China plans to expand a ban on the use of iPhones in sensitive departments to government-backed agencies and state companies, a sign of growing challenges for Apple in its biggest foreign market and global production base. This could significantly erode Apple’s position in a market. Apple shares tumbled by almost 3 per cent overnight on Thursday, forfeiting almost a whopping $US200 billion ($313 billion) of market value in just two days
Several agencies have begun instructing staff not to bring their iPhones to work, people familiar with the matter said. In addition, the sources said Beijing intends to extend that restriction far more broadly to a plethora of state-owned enterprises and other government-controlled organisations.
If Beijing goes ahead, the unprecedented iPhone blockade will be the culmination of a years-long effort to root out foreign technology use in sensitive environments, coinciding with Beijing’s effort to reduce its reliance on American software and circuitry.
It threatens to erode Apple’s position in a market that yields about a fifth of its revenue, and from where it makes most of the world’s iPhones through sprawling factories that employ millions of Chinese.
It is unclear how many companies or agencies could eventually adopt restrictions on personal devices, and there’s been no formal or written injunction as yet, the people said. State firms or organisations will likely vary in how strictly they enforce such bans, with some forbidding Apple devices from the workplace while others could bar employees from using them entirely.
Chinese state firms such as oil giant PetroChina employ millions and control vast swaths of a centrally planned economy. Given Apple’s relationship with Beijing and its importance to the economy, it “has historically been viewed as relatively safe in China from government restrictions”, KeyBanc Capital Markets analyst Brandon Nispel said in a report on Wednesday. “Is the government changing its stance?”
A representative for Apple did not respond to a request for comment. China’s State-Owned Assets Supervision and Administration Commission and the State Council Information Office did not respond to faxed requests for comment.
China plan to ban Apple iPhone shocked investors
The prospect of China souring on Apple shocked investors. The shares slid 3.6 per cent in New York on Wednesday (US time), their biggest single-day drop since August 4. Apple had gained 46 per cent this year before the decline, part of a broader run-up in tech stocks.
The company enjoys widespread popularity in China, despite rising resentment of American efforts to contain the Asian country’s technology industry. Apple’s iPhones are among the nation’s bestsellers and are common in both the government and private sector.
