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Tim Cook had come to China. As the leader of the most valuable company in the world, Cook’s visit in China was placed under limelight though he kept a low profile during the visit.
It is worthwhile to mention that this was the first time that Tim Cook paid a visit to a country other than the United States. Does this mean the Chinese market plays a more important role in Apple’s global strategy since Tim Cook chose China as its first outbound destination? Can his visit bring any changes to the three major problems of Apple in China, which are the “dispute on iPad trademark”, “Chinese writers’ lawsuits against Apple for infringing on their copyright”and the “accusation of using sweatshop”?
Secretive and Mysterious Schedule
Tim Cook’s visit in China was shrouded with mystery because both he and Apple did not reveal too much for this visit.
“I met Tim Cook today in the Joy City and luckily took a photo with him,” an ordinary consumer updated his Microblog with the picture with Cook on March 26. It was not until then Tim Cook’s visit in China was revealed to the mass media.
Before Tim Cook’s appearance in the Joy City, a shopping mall in Beijing where an Apple store is located, most people did not know he would pay a visit to China. Even after his visit became known to the public, Apple still refused to reveal the detailed schedule of Tim Cook in China.
Then the media figured out Cook’s journey in China by assembling the information of various parties:
On March 26, Cook visited the Apple store in Joy City, Beijing. After that, Cook had a meeting with Beijing mayor Guo Jinlong and Vice Minister of Industry and Information Technology Shang Bing. On March 27, Chinese Vice Premier Li Keqiang met Cook, who also met Henan governor Guo Maogeng and National Development and Reform Commission’s deputy director Zhang Xiaoqiang at the same time. On March 28, Cook met the headquarters of China Unicom. On March 28, Tim Cook visited Foxconn’s factory in Zhengzhou, Henan. On March 29, Cook visited the headquarters of China Telecom.
Only two items of the aforementioned schedules were actively revealed by Apple –“Cook had a pleasant meeting with Chinese government officials” and “Cook visited Foxconn’s factory in Zhengzhou, Henan”.
According to the media’s report, Cook said that “Apple would make profound cooperation with the China, operate its business legally and honestly” and “increase its investment in China”while talking with Li Keqiang.
Li Yi, secretary-general of the Mobile Industry Association, said that Apple actively disclosed this information, revealing the real goal of Tim Cook’s visit.
Big Trouble Haunts Apple
In the Chinese market, Apple does not only have numerous opportunities but some troubles that could affect its business.
Not long before Tim Cook’s visit in China, Apple launched the new iPad on March 8. But this new product could not assist in solving Apple’s three major problems in China.
“In Jobs’ times, these problems would not bother Apple, which might say nothing about them. But under Cook’s leadership, Apple would pay attention to these and then Cook paid a visit to China,” Li Yi said.
In February, Apple lost in the first trial about its dispute with Chinese company Proview. Now the second trial is going on. If Apple lost again, it would have serious problems in selling “new iPad” in China and would be fined for the income of iPad sold in China before. In the copyright issue, Apple also might suffer great loss. Han Han, Mai Jia and several other Chinese authors have already launched a lawsuit against Apple. These authors are quite influential in China. Therefore, if Apple loses the lawsuit, it will have untold loss for brand image.
Yu Fuguo, a lawyer from Shengfeng Lawyer Office, said: “Now Apple handles the copyright issue by only getting these authors’ books off the shelf without talking about compensation for these authors and punishing the App developers with malpractices. This allowed the developers to infringe on the copyright more than once.” Yu Fuguo believed that economic loss is nothing for Apple but the disgraced brand image is the most troublesome problem.
Compared with these two problems, Apple’s biggest concern is the accusation of sweatshop.
Before Cook’s visit in China, Apple invited the U.S. non-profit institution Fair Labor Association to have a survey into its assembly factories in China due to the great stress from the Chinese and U.S. media. The survey targets included the plants of Foxconn in Shenzhen and Chengdu. Previously, the “suicide of Foxconn’s employees in China,” the “strange disease of these employees” and the “milk river caused by pollution”, caused strong response from the public which threw stones at Apple.
Against that background, Tim Cook’s declaration in the meeting with Chinese government officials was more meaningful.
As the Wall Street Journal reported, “his came because of the numerous opportunities here and the untold troubles as well”.
To Encourage Foxconn?
When Foxconn was under the investigation of Fair Labor Association due to the labor abuse, Tim Cook’s visit revealed Apple’s true attitude toward this matter.
As one of the two journeys revealed by Apple, “visiting the production line of iPhone in the Foxconn’s factory in Zhengzhou, Henan”is the primary goal of Tim Cook’s visit in China. Though Apple is mainly blamed for recruiting“sweatshop”, Foxconn, as the biggest processing company for Apple’s products, also had great stress.
Foxconn is considered one of the most important partners by Apple.
“Apple could not ignore the trouble of Foxconn, which is the most powerful product supplier for Apple since it can produce the largest number of iPhone and iPad in the shortest time with the lowest price,” an expert said. Therefore, to pacify the big “assembly factory” and persuade it to provide cheap and high-quality services for Apple is of course a task Cook attached great importance to.
In addition, the location of factory that Cook visited contains a certain subtlety. When he was visiting the factory of Foxconn in Zhengzhou, the Fair Labor Association was making a survey in Foxconn’s plants in Shenzhen and Chengdu.
Cook’s “absence” of the survey might be related with his personal image and the brand profile of Apple. However, this still showed Apple’s support for Foxconn.
Ironically, the Fair Labor Association published the survey report which is to Foxconn’s disadvantages only two days after Cook’s departure from China. The report pointed out dozens of behaviors of Foxconn that damaged the labor rights, such as the extended working time and reduction of overtime.
Analysis – China is more important in Cook’s eyes
This is not the first time that Cook came to China. Actually, he came to China earlier than he became the CEO of Apple.
China is the largest market for Apple on top of the North American market. But Steve Jobs never visited China. Each time Apple launched a new product, China was never in the list of the first countries where the product would be launched though most of those products were made in China.
Different from Jobs, Tim Cook chose China as the destination of his first outbound journey. It was reported that Apple especially arranged a professional camerist to record his travel in China.
In July 2011, Cook, who was then the COO of Apple, said that it was the right time to expand the retail in Greater China has met its right time and this area would play an important role in Apple’s global strategy.
According to the financial report, China contributed 4.5 billion U.S. dollars of income to Apple in the fourth quarter of 2011, increasing by 270% from a year before and accounting for 16% of Apple’s total income. “There are so many Chinese people in the middle class. I have never seen a country like this. There is unlimited potential in this country.”
In addition, when Cook was asked why Apple had a 73% increase in the first quarter, Cook listed ten answers, three of which were related with China.
A Major Part of Budget in Asia
Presently, Apple attaches unprecedented importance to the Chinese market and the change is led by Cook.
Last October, Steve Jobs handed the CEO position to Cook when Apple is on the fast track. In the following time, Apple kept growing at a fast pace, with the stock price exceeding 600 U.S. dollars and the market value closing to 555 billion U.S. dollars, making the most valuable company in the world.
However, these figures were called “heritages of Jobs”.
The author of Jobs’ autobiography said that Jobs built Apple into an efficient organization whose system is completely different from Microsoft and other companies. The efficiency of this organization is that all departments are methodical and Jobs has supreme privileges. He could intervene in any details anytime and the underlings considered his interventions as the edicts from emperors. Cook is the core next to Jobs but he never intervened in product development.”
“But Jobs’ management method does not suit others. For Cook, he needs to build a management frame with his own style.”
Another problem is that Apple’s previous success lies in its innovative products. What is the next growing point for Apple at its peak? Cook threw his eyes to China.
It is said that Apple’s budget in 2012 reaches 7.1 billion U.S. dollars, which is the historical high, most of which will invested in the supply chain of Apple in Asia.
From that point, Cook’s visit in China is reasonable and necessary.