Even the biggest companies can't sway China. Apple joins the list of foreign companies that the Chinese government is wary of using products in its offices.
According to reports, China has advised government agencies not to purchase certain products from Apple due to concerns about security. There were 10 Apple products listed in the advisory, including versions of the MacBook and the iPad. The National Development and Reform Commission distributed China's procurement list and Apple's products were included since June when a draft of the list was created.
"When the government stops the procurement of products, it sends a signal to corporates and semi-government bodies. The Chinese government wants to make sure that overseas companies shouldn't have too much influence in China," said Mark Po, a UOB Kay Hian Ltd. Analyst in Hong Kong.
Just last week, China also banned the use of anti-virus software from Symantec Corp. and Kaspersky Lab citing security loopholes. The Chinese have used products from all three banned companies before but it looks like China is being doubly strict about software and hardware purchased by the government in light of Edward Snowden's revelation that the U.S. government has a spying program in place.
Many also feel that it's possible the restrictions are a form of retaliation for the indictment in the U.S. of five Chinese military officers in May for alleged cyber espionage, as well as the U.S.' involvement in territorial disputes that China is having with Japan and the Philippines.
The ban will definitely hurt Apple although the company has not made an official statement about the matter. According to Bloomberg, Greater China accounted for 16 percent of the $37.4 billion revenue that Apple posted last quarter, with iPad sales increasing by 51 percent while Mac sales jumped by 39 percent.
Apple still has a chance to get back on China's good side and overturn the ban because the procurement list will be reviewed again in January. For what it's worth, it doesn't seem like China is only striking off foreign companies from the list. Even Lenovo Group Ltd, a Chinese company, is included.
Last month, China Central Television had reported that the iPhone has features that made it possible for state secret to be leaked. Apple rejected these claims, denying that governments have access to the information it collects and reiterating that the company will never let this happen.
