Apple, CEO Tim Cook Can't Ignore China Risks Any Longer

Lockdowns, Human Rights Atrocities Should Drive Company to Stop Doing Business with Communist Dictatorship

Falls Church, VA

--News Direct--

As the Wall Street Journal reported over the weekend, Apple Inc. is belatedly taking steps to diversify its supply chain as it experiences costly delays – just as the holiday shopping season ramps up – in getting its merchandise to consumers, due to the company's overdependency on production in communist China.

The troubles were absolutely foreseeable, but Apple's board and CEO Tim Cook have demonstrated they have a huge blind spot when it comes to the oppressive dictatorship. They espoused all the benefits of working with and in China, while failing to account for the human and financial costs of doing business with the brutal regime. Apple even willfully cooperates with the communist government by removing apps from its platform, censoring content, hosting cloud content where it is accessible by the regime, and most recently removing a private peer-to-peer Airdrop sharing function on Chinese customers' iPhones.

As a result, National Legal and Policy Center – which owns stock in the Cupertino, Calif. tech giant – will sponsor a shareholder proposal at the company's next annual meeting in March 2023.

"Tim Cook and Apple's board got caught with their pants down. Stronger leadership would have seen this coming," said Paul Chesser, director of NLPC's Corporate Integrity Project. "The company has now heard from U.S. Senators from both political parties about ‘doing, in effect, the bidding' of the Chinese Communist Party, and its immoral reliance on Chinese labor."

"Mr. Cook refused to respond to questions from the media about Apple's unhealthy entanglements with the communist government, but shareholders expect him to not be so evasive when they demand answers."

The text of NLPC's proposal for a "Communist China Audit" report for Apple's 2023 annual meeting follows:

RESOLVED:

Shareholders request that, beginning in 2023, Apple Inc. report annually to shareholders on the nature and extent to which corporate operations depend on, and are vulnerable to, Communist China, which is a serial human rights violator, a geopolitical threat, and an adversary to the United States. The report should exclude confidential business information but provide shareholders with a sense of the Company's reliance on activities conducted within, and under control of, the Communist Chinese government.

Supporting Statement:

American companies doing business in China is a controversial public policy issue, according to an April 2, 2021 CNN report titled, "Doing business in China is difficult. A clash over human rights is making it harder."

Apple does business in – and relies on materials, parts, labor and/or services from – entities in China.

China is a serial violator of human and political rights.

China is also hostile to the U.S. for a variety of reasons, including:

— China intends to displace the U.S. as the lone global superpower by 2049;

— The U.S. has committed to defend Taiwan, which China has asserted is part of its country and may attempt to seize by force;

— U.S.-China relations are tense over a number of issues including China's military expansion; egregious human rights violations; actions related to the COVID pandemic; intellectual property theft; relentless espionage; elimination of freedom in Hong Kong; and environmental pollution.

China has also indicated that it would use its industrial capabilities for strategic purposes against adversaries.

Many Chinese companies – which are ultimately under the control of the Communist government – are vulnerable to the U.S. Holding Foreign Companies Accountable Act, do not adhere to basic auditing standards, and are therefore untrustworthy.

China, and by extension the companies it controls, were also identified in the U.S. State Department's 2022 Trafficking in Persons Report as a state sponsor of human trafficking. They are now subject to the Uyghur Forced Labor Prevention Act, which imposes strict verification of parts and products imported from China, that they are not generated from slave labor.

Apple's extensive ties to China also breed reputational risk for the company. For example, while the company funds groups that promote the interests of homosexual and transgender individuals, the Communist government persistently and vigorously cracks down on those forms of identity.

A July 2022 joint statement from the leaders of the British and American domestic intelligence agencies warned that the Communist Chinese Party is the greatest threat to the international order. "We consistently see that it's the Chinese government that poses the biggest long-term threat to our economic and national security, and by ‘our,' I mean both of our nations, along with our allies in Europe and elsewhere," said Federal Bureau of Investigation Director Christopher Wray.

Given the controversial, if not dangerous, nature of doing business in and with China, shareholders have the right to know the extent to which Apple's business operations depend on Communist China.

Founded in 1991, NLPC promotes ethics in public life and government accountability through research, investigation, education, and legal action.

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For more information or to schedule an interview with Paul Chesser, contact Dan Rene at drene@nlpc.org.

Please visit http://www.nlpc.org.

Founded in 1991, NLPC promotes ethics in public life and government accountability through research, investigation, education, and legal action.