Apple Inc. (AAPL): The China Syndrome, Explained (Sort Of)

Apple Inc. (NASDAQ:AAPL) has sure had its run-ins with the Chinese media – which, of course, as many know, is not the free press we supposedly enjoy here. The media in China are set up to be the mouthpieces for the communist government in the country, and being state-run, what may pass as a news story that day could very well be propaganda and not actual news.

Apple got a lot of heat just in the last couple of months over the company’s warranty policies, which the Chinese (state-run) media maintained were in violation of the country’s own consumer-rights protections. The state media produced a steady drumbeat of stories that excoriated Apple Inc. (NASDAQ:AAPL) for its customer service practices, which ultimately caused CEO Tim Cook to issue an apology and state that his company was reviewing and changing its polices for the sake of the Chinese consumer.

Apple Inc. (AAPL), Inc. (AMZN), Barnes & Noble Inc. (BKS)

That seemed to mollify the Chinese media – for about a week or two. Now, the latest issue for the Chinese media – and by extension, of course, the government – is what the government calls “pornographic material” in the Apple App Store.

A story recently surfaced in the state-run newspaper in China essentially listing a laundry list of web sites that supposedly offer this smutty material and content to mobile device users, and lists the app stores (besides and including Apple’s) that have applications  which access this content.

Image: Apple Inc. (NASDAQ:AAPL)

There are no details about the determination of pornography – but the Chinese government has long been hunting politically sensitive content and trying to get it removed from the Internet in the country.

From here in the Insider Monkey newsroom, it seems that this is some kind of campaign by the Chinese government to perhaps get either a lot of concessions from Apple Inc. (NASDAQ:AAPL) in order to keep operating in the country, or it is trying to push Apple out the door. From where we sit, Tim Cook was right when he professed his love for China – but he meant the Chinese people, who would be the major consumers of Apple products. The company hires (indirectly) thousands of people in manufacturing plants and a couple hundred in Apple retail stores in the country. In that sense, Apple has been a boon to the China economy.

The problem though, seems to be with the government. And what happened the last time the Chinese government picked on and tried to bully an American tech company?

Google Inc. (NASDAQ:GOOG) faced similar challenges with the Chinese  government, and it wound up lifting stakes and moving its operation to Hong Kong in 2010. Might the same fate happen here – might Apple stand its ground and punish the Chinese people by moving operations out of the country, or will it secede much of its business model to appease the communist regime?

What are your thoughts? Do you believe there are as many “complaints” against Apple Inc. (NASDAQ:AAPL) as the state-run media wants readers to believe, or is this just anti-American propaganda? And what do you think Tim Cook should do about it, if anything? Let us know your thoughts in the comments section below.

DISCLOSURE: I own no positions in any stock mentioned.