Media reports that in China, the number of state organizations and companies supported by the country’s government is gradually increasing, which prohibits their employees from using iPhone smartphones developed by the American technology giant Apple in the workplace.
Analysts suggest that the mentioned trend will scale. If this potential scenario is implemented in the space of objective reality, the possibilities of using Apple mobile phones in China will be significantly limited. Restrictive practices regarding the iPhone line of smartphones will likely spread beyond jobs in government agencies and companies supported by the government of an Asian country.
Analysts also admit the possibility that similar measures will be applied against smartphones of the South Korean manufacturer Samsung. This assumption is based on the fact that a campaign is currently underway in China to encourage the use of mobile phones and other technical devices made by homegrown companies. It is possible that, as part of the relevant efforts, measures will be taken to limit the distribution of firms’ products from other countries.
Media outlets, citing insiders, report that many state-owned companies and government departments in at least eight Chinese provinces have told employees over the past two months that they should use devices from local manufacturers. This is a significant advance in the framework of stimulating the application of homegrown firms’ products compared to the end of summer when a small number of structures in Beijing and Tianjin informed workers that they should leave smartphones of foreign brands at home. This information was provided by insiders who used the right of anonymity because in this case confidential processes are implied that are not indicated in the public space.
The scaling up of restrictive practices regarding the possibilities of using the devices of foreign companies indicates the intensification of Beijing’s efforts to achieve the maximum level of technological sovereignty. In this case, the main focus is on reducing the degree of dependence on the products of firms from the United States. This government campaign has already had some results. In the Chinese market, the level of consumer demand for Huawei products has increased significantly this year. At the same time, in this case, one should not underestimate the merits of the mentioned company, whose advanced smartphones have a high level of competitiveness in terms of technological capabilities.
The administration of the head of the People’s Republic of China, Xi Jinping, this year extended the directive banning foreign devices beyond the most sensitive government structures in terms of their critical importance to national interests. This directive was introduced many years ago, but the previous extent of its influence was not noticeable against the background of a wider range of possibilities for using products of foreign brands. The ban now applies to a much larger number of government agencies and state-owned companies.
For foreign firms, the specified restrictive practice is an extremely negative circumstance, since they face reduced opportunities to interact with one of the world’s largest markets, which will inevitably entail financial losses. For example, the price of Apple shares fell to a session low amid news about the ban on the use of the iPhone in some organizations and companies in China.
Chinese software and hardware have been competing for years with the developments of American firms, including Microsoft, Dell, and Intel. It is possible that Beijing will eventually decide to ban the use of the mentioned companies’ products. Such a measure is quite organic from the point of view of the logic of the movement toward technological sovereignty, although it contradicts the principles of a market economy.
Media insiders report that in recent months, a previously non-existent situation has been observed in China, in which small companies and agencies in small towns have distributed verbal directives about the undesirability of using smartphones of foreign brands. The beginning of restrictive practices has been recorded in Zhejiang, Guangdong, Jiangsu, Anhui, Shanxi, Shandong, Liaoning, and Hebei.
An Apple representative did not provide any comment in response to a media request regarding Beijing’s actions to ban the use of the iPhone in certain organizations and companies. The State Council Information Office and the Cyberspace Administration of China also did not comment on the restrictive practice.
In September, the government of the Asian country denied information about restrictions on the use of the iPhone. At the same time, local authorities have expressed concerns about the security of the tech giant’s smartphones. A spokeswoman for the Chinese Ministry of Foreign Affairs, Mao Ning, during a press briefing, stated that there are no laws and regulations in the country that prohibit the purchase of Apple mobile phones and other foreign brands.
Currently, there is no information on the number of government agencies that have implemented restrictive measures and on the extent of this practice. The media assume that in this case, the organizations will act in varied ways. It is likely that in some companies the ban will be complete. At the same time, there will be firms with partial restrictions on the use of smartphones by foreign brands.
For Samsung and Apple, Beijing’s efforts to ensure technological sovereignty are a serious problem. The largest manufacturing base of an American company is located in China. Apple receives about a fifth of its revenue in this country.
Most of the iPhones in the world come from Foxconn factories, which are located in China and employ millions of people. This manufacturer has already begun the process of diversifying its production activities outside the mentioned country, actively investing in the building of plants in India, but the path to this goal has only just begun and has not yet had consequences in the material space.
Sales of the iPhone 15 in China have significantly decreased compared to the results of the previous generation of the smartphone. Against the background of this dynamic, some analysts have already worsened their revenue forecasts. In this case, the August debut of a Huawei smartphone equipped with an advanced Chinese-made processor became an influence factor. Chinese state media described the device as the country’s triumph against U.S. sanctions that have restricted local companies’ access to next-generation chips. In the United States, lawmakers have called for an investigation into possible violations of the export control regime.
In the fourth fiscal quarter, Apple’s revenue in Greater China showed a decrease of 2%. The tech giant said that this result was due to a drop in demand for iPads and Macs.
Apple CEO Tim Cook says that the iPhone 15 Pro has proven itself well in China. According to him, the commercial performance of the new generation smartphone is very optimistic. He stated that the company’s devices remain common in the public and private sectors of China.
Anurag Rana and Andrew Girard, analysts at Bloomberg Intelligence, say that the possibility of weak iPhone sales in China is a risk to the overall financial performance of Apple in 2024.
