China has expanded the iPhone ban it initiated in September to include more government agencies and state-owned firms across the country, reported Bloomberg News, citing people familiar with the matter.
The report claims that state-backed firms and government departments from lower-tier cities in at least eight provinces have asked employees to start carrying smartphones manufactured by Chinese companies to work, and not the iPhone or phones from any other foreign manufacturer.
China Extends iPhone Ban to Government Agencies and State-Owned Firms in Eight Provinces
The move is part of China’s decade-long plan to reduce dependency on foreign technologies by asking state-affiliated firms to switch to using technologies developed locally and also as a way to promote domestic semiconductor chip manufacturing.
Bloomberg’s sources described the extension of the ban as a “major step-up” from three months ago, which impacted just a “small number of agencies”. At the time, China asked employees in at least three ministries and government bodies to not bring iPhones to work.
The news came as a big blow to Apple, who had just released the latest iPhone 15 and 15 Pro series smartphones and was expecting record sales in its second-largest market. China accounts for 19% of Apple’s revenue.
However, a source familiar with the situation said that government employees were not explicitly barred from using the devices but were told they would be held responsible should any issues arise with their use of iPhones.
In 2020, the state-owned financial media outlet Economic Observer reported that some government agencies banned officials from using iPhones because Apple’s strict privacy rules made it hard for anti-corruption officers to access and investigate a suspect’s device.
According to the Bloomberg report, over the past month, employees from several state firms and government departments across at least eight provinces – including the prosperous coast – were instructed to start carrying smartphones made by local brands like Huawei and Redmi.
Chinese officials denied reports that it had banned the use of iPhones within government offices. However, they expressed concerns about “a lot of media exposure” of security incidents related to the iPhone.
The US government called Beijing’s iPhone ban an “inappropriate retaliation”.
Beijing Promotes the Use of Tech Developed by Chinese Companies Rather Than Depend on Foreign Imports
In December, smaller firms and agencies in lower-tier cities from the Zhejiang, Shandong, Liaoning, and Central Hebei provinces issued directives instructing employees not to bring their iPhones to work.
Central Hebei is home to the world’s largest iPhone factory, the Foxconn factory in Zhengzhou also known as the “iPhone City”. The facility is about one-tenth the size of Manhattan and employs over 300,000 workers. The iPhone City assembles nearly 80% of the world’s iPhones.
Bloomberg report also states it is unclear how many government agencies have issued directives, how widespread the ban is, or how strictly it is being enforced. This is due to some organizations forbidding Apple devices from the workplace while others bar their use entirely.
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Tim Cook Says iPhone Doing Well in China Despite Drop in Overall Sales
The ongoing saga began right before the iPhone 15 was launched. There were rumors that China would not just ban iPhones in the halls of government, but on the local level as well. There were also claims that the country’s largest carrier, China Mobile, wouldn’t support the newest iPhones.
However, those rumors were unfounded as the iPhone 15 and 15 Pros have been selling in the Chinese market since launch. Apple CEO Tim Cook said the smartphones were doing very well in China.
This is despite sales in the country being down by 2% in the quarter ending in October, which Cook blamed on declining Mac sales.
There is no end in sight for the geopolitical drama taking place between the US and China. In 2019, President Trump issued an executive order banning the sale of smartphones by Chinese tech giant Huawei in the US over security concerns. The iPhone ban is said to be China’s response to that move.
Apple shares dived following the Bloomberg report, as AAPL closed the market on Friday at $196.50, dropping about a dollar in value in after-hours trading. At the time of writing, Apple stock is trading at $197.57 – down 0.27%.
Bloomberg says the ban presents a “major challenge” for Apple as well as other foreign technology companies like Samsung.
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