Apple 2.0

Covering the business that Steve Jobs built

Three things the press gets wrong about Apple in China

January 13, 2014: 7:42 AM ET

Letter from a reader: An American expat based in South Korea.

By Jake_in_Seoul

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The launch of the iPhone 4S in Beijing. Photo: M.I.C. Gadget

FORTUNE -- Much has been written lately in the U.S. press about Apple (AAPL) and China, but from my perspective on the ground -- as a long-time Apple investor who speaks fair Mandarin Chinese and has been in and out of China for business and personal reasons for the past 18 years -- what I read is almost always incorrect. Sometimes egregiously so. Not necessarily in the facts, but in the context.

Here are three simple things the American press usually gets wrong about China and Apple:

1. There is not just one China.

Don't think "China united," rather think the European Union times two, with all its sprawling diversity of language, climate, cuisine, wealth, poverty, etc.

I suspect most Americans who haven't been to China have a few choice images in mind (the Great Wall, the Forbidden City, grimy factories). I know I did. But like a super-EU this is a vast place, full of huge regional and local differences over which the central government has much less control than people think. A small but telling example: Even accounts in national banks are based in locales. It is quite expensive and far from routine to move money from a major Chinese bank branch in Beijing to one in Shanghai or Sichuan. So, too, phones, which are entirely regionally based, so that managing the details of one's subscription requires complicated procedures, often best done in person, in one's home region.

This diversity frequently complicates and enriches social interaction, as it does in Europe. When two strangers meet here, there is a complex set of questions that quickly get answered, often unconsciously. "North or South"? If South, then maybe Fujian? Guangdong? Guangxi? If South-central, then Zhejiang/Jiangsu, Hunan, Hubei, Sichuan? If North, then the northeast provinces, or Shandong, or Hebei, or the far northwest? Depending on the social parsing, entirely different sets of conversations ensue, with full awareness of the many subtle complications involved in crossing large cultural and linguistic gulfs, often smoothed over with good food and wine.

Additionally like the EU, there are currently vast waves of migration occurring all over China -- much of it quasi-legal -- which add up to a fascinating melange of cultures and varieties of the "Chinese language" (in fact, at least as variant as Polish and Icelandic). Foxconn workers are part of that migration of the hopeful and the ambitious, like southerners who came to Detroit in the 30s, 40s, and 50s to work in the auto industry. In return for getting, say, 150% to 200% more pay than local clerical jobs (moving, say, from 1200 RMB/month in Hainan to 2400 RMB/month at Foxconn) or 200% to 300% more than local farm labor, migrant factory workers face isolation and mind-numbing, regimented work, but can save real money for a better future.

From the perspective of the place I'm staying right now (one of my favorite spots on earth, a cheerful but somewhat shabby town of 50,000 on Hainan Island that time mostly forgot) young people in the Chinese countryside have many local choices, and those who choose to be migrant laborers at Foxconn seem rather akin to a Michael J. Fox in Family Ties -- a get-ahead group, willing to forego a pleasant life with family and friends in order improve their future chances. As Leslie Chang put it so well in her TED talk, they are self-driven, much more to be seen as heroes than victims.  Future winners in their own minds, they seek to go beyond the horizon to expand possibilities in life.

2. Apple is not just an exclusive aspirational brand for the wealthy.

Rather it has now a widely-known part of general Chinese commercial culture, likely familiar to every urban adult and young person in China (say 500+ million people). Speaking from the utter hinterlands, "my" little town of 50,000 must have at least 20 cell phone outlets, all of them flaunting the Apple/iPhone logo, some of which are four-feet high. In casual conversions across the social spectrum I have found no one who didn't know of Apple (苹果 Pingguo) products.

iPhones here are not predominant, but are readily seen, certainly in the hands of wealthy and powerful, (e.g., a local real estate tycoon), but also surprisingly owned by the likes of hotel clerks and a remarkable noodle shop girl. Ownership seems to be a state of mind. To be fair, Samsung advertising is also much in evidence and one techie-type teen I met quickly dismissed Apple and championed Samsung, based on "specs" (using the English word). However, I was amused in another casual conversation to hear Samsung (known in China by its Chinese/Korean character name 三星 Sanxing = "Three Stars") referred to as a "Chinese phone" (中国手机) as opposed to the iPhone, which was termed a "foreign phone" (外国手机). I suspect this misunderstanding may be not be uncommon and hence highly aggravating to Samsung, prompting them to use their roman letter logo in all advertising, but apparently with scant success. The iPhone, by contrast, is now called "iPhone" (using roman letters) in every press article I've seen recently, and a Chinese character equivalent 爱疯 (Aifeng" = "Love Crazed") is increasingly used only as slang in advertising, on Weibo, in blogs etc.  The brand maintains its pristine foreign identity.

Overall, the fact that an awareness of Apple and the iPhone has so quickly and widely penetrated Chinese society is a remarkable achievement, one likely due to the perceived excellence of Apple technology and also to good timing, as cell phone culture comes of age here. As long as Apple continues to produce cool products, it will surely gain adherents in China as more and more people can afford them.

3. Apple benefits from the basic pro-American attitude of many individual Chinese.

I may be one of the few people talking about this, but coming from South Korea, where anti-Americanism among a large minority has long been fashionable, and talking to hundreds of ordinary people here in the hinterlands of China, the difference is like night and day. True, there are numerous venues of competition and potential conflict between China and the U.S., and there is a drumbeat of criticism of U.S. policy in the media, but such concerns prove easy to ignore in personal life. What counts more seems to be the examples of stellar sports stars such as Yao Ming, the allure of real estate purchases in California, the increasing possibility of an anchor baby born in the U.S., and most of all a dream of the "beyond" in America. It's remarkable, even daunting, how welcoming people have been to me once they learn my nationality. The growing pollution over much of urban China and the ferocious competition to get ahead seem to prompt many Chinese to muse on possibility of heading out to the U.S..  To America's great credit, the perception here is that talented and economically successful immigrants are welcomed there, unlike in Europe generally. Apple technology and the legacy of Steve Jobs partake of this luster imputed to the U.S. and its technology, and no other tech company can come near to matching it.

In sum, for the long-term I count China squarely in the Apple camp. There will be many twists and turns, but this trip has confirmed my high optimism about the future of Apple here.

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