Apple could pay an even bigger price for its secret deal in China. Chief Executive Tim Cook signed an undisclosed agreement in 2016 promising Beijing $275 billion of investment in the country over five years in exchange for relaxing pressure on its business, according to a report published on Tuesday. He may have had little choice, but it muddles the return calculus.
As a canny investor, Apple, which declined to comment on the article, surely put some of the money into projects that were going to be developed anyway. To placate Beijing, though, some capital may have served more like donations to state enterprises and local governments. The company generated $249 billion of sales in Greater China over the last five years, less than the pledged amount.
Apple’s share of the Chinese smartphone market has remained roughly static since 2016, even though it benefitted somewhat from White House sanctions that pushed Huawei, its closest domestic rival, out of the smartphone business. The decision to hide the deal from shareholders will make it even harder for Cook to justify now. The heightened geopolitical tension also augurs greater blowback at home. If nothing else, Apple at least bought itself some time.
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