The WSJ announced that the Chinese government has issued a directive prohibiting central government agency officials from using Apple iPhones and other foreign-branded devices for work or even taking them to the office. This significant development comes in the midst of the increasing strain between China and the United States, potentially impacting external companies running in China.
In accordance with the report, employees were given these rules through the office chat groups or during meetings in the past few weeks. However, the extent to which these orders have spread remains unclear.
The ban coincides with a forthcoming Apple event, widely anticipated to reveal a new line of iPhones. Analysts believe this move is intended to address worries among external companies operating in China as geopolitical tensions between China and the U.S. continue to rise.
Sino-U.S. Tensions
The Wall Street Journal did not identify which other phone makers, apart from Apple, are affected by this ban. Requests for comments from China’s State Council Information Office and Apple were met with no immediate response. The premarket trading of iPhone shares dropped by 0.7% following this news.
China has been striving to decrease its dependence on foreign technologies for more than a decade. In 2020, China launched the “dual circulation” growth model, aiming to decrease its dependence on overseas markets and technology. Data security worries played a significant role in driving this strategy
China has encouraged large state-owned enterprises to have an important role in achieving self-reliance in technology. These efforts have intensified amid strain with the United States, as Washington seeks to obstruct China’s access to vital equipment for its chip industry.
Analysts view this recent move as a clear indication that Beijing is unwilling to show leniency toward any U.S. company as it works to diminish its reliance on American technology. D.A. Davidson analyst Tom Forte suggests that even Apple, which employs a significant workforce in there, should consider diversifying its supply chain and customer base to minimize dependence on China in case tensions increase further.
The country is among one of Apple’s largest markets, contributing up to a fifth of its revenue. While analysts do not anticipate an immediate impact on earnings, the popularity of the iPhone in the country could be a significant factor to monitor.
During a recent visit to China, U.S. Commerce Secretary Gina Raimondo revealed that U.S. companies have expressed worries about the country becoming “uninvestable” due to the fines, raids, and other things that have made doing business in that country risky.
This recent ban by Chinese government is resemblance to bans enforced by the United States on Chinese companies like Huawei Technologies and TikTok, which is owned by China’s ByteDance.
In conclusion, China’s ban on Apple iPhones for government officials underscores the country’s determination to decrease its dependence on external technology, even at the expense of prominent foreign companies. This move, coupled with ongoing geopolitical tensions, raises questions about the future of foreign businesses operating in China and emphasizes the need for diversification in supply chains and customer bases.
