No law issued against iPhone, China says while pushing Huawei alternative

Updated on: 14 September 2023

Stefanie Schappert
Senior journalist

Apple store customers in Beijing, China — Image by Thomas Peter | Reuters

A week after China's foreign ministry declared a ban on iPhone use for all workers at government and state-run offices, officials there are clarifying their stance due to conflicting media reports. Meantime, the competition to rule China's smartphone market heats up between Apple and the homegrown Huawei Technologies.

The Chinese government says that workers are still able to buy the Apple flagship product, along with other foreign made phone brands, without fear of retribution.

"China has not issued laws, regulations or policy documents that prohibit the purchase and use of foreign brand phones such as Apple's," foreign ministry spokesperson Mao Ning said at a press briefing Wednesday.

“The Chinese government attaches great importance to information and cybersecurity and treats both domestic and foreign companies as equals," Mao said.

White House national security spokesman John Kirby commented on the so-called iPhone ban, asking China to be more transparent about the restrictions.

Kirby said the White House is monitoring the situation with “concern,” and called the ban aggressive and inappropriate retaliation by the Chinese government.

Last Wednesday, September 6th, Chinese officials were said to have issued the directive to central government agencies, essentially banning state workers from bringing or using any foreign-brand mobile device at work, the Wall Street Journal first reported.

The Apple iPhone was specifically singled out in the government edict. Some restrictions for government workers using it had already been in place, but the latest ban is said to widen those restrictions.

Mao commented that Beijing officials have been concerned about several recent media reports about security incidents involving Apple phones, but did not mention any specific instances.

The move was seen as yet another step by Beijing to cut reliance on foreign tech and limit the flow of sensitive information outside of China.

Mao added that China hoped all mobile phone companies would strictly abide by its laws and regulations, as well as "strengthen information security management."

Timing is everything

The timing of the directive has been less than ideal for Apple as the tech mammoth gears up for the official release of its iPhone 15 series phone line, as well as the updated Watch Series 9 release on September 22nd.

Apple CEO Tim Cook introduced the new iPhone line-up at its annual fall “Wanderlust” product launch event, held Tuesday at the company’s headquarters in Cupertino, California.

The iPhone makes up more than half of Apple's annual $4 billion in sales – with China being Apple’s third-largest market, including both revenue growth and manufacturing.

iPhone Pro Titanium — Apple iPhone Pro and Pro Max, titanium design. Image by Apple.

The news of the ban sent Apple shares down more than 6% over two days last week, wiping $190 billion off its market value.

As national security concerns over trade secrets and data privacy continue to strain relations between the US and China, Beijing has increasingly pushed the use of locally made tech products within its borders.

This means Apple will also have to contend with competition from the Shenzhen-based Huawei Technologies.

The two phone carriers were primary rivals within the Chinese smartphone market until 2019, when then President Donald Trump essentially banned Huawei from doing business with any other company operating in the US.

Similar to the national security concerns against the social media app TikTok, US lawmakers – as well those in the EU – feared the Chinese government was using Huawei devices to spy on American users.

Apple caught off guard

Last week in a surprise move, Huawei launched its own brand-new smartphone model, the Mate 60 Pro, hoping to gain back its spot as Apple’s main competitor.

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The high-end phone, which has been officially backed by Beijing, uses Chinese-made chips and has several innovative features, including satellite calling that relies on China's government-backed network.

Apple's new iPhone line-up also introduced satellite capabilities Tuesday for its new “Emergency SOS” feature, but it is only activated in emergency situations.

Some US lawmakers also believe that the Chinese chips manufactured for the Huawei devices, were made in violation of US trade rules.

A recent social media survey by Chinese news portal Sina asked participants which device they would choose to buy; almost three quarters of the roughly 85,000 voters picked Huawei’s Mate 60 over the Apple iPhone 15.

"Before Huawei's surprise launch, we projected Apple's sales in China Q3 and Q4 to be flat or slightly weaker than last year," said Counterpoint research analyst Archie Zhang.

Industry analysts are predicting Apple's share in China's premium phone market will gradually decline even more due to increased competition from Huawei.

In the first half of 2023, Apple’s market share for smartphones priced over $600 was 67%, while Huawei’s share was only 5.6%.