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China prohibits government officials and SOE employees from using iPhones and foreign-branded smartphones

Amid heightened geopolitical tensions with the US, China has banned officials and state-owned enterprise employees from using foreign-branded smartphones, including iPhones, at work, citing cybersecurity concerns.

Experts suggest the impact on iPhone sales in China will be limited.

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CHINA: China has ordered officials at central government entities and employees of state-own-enterprises (SOE) not to bring iPhones and other foreign-branded smartphones into their place of work, a development that was first reported in the Wall Street Journal on 6 Sept 2023.

The Chinese government cited cybersecurity concerns amid increased geopolitical tensions with the US, raising investor concerns that the ban could affect iPhone sales in China.

CGS-CIMB Research (CGS-CIMB) expects the potential impact of the ban, would be less than one million units of iPhone sales in a year, as it estimates only 5% of the 38 million employees (based on Apple’s 17% market share in China in 2022) in government entities and SOEs use iPhones, which is 0.4% of annual iPhone shipments globally, according to research firm Counterpoint.

“We stay Neutral on the China smartphone sector due to weak consumer demand and slower-than-expected specification upgrades on the back of global inflationary pressures, a strong US dollar, and an uncertain global economic outlook.

“We believe prohibiting government officials from using iPhones and other foreign branded smartphones not only enhances national cybersecurity by minimising the chances of sensitive information leaking abroad, but also increases the competitiveness of domestic mobile smartphones, allowing these handsets to gain higher market share in the high-end segment,” the research house said in its report on 11 Sept.

Two years ago in 2021, the United States government prohibited officials from using Huawei handsets, also for national cybersecurity reasons, while China banned Windows.

Meanwhile, this is the second time the Chinese government has expressed concerns about cybersecurity risks emanating from dependence on foreign software, particularly operating systems.

In September 2021, China discouraged government entities from adopting the Windows operating system in computers.

The potential impact on iPhone sales could be minimal

The research arm said the impact on iPhone sales in China would be small.

“We believe the potential impact on iPhone sales in China has been overstated by international media.

“Based on our observation, government officials, particularly males, typically carry Huawei or other Chinese brands, with relatively few owning an iPhone.

“The majority of iPhone users in China are women in the middle-to-upper-income groups,” it said.

Apple may sell less than one million iPhones a year in China

In 2021 and 2022, Apple sold approximately 49 million and 46 million iPhones in China, accounting for 21% and 20% of total global shipments, respectively, according to data from Counterpoint.

According to the National Bureau of Statistics of China, China has approximately eight million civil servants and 30 million employees in SOEs, accounting for 5% of China’s working population.

“We estimate only around 5% of iPhone users work in government entities and SOEs (based on Apple’s 17% market share in China in 2022, according to Counterpoint).

“This translates into approximately two million iPhones, or 800,000 unit demand a year (based on a 2.5-year replacement cycle), which is a very small portion of global iPhone sales of 230m units in 2022, according to data from Counterpoint,” it said.

Meanwhile, former investment banker and high-net-worth private investor Ian Yoong Kah Yin said it is unlikely for the Chinese government to escalate this restriction to its population as China is the dominant assembler of iPhones in the world.

In 2022, the best-selling smartphone in China was Apple’s iPhone.

While in the second quarter of 2023 (Q2’23), the best-selling smartphone in China 2Q23 was Huawei as its latest models are technologically on par with the iPhone and about 15%-20% lower price than the iPhone. The iPhone was the second best-selling smartphone in 2Q23.

“There are an estimated 7.1 million civil servants in China and about 50 million to 60 million government contractors. Apple reported a total of 225 million global iPhone shipments in 2022. The number was 240 million in 2021.”

“If we assume the iPhone penetration rate is 26% for civil servants and government contractors which is same as the population, the number of smartphones affected by the China government restriction is 17.4 million units.”

“The smartphone replacement cycle in China is 40 months. This works out to an insignificant 2% of global iPhone shipments in 2022.”

“Many analyses have yet to downgrade companies in Apple’s supply chain as the perceived impact of the China government’s restrictions is low,” he said.

Yoong said iPhone’s main assembler Foxconn/Hon Hai , Apple Inc and other companies in the iPhone supply chain will be adversely impacted by China government’s restrictions.

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China

Tragic stabbing of Japanese boy in Shenzhen sparks concerns over Sino-Japanese relations

A 10-year-old Japanese boy died after being stabbed in Shenzhen on 18 September, raising fears about strained Sino-Japanese relations. The attacker, a 44-year-old man, was apprehended. Japanese Prime Minister Fumio Kishida condemned the act, urging Beijing for swift information. This incident follows previous attacks on Japanese nationals, heightening concerns for their safety in China.

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CHINA: A 10-year-old boy, a dual citizen of Japan and China, succumbed to injuries after being stabbed while on his way to school in Shenzhen on Wednesday (18 September) morning.

The incident has raised alarms within the Japanese community in China and could further strain already tense Sino-Japanese relations.

According to the Chinese Foreign Ministry, the boy was attacked in the abdomen near a Japanese school and was transported to a hospital for emergency treatment.

Despite efforts to save him, he died of his wounds early Thursday.

The assailant, a 44-year-old man, was arrested by police near the scene.

The motivations behind the attack remain unclear, and it is uncertain whether the boy was specifically targeted due to his nationality.

A local Japanese businessman expressed concerns for the safety of the community, advising vigilance and caution when speaking Japanese in public spaces.

Japanese Prime Minister Fumio Kishida condemned the stabbing as an “extremely despicable crime” and called for prompt information sharing from Beijing regarding the investigation.

The Chinese Foreign Ministry, represented by spokesman Lin Jian, expressed condolences and emphasized the commitment to protecting foreign nationals in China.

Lin noted that such incidents could occur in any country and downplayed the potential impact on bilateral exchanges.

Eyewitness accounts described the chaotic scene, with the boy receiving immediate medical attention from passersby.

His mother was present during the attack.

This incident follows a similar knife attack in Suzhou in June, which left a Japanese mother and child injured.

In response to both attacks, Japanese officials have reiterated their demand for enhanced safety measures for their nationals in China.

Wednesday also marked the 93rd anniversary of a significant historical event—Japan’s bombing of a railroad track near Shenyang, which contributed to the Manchurian Incident and subsequent occupation of northeastern China during World War II.

In light of this, Japan had previously requested the Chinese government to bolster security at Japanese schools.

In mourning, Japan’s Ambassador to China, Kenji Kanasugi, ordered the national flag at the embassy to be flown at half-staff and planned to visit Shenzhen to meet the victim’s family.

The Japanese consulate in Guangzhou reported that local government officials had also extended their condolences.

Community responses in Shenzhen reflected a mix of shock and sorrow, with residents leaving flowers at the entrance of the Japanese school.

One local expressed shame over the incident as a Chinese national, while another voiced concern over the implications for Sino-Japanese relations.

As diplomatic tensions have already been heightened by issues such as espionage allegations against Japanese nationals and trade disputes, including a ban on Japanese seafood following the Fukushima disaster, this tragic event may exacerbate existing challenges.

The Japanese Chamber of Commerce and Industry in China has urged both governments to ensure the safety of Japanese citizens and seek clarity on the incident.

The investigation into the stabbing continues, with officials pledging to hold the perpetrator accountable under Chinese law.

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Animals

Panda knocks down zookeeper in Chongqing zoo, both unharmed

A panda named Ding Ding knocked down a zookeeper at Chongqing Zoo on 19 September, sparking concern after a video surfaced online. Both the caretaker and the panda were unharmed, and the zoo has continued normal operations.

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CHINA: On Thursday (19 September), a social media user shared a video showing a giant panda named Ding Ding (丁丁) knocking down a zookeeper at Chongqing Zoo.

In response to inquiries, zoo staff confirmed that both the zookeeper and the 9-year-old panda were unharmed and that Ding Ding continues to be exhibited as usual.

The video, circulated on Chinese social media platform Weibo, shows a zookeeper noticing that Ding Ding was attempting to escape through a partially open gate. The zookeeper rushed to close the gate, which produced a loud noise.

However, the gate wasn’t fully secured, and Ding Ding can be seen trying to open it again.

Visitors alerted the zookeeper, who rushed back to shut the gate.

This action seemingly agitated the panda, who then turned its attention toward the zookeeper.

During a brief chase, Ding Ding knocked down the zookeeper.

In the footage, some visitors can be heard advising others to stay calm and avoid shouting.

This is not the first such incident at the zoo.

In April 2024, another panda knocked over another zookeeper.

The zoo’s management reported that on 23 April, at around 2:00 PM, a zookeeper was guiding two pandas, Yu Ke (渝可) and Yu Ai (渝爱), to a feeding area when they chased and knocked the zookeeper down.

Fortunately, neither the zookeeper nor the pandas were injured.

Following that event, the zoo held a safety meeting and implemented stricter feeding protocols to prevent similar incidents.

Chongqing Zoo is home to 23 giant pandas.

According to Chongqing Daily, the panda enclosure, which has undergone three rounds of expansion and renovation, now covers nearly 20,000 square meters and is one of the earliest panda breeding centers in China.

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