Apple, Google, IBM CEOs head to China with trade war brewing

Leaders of Apple Inc., Google and other US technology giants head to China this weekend to pursue a familiar goal: To do more business in the world’s most populous nation. The effort has had mixed results, at best, in the past.
 
With a trade war brewing between the world’s two largest economies, the goal has gotten loftier still.
 
Tim Cook, chief executive officer of Apple, Sundar Pichai, CEO of Google, and Ginny Rometty, head of IBM, are scheduled to attend the China Development Forum, an annual gathering that helps Western corporations build relationships with the country’s government officials.
 
Cook is co-chairing the event this year, and Apple has the most at stake in China among US tech companies. Its iPhones and other gadgets have sold well in the country, but revenue from the region fell in Apple’s last fiscal year. The Cupertino, California-based company has also been criticized recently for relocating the data of Chinese iCloud users to state-controlled server farms.
 
Last year, International Business Machines Corp. announced a deal with Chinese company Wanda Group at the forum. The deal was meant to help IBM expand in the country’s cloud market, though Caixin reported recently that Wanda would stop working with the U.S. company.
 
Google pulled out of mainland China in 2010 over government censorship of its search results. The company has been trying to return in recent years, but has made little progress.
 
These hurdles will only get higher if a trade war erupts between the U.S. and China. On Thursday, President Donald Trump ordered 25 percent tariffs on at least $50 billion of Chinese imports, including information and communication technology. He also accused China of stealing intellectual property. China responded with its own duties on some U.S. imports.
 
Apple could see a negative effect on about 15 percent of its business if China were to retaliate with duties on imports of U.S. products, Loup Ventures’ Gene Munster said in an email earlier on Thursday.
 
Steve Mollenkopf, Qualcomm’s CEO, will attend the conference but has canceled his plan to speak.
 
The conference comes just days after Bloomberg News reported that Chinese regulators are seeking more protections for local companies before approving Qualcomm’s proposed purchase of NXP Semiconductors NV. China’s Ministry of Commerce isn’t satisfied with the remedies that Qualcomm has offered so far and has told the company to propose more, people familiar with the matter have said.
 
China is the world’s biggest market for smartphones and a crucial customer base of Qualcomm’s chips for mobile phones. The San Diego, California-based company won the right to extend its technology licensing business in China in 2015 after paying a fine and agreeing to charge lower rates to local customers on phones for that market.

©2018 Bloomberg L.P.