AAPL Apple Inc

By Yoko Kubota 

BEIJING--Apple Inc. Chief Executive Tim Cook will co-chair the Chinese government's showcase global business forum next month, underscoring his increasingly high profile here as Apple and other companies wrestle with tough new government demands on cybersecurity.

When he co-chairs the China Development Forum in March, Mr. Cook will be making his fifth appearance at a newsmaking event in China in little over a year. The development forum is a sought-after event for the world's business elite due to the rare access it offers to senior Chinese government leaders.

It comes as Apple faces myriad challenges in China, including loss of market share to domestic smartphone rivals as well as dealing with new government demands on its operations. This week, Apple will begin shifting customer iCloud data to servers on the Chinese mainland, where experts say it will be more vulnerable to government seizure.

Apple is far from the only company to make concessions to China. But the company faces a special challenge maintaining a consistent global branding image given its roots as a company that challenged convention, said Tim Calkins, a professor of marketing at Northwestern University's Kellogg School of Management.

"Apple, for many years, has embraced the idea 'think different,'" Mr. Calkins said. "And yet it's become clear that in China you can't think too different."

Apple had no immediate comment. But Mr. Cook himself recently defended the company's moves in China, including its decision to remove nearly 700 apps that allow people to bypass internet restrictions. He said Apple needs to engage with governments around the world even when it disagrees with them.

"Nothing ever changes from the sideline," he said at a business conference in Guangzhou in December.

Western companies are accustomed to making concessions to China's authoritarian government, including censoring content and setting up joint manufacturing ventures with state-backed Chinese enterprises, in return for access to the massive consumer market.

But Michael Auslin, a fellow at Stanford University's Hoover Institution, contends that Apple's China stance fuels a false impression that Chinese and Western business systems are comparable. It also cuts against the grain of companies such as Apple, he said, since tech firms have succeeded in an environment where information is openly shared--which China's authoritarian system doesn't allow.

"You are essentially showing that you're going to be a constructive partner and not a disruptive partner to the Chinese system," Mr. Auslin said. "But of course the systems are not comparable" between China and the Western countries.

While many Apple users in China have no complaints, some are troubled by its dual standards for China and the rest of the world. One customer who bought an iPhone at a Beijing Apple Store recently said the company's image had suffered by agreeing to store data in China. That "makes Apple no more a great company," the person added.

For Apple, China is critical not just as a market, but as a manufacturing center. Most of its iPhones and other products are assembled in China through partners here.

In recent years, it has also faced increasingly tough competition from Chinese smartphone rivals. Apple went from China's third-best selling smartphone brand in 2015, with a 13% share, to fifth in 2017, with a 9% share, data from research firm Canalys showed.

Apple has taken steps in the past year to shore up its position, including adding China-friendly smartphone features and naming, for the first time, a China-born executive to a newly created role to oversee operations in the country.

Next month's China Development Forum will now provide a starring role for Mr. Cook, who follows a long line of prominent executives to co-chair the event, including former Ford Motor Co. Chief Executive Mark Fields and former Caterpillar Inc. Chief Executive Doug Oberhelman.

Mr. Cook will be joined by dozens of international business luminaries, including Boeing Co. Chief Executive Dennis Muilenburg, BlackRock Inc. Chief Executive Larry Fink, GlaxoSmithKline Chief Executive Emma Walmsley and billionaire investor Peter Thiel, according to a release by the state-founded China Development Research Foundation on Monday.

The forum's chair hasn't yet been announced, but customarily it is the minister of China's State Council Development Research Center.

Mr. Cook, who took over as chief executive from the late Steve Jobs in 2011, has paid increasing attention to China in recent years. He made just one visit in 2012, then twice-yearly visits from 2013-15. Since 2016, he has made at least three public trips annually, according to media reports.

Mr. Cook attended the China Development Forum last March, speaking on globalization. In October, he was back for an advisory board meeting of Tsinghua University's School of Economics and Management in Beijing, in which he and others met Chinese President Xi Jinping.

In December, he spoke at an internet conference in Wuzhen hosted by the Chinese government's cyber censorship arm. Mr. Cook's participation drew fire from conservative China critics in the U.S., but Chinese state media applauded his remarks affirming the need to abide by the laws of host countries.

"Only those that can play by the rules can win in the game of corporate competition," People's Daily said in a commentary in January. "Apple's CEO Tim Cook has come to understand that."

Tripp Mickle in San Francisco and

Xiao Xiao

in Beijing contributed to this article.

Write to Yoko Kubota at yoko.kubota@wsj.com

(END) Dow Jones Newswires

February 26, 2018 06:16 ET (11:16 GMT)

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