Apple's Chinese success tied to $275B deal spearheaded by Tim Cook: report

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• Much of Apple's (NASDAQ:AAPL) recent success in China can be tied to a 2016 deal the company signed with Chinese officials, estimated to be worth more than $275 billion, to help develop the country's economy and technological prowess, The Information reports.
• The news outlet reported that the five-year deal, not previously reported, was personally spearheaded by Apple (AAPL) Chief Executive Officer Tim Cook, who made a number of in-person visits to the country to end certain regulatory actions that were negative to Apple's business, citing internal documents. Prior to the meetings, Apple's (AAPL) business in China had slowed considerably, due to a government crackdown on concerns the company was not providing support to the local economy and subsequent bad publicity.
• Cook wound up personally lobbying officials over issues relating to Apple Pay, iCloud and the App Store, which have helped Apple's (AAPL) success in the country for both its services, as well as its devices.
• The crux of the deal is a 1,250-word agreement, a memorandum of understanding, signed between Apple (AAPL) and China's National Development and Reform Commission, in an effort to boost relations between the tech giant and the Chinese government. Face-to-face meetings happened after Chinese regulators shut down iTunes books and movies in April 2016. One month later, Apple announced that it would invest $1 billion in DiDi Global (NYSE:DIDI) to help give it a leg-up in the ride-hailing space against Uber (NYSE:UBER). Uber (UBER) eventually sold its Chinese business to DiDi (DIDI) in exchange for a sizable stake in DiDi.
• Other concessions were made by Apple, including a pledge to help Chinese manufacturers develop technologies, train Chinese citizens, use more components from Chinese suppliers, sign deals with Chinese software firms and a host of others, including spending "many billions of dollars more" than what Apple (AAPL) previously spent in the country.
• Citing separate documents, Apple's (AAPL) total investment would account for more than $275 billion in spending over five years and the deal would automatically extend through May 2022 if neither side had objections.
• There is some concern that Apple (AAPL) may be too reliant on Cook's diplomacy, who had received a personal invitation from China’s No. 2 official, Premier Li Keqiang, to meet in 2016.
• The 61-year-old Cook has made several visits to China over the years, helping continue positive China relations, but there are concerns about what the company would do if other Apple (AAPL) execs were unable to build positive relationships should Cook become unavailable.
• In fiscal 2021, Apple (AAPL) generated $68 billion in revenue from Greater China, accounting for 19% of the company's total sales, having recently become the largest smartphone brand in China for the first time in six years.
• On Tuesday, Morgan Stanley boosted its price target on Apple (AAPL) to $200, the highest on Wall Street, as analyst Katy Huberty notes shares should benefit from a "flight to quality," upside from new products are priced in and near-term strength in the iPhone and App Store.