From Wayne Ma’s “Facing Hostile Chinese Authorities, Apple CEO Signed $275 Billion Deal With Them” ($) posted Tuesday to subscribers:
The cornerstone of Cook’s strategy was a memorandum of understanding between Apple and the National Development and Reform Commission, China’s powerful economic planning agency. The 1,250-word agreement was originally conceived by Apple’s government affairs team in China as a way to improve relations with Beijing and win an audience with senior leaders, according to a person familiar with the agreement. 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 said.
To mollify authorities, Cook in May announced an unprecedented $1 billion investment in Didi Global, then China’s most valuable startup, giving Didi an edge in its grueling ride-hailing war against U.S.-based Uber.
Five days later in Beijing, Cook, along with Chief Operating Officer Jeff Williams and government affairs head Lisa Jackson, met publicly with senior government officials at the country’s secretive leadership compound, Zhongnanhai. Neither side disclosed details of the visit, but they were there in part to sign the economic deal, which committed Apple to aiding roughly a dozen causes favored by China. They included a pledge to help Chinese manufacturers develop “the most advanced manufacturing technologies” and “support the training of high-quality Chinese talents.”
In addition, Apple promised to use more components from Chinese suppliers in its devices, sign deals with Chinese software firms, collaborate on technology with Chinese universities and directly invest in Chinese tech companies—akin to the Didi investment. Apple promised to invest “many billions of dollars more” than what the company was already spending annually in China. Some of that money would go toward building new retail stores, research and development centers and renewable energy projects, the agreement said.
According to separate internal documents, Apple’s China pledge would amount to more than $275 billion in spending over five years. The agreement said the deal would automatically extend for an additional year, through May 2022, if neither side had objections in the future.
My take: Ma, who plays Apple’s Woodward and Bernstein at The Information, offers this cautionary note:
The revelations also suggest Apple’s dependence on Cook for government affairs could present risks down the road if he were to step down as CEO.
Knowing Cook, he’s been carefully training his replacement(s).