Apple’s Tim Cook plans to travel to Beijing for a meeting with government officials this month, according to an exclusive report from Reuters.
This meeting follows a flurry of issues Apple faces with China, it’s second largest market in terms of revenue after the U.S.
In mid-April this year, Apple’s book and movie services were shut down in China due to stricter regulations on Western content. This comes as China’s government continues its policies to censor online content and increasing demands for local data centers to improve cybersecurity and prevent terrorist attacks.
The tech giant has also experienced declining smartphone sales and recently lost an iPhone trademark dispute. A Beijing court ruled that it cannot prevent the iPhone trademark being used on iPhone accessories, such as leather iPhone cases, according to the Financial Times.
These threats to Apple’s core business raise questions on its growth and future performance since reporting its first quarterly revenue fall in 13 years.
Billionaire investor activist Carl Icahn announced that he is selling his stake in Apple due to concerns about Apple’s ability to do business with China.
When asked on CNBC if China’s “government interference” was the reason he sold his stake in Apple, Icahn said, “That is the main reason that, yeah, I got out.”
Icahn also clarifies that it is Apple-China relations that concern him rather than China’s economy.
“I’m not talking about China’s economic status right now. I’m talking about what are they going to do—I mean, could this thing with Apple escalate a little bit? And if it does, what does that mean to Apple’s profits for the near term?”
Cook plans on meeting high-level government officials and Communist party leaders, including those in charge of propaganda, according to the Reuters report.
Apple’s refusal to provide the source code to unlock the San Bernardino iPhone as requested by the FBI may have raised concerns with China. According to a prominent Apple lawyer, the company has refused to provide the source code to China for the last two years.
Despite recent setbacks, Tim Cook remains optimistic in regard to Apple’s relationship with China during Apple’s Q1 2016 earning call.
“I think China is not weak, as has been talked about, I see China as, may not have the wind at our backs that we once did, but it’s a lot more stable than what I think is the common view of it. And so we remain really optimistic on China.”
Tim Cook may be hoping to challenge some of China’s regulations that are affecting Apple’s growth in the region during the reported meeting scheduled to take place in Beijing. As for now, it’s unlikely that Cook has any knowledge as to how China’s government decisions will affect Apple’s future sales and earnings.
Cook is also enthusiastic about Apple’s future product releases, which may help boost sales.
In the earnings report Cook said, “We also look at our pipeline and are very excited about what’s in our pipeline. And so all of those things make me optimistic.”
The president of the People’s Republic of China, Xi Jinping, has overseen cybersecurity laws that prevent many technology companies from operating effectively in China to boost local technology growth. Social networks, such as Facebook and Twitter, are blocked in China while local competitors, Renren and Sina Weibo, control the market share.
Google and Microsoft also face censorship issues in China, which is an indicator of the uphill battle Apple faces in improving relations with the Chinese government.
[Photo by Justin Sullivan/Getty Images]