The Chinese communist party had already run several campaigns on China Central Television and in the People’s Daily newspaper to damage Apple’s reputation in the country. Though the broadcasts may not have been completely successful — as some met with backlash from Apple fans within the country –the efforts haven’t ended.
The party’s most recent campaign includes a directive for Apple that reads like a warning of “strengthened supervision” in China. With China being the largest smartphone market in the world and Apple’s second largest market, increased supervision — or really any changes to the way Apple can operate — could profoundly affect Apple’s business success in the country.
Further complicating the situation is China’s largest mobile carrier, China Mobile (NYSE:CHL). The carrier holds a majority of the Chinese wireless market, and the iPhone has been a selling point for the company, but it hasn’t been as strong a selling point as it may have been for competing companies. The difference lies in technology…
For some time now, China Mobile’s 3G network has been incapable of operating with Apple’s iPhone, as it uses a different technological standard from other 3G networks. So, despite having 15 million customers using iPhones, it could only see its 3G subscriptions reach 100 million in 3 years, while a smaller competitor, China Unicom (NYSE:CHU), managed 83.5 million subscribers to its 3G network, and it’s been increasing that number at a faster rate.
It’s possible that the grief the government is giving Apple is an effort to make the company more pliant when it comes to making deals in China. As it would be devastating for Apple to lose the Chinese market, the company may more strongly consider implementing the necessary technologies to get its devices up and running on China Mobile’s network, which would benefit the carrier significantly.
Alternatively, the Chinese pressure could be meant to weaken Apple, as China has many of its own device makers and has been making its own standards for mobile technology, and the country would likely want to see as much consumer money as possible going toward domestic brands and technology, rather than going abroad.
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