Apple ‘Secretly’ Agreed to Invest $275 Billion in China in 2016

Tim Cook

A report from The Information claims that Apple CEO Tim Cook “secretly” signed a deal worth over $275 billion with Chinese officials, promising to develop China’s economy and bolster its technological capabilities.

The detailed report backed by interviews and internal Apple documentation reveals that Cook personally cultivated a five-year agreement with the Chinese during the course of several personal visits to the Asian country in 2016.

At the time, several executives were reportedly worried by negative publicity for Apple in China and the company’s poor relations with local officials. The local authorities allegedly believed that Apple was not pitching to help the Chinese economy. This prompted the need to forge a close and robust alliance with China. The deal also came in clutch when local smartphone manufacturers in China were pressurizing iPhone sales to drop in their domestic market.

Apple documents reportedly reveal that Cook “personally lobbied officials” for threats made against App Store, iCloud, and Apple Pay. In China, Apple’s government affairs team drew up a 1,250-word document as a “memorandum of understanding” between the iPhone maker and a Chinese government agency called the National Development and Reform Commission. Cook reportedly pushed for this memorandum in his meetings with the Chinese.

“Face-to-face meetings with top Chinese officials became a priority for Apple brass after regulators shut down iTunes books and movies in April 2016, the person [familiar with the agreement] said.”

In May 2016, Cook announced Apple’s $1 billion investment in Chinese ride-sharing start-up Didi Chuxing. This can be interpreted as a direct attempt to appease the local authorities and demonstrate that Apple intended to invest in the Chinese economy. Just five days after, Apple COO Jeff Williams, head of government affairs Lisa Jackson, and Cook met senior Chinese officials in Zhongnanhai, a “secretive leadership compound” where the Communist Party of China is headquartered. Details about the day’s proceedings were kept hush-hush.

Cook succeeded in getting the Chinese to agree to the billion-dollar deal and shelve plans for regulatory action against Apple. The deal gave Apple exemptions enabling deeper access to the Chinese market in exchange for investment, business deals, and worker training for the Chinese.

If you’re curious what Apple pitched in the deal, here it is:

  • Pledge to help Chinese manufacturers develop “the most advanced manufacturing technologies.”
  • “Support the training of high-quality Chinese talents”
  • Increased reliance on Chinese component suppliers
  • Deals with Chinese software firms
  • Collaboration with Chinese universities
  • Direct investment in Chinese technology companies
  • Help with government causes in China
  • Promise to invest “many billions of dollars more.”
  • Spend on new Chinese retail stores
  • Create new research and development facilities in the country
  • Develop renewable energy projects in China

In summary, Apple reportedly pledged to spend over $275 billion in China over five years. The deal would be renewed automatically for one more year if there was no objection from either party until May 2022.

What do you make of this revelation? Is Apple’s extensive investment in China consequential to its functioning in global markets? Tell us in the comments below.

[Via The Information]