The Cult of Apple in China

China is where most of Apple's signature products are built. One day it might also be where most of them are sold. Why Apple is booming in China

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Photo-Illustration by Alexander Crispin for TIME. CGI by Hayri Er.

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China, however, is no longer a Wild East where foreign companies can act with impunity. Yes, the pervasiveness of corruption in China can make it difficult for American firms to operate without violating the U.S.'s Foreign Corrupt Practices Act. But multinationals, whose labor or environmental records may be less egregious than those of domestic manufacturers, are becoming riper targets for sanctions by the Chinese government. In recent months, American companies like Walmart have been slapped by Beijing for allegedly violating food safety standards. In March, when Tim Cook met with China's presumptive Premier, Li Keqiang, the Apple CEO enjoyed a reception akin to that of a visiting head of state. But Cook also got a lecture from the Chinese leader on how Apple, like other international firms operating in China, needed to "pay more attention to caring for workers and share development opportunities with the Chinese side," according to state news agency Xinhua. China's message was clear: We're rolling out the red carpet, but mind your manners.

Apple is changing in China--and the shift in attitude has to do with the new man in charge. Cook took over last year from Steve Jobs, the visionary Apple CEO who died of cancer in October. Under Jobs' leadership, the company embraced a culture of corporate secrecy that protected its technological innovations. The element of surprise ensured that each product launch would come with buzz--and a stock boost. Yet the obsession with privacy also made its China operations frustratingly opaque. For years, Apple refused to make its supply network public, a lack of transparency that gave the company a convenient way to dissociate itself from violations committed by its contract manufacturers in China. Jobs never visited China on official business.

By contrast, Cook, when he served as the company's chief operating officer, led Apple's efforts to streamline its operations and maximize profits by sending most of its supply chain overseas. He toured China to inspect the plants where labor violations were occurring. This year, when he made his first trip to China as Apple's CEO, Cook copped to the company's supply-chain problems. In January, Apple finally released a list of its leading suppliers. In its 2012 progress report, the company admitted that more than 60% of 229 audited suppliers failed to comply with a 60-hour maximum workweek and said 112 suppliers failed to deal properly with hazardous chemicals. Cook then authorized an independent audit of the company's Chinese suppliers, making Apple the first electronics firm to undergo such an investigation. The day after he toured a Foxconn plant that makes iPhones in central China, the audit was released, detailing wage, overtime and safety violations throughout Apple's China network. In response, Foxconn has promised to boost salaries and cut back hours without penalizing employees. Apple says it will share some of the costs to improve working conditions.

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