CELLPHONES: Apple’s Cook Visits Vice Premier, China Telecom
Bottom line: Apple CEO Tim Cook’s latest meetings in Beijing are important steps in his bid to cultivate better government relations, but he may need to make more substantive moves to earn serious goodwill.
We’ll continue this week’s tradition of closely following Apple (Nasdaq: AAPL) CEO Tim Cook on his latest trip to China, with word that he’s met with one of the nation’s vice premiers and also with officials from China Telecom (HKEx: 728; NYSE: CHA), one of its 3 big state-run telcos. I’ll begin with just a slight note of cynicism by saying that both of these meetings seem just slightly second-tier, for reasons I’ll explain shortly, and therefore one could argue that Cook has yet to make it into the “big leagues” of Chinese politics.
But that said, these and other visits on this trip still mark a huge step forward for both Cook and Apple, which just 2 years ago were criticized by the powerful People’s Daily, the official newspaper of the Communist Party, for its unparalleled arrogance. Cook has been working hard to change that image, and this particular weeklong trip seems to be almost as much about public relations as it is about doing business.
Let’s begin with politics, which was the main theme in Cook’s high profile meeting with Vice Premier Liu Yandong. (English article) Perhaps most significantly, the highly symbolic meeting was featured prominently in coverage by the Xinhua news agency, often considered a mouthpiece of Beijing and the Communist Party. The meeting actually took place on May 12, and a report on the encounter prominently features a photo of the pair shaking hands.
China loves these kinds of photo opps because they bring huge face to the country’s top officials, who gain greater credibility among average Chinese when they’re seen meeting with global business and political leaders. During their meeting Liu called on Cook to do more to build scientific and educational ties between China and the US. That seems to be a quiet hint that Apple should open an R&D center in China and try to cultivate related local talent — something I’ve been calling on them to do for quite a while, to show their commitment to the market.
Cook has done quite a bit to show his company’s commitment to China over the last year, launching a number of environmental programs and also promising to sharply boost the company’s number of Apple stores in China. But what China really wants is to learn from Apple’s ability to develop cutting-edge products, and Apple hasn’t done much to bring that element of its story to China yet.
I’ll be the first to admit that I’m not hugely familiar with Chinese politics, but I also had never heard of Liu Yandong until reading this particular news item. She’s China’s highest ranking woman politician, which means she’s quite ambitious but also probably at least partly a figurehead in this male dominated society. What’s more, she’s closely connected to former President Hu Jintao, which means she probably doesn’t have as close ties to the current administration led by Xi Jinping. Hence my characterization of this meeting as somewhat second-tier.
We’ll close out this post with Cook’s other visit in the latest headlines, which was to the offices of China Telecom, the smallest of the nation’s 3 wireless carriers. (Chinese article) This particular visit was mostly a formality, as Cook went discuss renewing a partnership that has China Telecom helping to sell Apple’s iPhones in China.
There’s nothing more of substance to the reports, though it appears that Cook didn’t get a meeting with China Telecom’s CEO Wang Xiaochu but instead met with other high level officials. This particular meeting was really the result of timing, since Apple had signed a 3 year contract with China Telecom that needed to be renewed. Still, China Telecom is easily the smallest of China’s 3 carriers, and thus Cook’s meeting seems to show that he still has a ways to go in his long march to curry favor with China’s massive bureaucracy. But he’s certainly moving in the right direction.
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