 200,000 jobs, and helped Vietnam’s electronics industry surge to 32% of the country’s exports in 2023.
Nevertheless, Cook’s claim that “no other supply chain is more to critical Apple than China” is still salient, as China is still home to over half of Apple’s suppliers and continues to manufacture the vast majority of its devices. At the same time, the company is making no secret of its intention to shift production elsewhere in Asia, and all this is happening while Apple is trying to fortify its position in China’s consumer market against domestic rivals like Huawei and Vivo. The coming years will tell just how well Apple manages to navigate this juxtaposition – and just how much it impacts the ever-evolving landscape of American tech in the Indo-Pacific.
Vincent Zhang is a Spring 2024 Young Professional at the East-West Center in Washington. He is a senior at the Edmund A. Walsh School of Foreign Service at Georgetown University, pursuing a B.S.F.S. in International Politics with a concentration in Foreign Policy.
Lei Nishiuwatoko is a Spring 2024 Young Professional at the East-West Center in Washington. She recently graduated from Northeastern University, where she obtained a B.A. in International Affairs. Lei has previously interned at the NATO Defense College, WorldBoston, and L.E.K. Consulting.