Behind Cook's Visit to China: Apple's AI Dilemma and US-China Tech Rivalry

Behind Cook's Visit to China: Apple's AI Dilemma and US-China Tech RivalryTim Cook, CEO of Apple, visited China this week, his second trip to the country this year. Hello! Glad to be back in Beijing, Cook wrote on Weibo, as he accompanied a local photographer on a tour of their neighborhood

Behind Cook's Visit to China: Apple's AI Dilemma and US-China Tech Rivalry

Tim Cook, CEO of Apple, visited China this week, his second trip to the country this year. Hello! Glad to be back in Beijing, Cook wrote on Weibo, as he accompanied a local photographer on a tour of their neighborhood. Cook also shared photos of visits to organic farms, meetings with students and retail employees, and frequent selfies along the way. However, so far, Cook has remained silent on the biggest challenges Apple faces in China.

The main selling point of Apple's latest high-end smartphones is the introduction of AI features, namely Apple Intelligence powered by OpenAI ChatGPT, but there are no plans to launch the feature in China yet. In the comments section of Cook's Weibo post, many local iPhone users inquired about the latest news regarding the release. Apple urgently needs to announce a plan to launch AI services in China, or seek collaboration with local AI developers, to meet the strong demand for this technology among Chinese consumers.

China has a significantly higher adoption rate of generative AI for personal use compared to other countries, including the U.S., UK, Germany, and Japan. Meanwhile, Apples competitors are seizing the opportunity of Cooks visit to showcase their AI-powered phone features. Other rivals, including Samsung, have also rolled out AI updates in China. Apple is reportedly in talks with major tech companies like Alibaba and Baidu, as well as startup Baichuan, but these collaborations are shrouded in uncertainty.

The U.S. is hindering the development of China's AI ecosystem through export controls and other measures, while Chinese policymakers are pushing for self-sufficiency and leadership in this technology. Apple needs to act swiftly and prioritize AI to remain competitive in China, but it may have to collaborate with local companies. Moreover, Apple needs to tread carefully to avoid being squeezed out of the market by local Chinese smartphone companies.

For years, Apple, under Cook's leadership, has weathered numerous challenges in its relationship with the Chinese government. However, China has been leveraging its partnership with Apple to drive the development of its own technology, and now has the leverage to force Apple to collaborate closely with China's AI industry. This week, Cook met with China's Minister of Industry and Information Technology, promising to increase investment in China and contribute to the high-quality development of its supply chain. Apple announced the establishment of its first compliant data center in China in 2017 and agreed to store Chinese users' data on servers operated by local companies. Earlier this month, Apple opened a large research center in Shenzhen, reportedly the company's most extensive research facility outside the U.S.

Apple's business in China is interconnected with millions of jobs, and the Chinese government is reluctant to lose these opportunities. Although Apple is trying to shift some production to countries like India and Vietnam, analysts suggest its reliance on Chinese suppliers and manufacturing is actually increasing. Meanwhile, Apple's sales revenue in China has been somewhat sluggish. In the latest quarter, Greater China accounted for approximately 17% of Apple's net sales, down from 19% in the same period last year.

Policymakers can learn from this situation. The policies that led to Apple's heavy reliance on China were formed gradually over decades. Therefore, U.S. lawmakers should consider a longer timeline and transcend short-term solutions like export controls. Additionally, they can learn from Cook. Years ago, Cook recognized the value of China's investments in vocational education and the vast number of highly skilled workers being trained in China. He once said, In the U.S., you could get all of your mold engineers together in a meeting, but I don't know if we could fill a room. In China, they would fill several football stadiums.

Ultimately, the U.S. should focus on building its own ecosystem, rather than simply trying to curb China's development. Cook's selfie-filled visit to China offers little in promoting the resolution of these substantial issues.