Red, Delicious, and Rotten

How Apple conquered China and learned to think like the Communist Party.

BEIJING - A friend in Beijing recently told me a story about the time a China Telecom technician came over to install the Internet connection for her Apple laptop. The man, an experienced worker, puzzled over the slim, silver device. He picked it up gingerly, holding it away from his body as one might inspect a suspicious package. After a few minutes, he set to work, but then grew frustrated when he couldn't find the familiar pull-down menus to configure the connection.

That was just three years ago. Today, it's highly unlikely that any Chinese technician would be similarly flummoxed. Since the first Apple Store opened in Beijing on July 19, 2008, the company has made astonishingly rapid inroads into the Chinese public's pocketbooks and imagination. In any high-end coffee shop like Starbucks or Costa Coffee in central Beijing or Shanghai, the ratio of Apple devices (iPhone,iPad, MacBook, etc.) to non-Apple devices is often more than 1-to-1.

Apple now has four flagship stores in China -- two in Beijing, two in Shanghai -- and plans to open an additional store in Shanghai and its first Hong Kong location within a year. There are also hundreds of licensed Apple resellers in major Chinese cities, as well as many more unlicensed venders (including the elaborate fake "Apple Store" in Kunming unmasked two weeks ago by an American blogger). And these stores are packed with customers: As the company's chief operating officer, Timothy Cook, revealed on a recent earnings call with reporters, "Our four stores in China [are], on average, our highest traffic and our highest revenue stores in the world." Each attracts as many as 40,000 people daily (to accommodate crowds, Apple's stores in China are designed to be much larger than in the United States). From 2010 to 2011, revenue in greater China has ballooned 600 percent, totaling $8.8 billion for the first three quarters of fiscal year 2011.

And yet the same company that enjoys such a sterling, virtuous image in the global press and that's now making buckets of cash in China is precisely the one singled out by China's fledgling civil society groups for its alleged indifferenceto labor rights and environmental enforcement, as well as an apparent tendency toward secrecy and obfuscation. In a nutshell, just as Apple has been consolidating its success in China, it has been acting depressingly like the Chinese Communist Party.

So how did this happen? As in the United States, Apple's extraordinary success in China owes to the fact that it's much more than a device maker; it's a dreammaker. But it has had to edit its dream a bit to translate to a Chinese audience. In the United States, after all, Apple launched its first Macintosh computer with an iconic 1984 Super Bowl ad in which, with a nod to George Orwell, a roomful of pale, listless drones stares unblinkingly at a projection of their leader on a giant TV screen. "Today we celebrate the first glorious anniversary of the Information Purification Directives," his voice crackles. "We have created for the first time in all history a Garden of Pure Ideology … secure from the pests of any contradictory force.… We are one people, with one will, one resolve." Just then, a chiseled blonde in red track shorts sprints down the center aisle and hurls a sledgehammer at the screen, shattering the illusion of unison. The voice-over intones: "On January 24, Apple Computer willintroduce Macintosh. And you'll see why 1984 won't be like 1984."

From the beginning, Apple positioned itself as a righteous upstart, a firebrand challenge to authority, and to the presumably evil dominance of behemoths like IBM and Microsoft. Its 1997 ad campaign "Think Different," featuring theDalai Lama and Martin Luther King Jr. among other famous iconoclasts, encapsulated the company's concept of itself. As Apple grew larger and more established, its carefully crafted image evolved, but it preserved a rebellious streak. Even today, when Apple is in no way an underdog -- in fact, it's now the largest computer maker in the world -- its image still retains a bit of that upstart sheen.

Of course, none of that is an easy sell in China, where the Dalai Lama is a statecriminal. Nor is it a simple matter to purchase airtime on Chinese state-run TV stations for ads mocking "Information Purification Directives." A decade ago, Apple did run a pared-down version of its Think Different campaign in China, but it fell flat largely because, as David Wolf, CEO of the corporate strategic communications firm Wolf Group Asia and author of the blog Silicon Hutong, explains: "Being a rebel is so obviously not the aspiration of the people who can afford these things."

About three years ago, however, Cupertino rolled up its sleeves and began to focus on cracking the China market. Apple staffed up its Beijing office, opened its first store in time for the 2008 Beijing Olympics, and rethought its marketing scheme; in Chief Operating Officer Cook'swords: "We wanted to understand that market and understand the leversthere."

Theresult is that Apple's image in China now emphasizes not rebellion, but luxury --or as Wolf puts it, "exclusivity." Its gorgeous glass-walled storesare located next to high-end clothing boutiques like Armani, Versace, and BMW Lifestyle. Apple is seen as the choice of "top white-collar professionals,"as stylish 30-something Lily Ou told me, glancing up from a row of brightly colored iPhone cases at Beijing's Sanlitun Apple Store. Ou is a sales manager for an international food distributor. "I like to show off my Apple identity,"she said.

The brand update has been helped along by the availability of cheaper options: the iPhone and iPad, which cost significantly less than laptops. Today an iPhone 4 16GB sells for 5,000 yuan, or about $775. Of course, that's still an extraordinary sum in China. By comparison, a simple Lenovo or Nokia phone typically runs less than $100 in China. This in a country where the per capita income in 2010 was just $4,260, according to theWorld Bank. An iPhone, let alone an iPad or MacBook, is no casual purchase.

But like any luxury good, the high price and relative scarcity -- and sense of exclusivity that creates -- is part of its appeal. Before Apple products are released officially in China, a limited number are smuggled in through a vast gray market.Last summer, a few months before the iPad had even been released on the mainland, I noticed one young woman decked out in a shimmering silver miniskirt, red halter top, and fake eyelashes, and followed by a small camera crew, posing with her contraband (i.e., not-yet-released, not necessarily fake) iPad against the spiral staircase of Beijing's Guomao Starbucks. She was showing off, and recording for posterity, her lovely device, with languid poses that called tomind (or tried to) ads for luxury automobiles.

But on the other side of Apple in China is Jia Jingchuan, a 27-year-old native of the tiny village of Heze in Shandong province. He does not own an iPhone, but hundreds or even thousands have passed through his hands. In May 2007, he moved to Suzhou, a city of 6 million in neighboring Jiangsu province, and took a job at a factory operated by the Taiwanese company Wintek, which makes parts for iPhones. At first, he was thrilled: "When I first knew that we were going to work with Apple, I was very proud," he told me, speaking by telephone from Heze. "It meant we will get a lot of ordersand I will make more money" -- about $200 a month -- "and send more money back home."

But within two years, his excitement soured. As orders for glass iPhone touch screens went up, the factory bosses began to have workers wipe screens with a new and apparently more efficient cleaning agent. But the new formula contained n-hexane, a toxin that causes nerve damage. After suffering dizzy spells and intense pain that left him unable to work, Jia was hospitalized for 10 months beginning in August 2009, and 136 other workers at the same plant were also severely injured. Wintek paid for Jia's initial hospital care (the company reported shelling out $1.5 million for workers' compensation in the case), but after he was released, he says it put pressure on him and other workers to resign and sign no-liability forms so that the company would not have to cover future medical expenses, a charge that Wintek denies.

As of July 2011, Jia had no job, faced mounting medical bills, and worried he may be too ill to work again. On June 7, 2011, Jia's family paid (out of pocket) for him to visit a specialist at a Beijing hospital, where doctors gave a bleak prognosis for the likelihood that the symptoms of his nerve damage -- weakness, dizzy spells, frequent numbness in his lower legs, severe sensitivity to hot and cold temperature changes, continually sweaty palms -- will ever abate. "As the only son of my family, I attended college, which is supposed to be an achievement, something my family is very proud of," he told me. "My daughter is 1 and a half years old now, and I want to provide her a good life. But now I can't really do anything due to my health issues."

A spokeswoman from Apple declined to comment directly, but referred me to its Apple Supplier Responsibility: 2011 Progress Report: "We required Wintek to stop using n-hexane and to provide evidence that they had removed the chemical from their production lines.... In parallel, Apple has verified that all affected workers have been treated successfully, and we continue to monitor their medical reports until full recuperation." Indeed, the factory has ceased using n-hexane, but Jia's experience calls into question Apple's claim that it is continuing to monitor the recovery of sick workers. Currently, he says he pays 400 to 500 yuan monthly (about $60 to $80) for his own medical care; "Now I feel great disappointment. Apple has been so cold and nonresponsive to us, the first-line workers of its product."

Tragically, examples of labor violations, heath risks, and pollution at Chinese factories are all too common. Not only does the country have lower standards than the West, but even the rules on the books are routinely flouted.

In recent years, Apple's Chinese suppliers have been involved in a series of labor and environmental infractions, from a string of suicides linked to poor or inhumane working conditions at plants managed by one of its major suppliers, Foxconn, to allegations by green groups that chemicals leaching out from its factories are polluting China's fields. True, Apple is hardly alone among international companies with Chinese factories in having problems arise from the practices of its suppliers. But what makes Apple singular, say Chinese environmental and labor rights activists, is its sluggishness in responding to complaints and its secretiveness about just which factories are in its supply chain.

Ma Junis one of the leaders of the Green Choice Alliance, a coalition of 36 Chinese NGOs that tracks pollution reports among international brands operating in China.In January, they released a report focusing on global IT companies that ranked Apple dead last among 29 companies in responding to inquiries about pollution and workers' safety. Last winter, Ma met with Jia and helped him pen a letter about working conditions and medical compensation to Apple CEO Steve Jobs. It went unanswered. So did a second letter.

According to Ma, most multinational companies go through an evolution in dealing with complaints presented by Chinese civil society groups: "from nonresponsive, to somewhat resistant, to at least listening, to a proactive response." Two examples of the latter category would be Siemens and Vodafone, which now use the NGO's database to check potential suppliers before renewing contracts. Apple, however, has stayed resistant, fighting off attempts by others to uncover whether factories where workers have been poisoned or where pollution is extreme are their suppliers. "They said, it's our long-term policy not to disclose our supply chain," Ma told me. "So no one can make any public scrutiny? No one can really know what is really happening?"

Richard Brubaker, a Shanghai-based supply-chain consultant who follows sustainability issues, has a similar impression: "Name another firm that has ... billions in reserves and [continues to work] with suppliers who have a clear record of failure to comply with Apple's own codes of conduct."

As for Jia, now resting at his parents' home in the tiny village of Heze, he says: "I never feel the so-called 'human rights protection' and 'respect' that have always been advocated by American corporations. I only feel hypocrisy."

ChinaFotoPress/Getty Images


The Last Stand of Bashar al-Assad?

With more blood in the streets of Syria, can Washington apply enough pressure to finally bring down the tyrant in Damascus?

DOHA, Qatar — As Bashar al-Assad's shock troops storm cities and towns across Syria, leaving a death toll in the triple digits that has only stoked the fires of rebellion even hotter, Barack Obama's administration is stepping up measures aimed at fatally weakening the Syrian dictator's regime.

Critics of the U.S. president's policy, particularly on the right, have long charged his administration with being soft on Assad. But the United States is now unequivocally committed to his ouster, having lost whatever little faith it had in the Syrian leader's willingness to reform. "He is illegitimate," a senior administration official says flatly. "We've definitely been very clear that we don't see Assad in Syria's future."

To that end, the administration is working closely with its European allies and Turkey, seeking to steadily ratchet up the pressure on a regime that analysts, including within the government, increasingly see as doomed. "All of the factors that keep the regime in power are trending downward," the senior official says, pointing to a swiftly collapsing economy and worsening "cohesion" within the regime. "Assad is in on every decision, without a doubt, but as time goes on there's more infighting."

So far, the revolt has mostly taken place outside the seat of power, beginning in rural towns like Daraa and spreading to larger hubs such as Hama and Homs. But as the demonstrations creep closer to the regime's strongholds in Aleppo and Damascus, the State Department is seeing signs that a number of Assad's supporters, including Christians, some Alawites, and a few big Sunni businessmen, are starting to distance themselves from the regime because they are starting to assess the president as a liability -- a view the U.S. Embassy in Damascus is assiduously trying to cultivate behind the scenes.

But Syria is, to borrow a phrase from White House advisor Samantha Power, a problem from hell -- a brutal state with a fragile ethnosectarian makeup that straddles the region's most dangerous fault lines, from the Sunni-Shiite divide to the Arab-Israeli conflict. Unlike Libya, Syria matters in regional geopolitics, and nobody has any illusions that Assad will go down easily. "It's going to get bloody, and it's going to be a slow-motion train wreck," warns Andrew Tabler, a Syria specialist at the Washington Institute for Near East Policy.

Assad's fury has been felt most keenly in Hama, where his father famously killed thousands in the 1980s, and in Deir al-Zor, an eastern city on the Euphrates River that has slipped out of the government's control. Human rights groups say the death toll rose as high as 142 on Sunday, July 31, and activist Facebook pages displayed dozens of gruesome videos showing the bodies of those killed in the assaults, the vast majority of them in Hama, where government troops have been furiously shelling the city. Some of the dead were said to have been run over by tanks.

"They're doing the only thing they know how to do, which is kill people," says Shakeeb Al-Jabri, an opposition activist in Beirut.

The international community has not been silent. Obama reacted quickly and angrily on Sunday, denouncing the attacks as "horrifying" and vowing to increase the pressure on Assad's regime and work toward a democratic transition. British Foreign Secretary William Hague demanded on Monday, Aug. 1, that the U.N. Security Council issue a resolution to "condemn this violence, to call for the release of political prisoners, and call for legitimate grievances to be responded to." Even Russia finally spoke out against its ally, declaring, "The use of force against Syria's civilian population and state agencies is inadmissible and must cease." (It only took an estimated 2,000 dead Syrians for the Russians to get there.)

A Security Council resolution, as Hague himself acknowledged, seems unlikely: Beijing and Moscow have resisted all attempts to take meaningful action against Assad, citing the Libya precedent. The United States has been pushing -- aggressively, the administration insists -- for a resolution condemning the crackdown, but has run into opposition not only from veto holders China and Russia but also from temporary council members Brazil, India, Lebanon, and South Africa. Attempts to refer Syrian officials to the International Criminal Court would run into the same roadblock because the Security Council would have to do the referring.

But the politics may shift if the bloodshed continues to escalate throughout the holy month of Ramadan, as many expect it will, and the world is confronted with the prospect of hundreds, perhaps thousands, more bodies in the streets. "I have no doubt that the dynamics on the ground will embarrass those standing in the way," says Salman Shaikh, head of the Brookings Doha Center and a former U.N. official in the Levant. Shaikh argues for a hard push at the Security Council to hold an escalating swath of Syrian officials accountable for the slaughter. "I don't see how else we're going to get these people to take notice," he says.

Shaikh also advocates putting together an informal "contact group" of concerned countries -- as with Libya -- with a core group perhaps consisting of the United States, France, Qatar, and Turkey. But the all-important Turks, who share a border with Syria and have hosted thousands of refugees and several opposition meetings, are still hedging their bets. Sunday's statement by the Turkish Foreign Ministry called on the Syrian government to "end the operations and resort to political methods, dialogue and peaceful initiatives in order to reach a solution" -- options that the protest movement explicitly abandoned several weeks ago.

The European Union's position comes across as similarly cautious, the product of an institution that operates by consensus. "The only way out of this crisis is through a genuine inclusive national dialogue with the opposition," EU foreign-policy chief Catherine Ashton said Sunday. The European Union did announce fresh sanctions on Monday, with asset freezes and travel bans on five additional Syrian officials, but harsher measures that Tabler argues could really damage the regime -- targeting the oil and gas revenues that help keep the Syrian government afloat -- are so far off the table. The United States already maintains unilateral sanctions against the Syrian regime and top figures within it, but more could be done to choke off its sources of income, says Tabler.

Syrians aren't holding their collective breath. "We can't really expect much from the international community," says Jabri, and most Syrians are wary of external involvement in their struggle. The fractious opposition -- which is only loosely connected to the street protesters, in many cases -- is concentrating its efforts instead on building consensus and proving to Syrians that it is a viable alternative to Assad, a task made all the more difficult by the reality that until recently, as Jabri puts it, "no two Syrians could get together and talk about politics without ending up in jail." New meetings are being planned both within Syria and abroad, possibly in Egypt and Saudi Arabia.

If international pressure and the opposition aren't a sure bet, what seems clear is that Assad is in deep trouble. A report last month by the International Crisis Group, reviewing the Syrian president's erratic strategy for containing the protests -- crackdowns followed by half-baked reforms and vague promises, followed by more crackdowns -- concluded that "in its attempts to survive at all costs, the Syrian regime appears to be digging its own grave." Violence has proved to be a losing strategy, as each death enrages other Syrians, sparking new demonstrations and convincing more and more fence sitters that dialogue is a fool's errand.

Obama's Syria policy is bound to come under the spotlight this week, given the regime's ruthlessness in Hama and the fact that Ambassador Robert Ford is in Washington this week for a Wednesday confirmation hearing. Ford, who was sent to Damascus under a recess appointment because he could not be confirmed the first time around, will face a panel of Republican senators on the Foreign Relations Committee who are eager to criticize what they see as the administration's timidity in Syria -- and some of whom have demanded that Ford be recalled.

The White House counters that Ford's presence in Damascus is essential, allowing him to meet with opposition figures, warn regime allies against supporting Assad, and even identify potential transitional leaders. Ford's recent dramatic visit to besieged Hama, where he was greeted by cheering protesters bearing roses and olive branches, may have earned him some breathing space on Capitol Hill.

The ambassador's confirmation hearing also comes just "days, not weeks" before the Treasury Department is expected to designate more Syrian officials for targeted sanctions, predicted an administration official who is not directly involved in the preparations -- but probably not before he gets raked over the coals on Wednesday. In last week's hearing with Assistant Secretary of State Jeffrey Feltman, Democratic Congressman Gary Ackerman let loose, demanding that Obama call for Assad's "immediate departure."

"History will record not only how we mostly ignored the people of Syria in their hour of need, but worse, how we overlooked our own blindingly obvious national interests in the demise of the Assad regime," Ackerman said.

But few analysts think words will do much to damage the deeply entrenched Syrian regime, and some, like the Century Foundation's Michael Hanna, worry that Assad could limp on far longer than anyone expects. Nor would multilateral sanctions, even if they do somehow pass the Security Council, have an immediate effect. "It's unlikely that, short of massive defections within the security services at an elite level, outside pressure is going to change the calculus of the inner circle of the regime," says Hanna. Instead of being toppled, he cautions, Assad could become another international pariah, like Saddam Hussein or the Burmese junta.

Washington has made its decision, though nobody can say when Assad will go. "He's on his way out," says the senior administration official, stressing: "This is about the Syrian people, not about us. They're the ones that say that they want someone else, and they should be able to choose the government that they want."

And Assad? "He's in the past."