Apple has most of its supply chain in China, employing Chinese labor. It blocked the Hong Kong protest app and let China get its hands on iCloud encryption keys for Chinese customers. Tim Cook was named chairman of a Chinese university. But to China that isn’t a quid pro quo, and it hasn’t been letting Apple sell its services there.
Bloomberg included this quote from Wedbush Securities analyst Dan Ives:
This is a concern for investors because Apple is relying on services to power future revenue and profit. If the company can’t sell these offerings in the world’s large internet market, it will be harder to keep growing. About 10% of Apple’s services revenue comes from China, while the country accounts for roughly 18% of iPhone sales. The missing puzzle piece for services is China.
10% and 18% are certainly non-zero numbers, but it remains to be seen whether China is a make or break market when it comes to Apple’s growth (in my opinion it’s not). While Apple is positioning its services business as one that can generate revenue on the level as its hardware business, Apple remains a hardware company for the foreseeable future.
Ultimately, the Chinese government favors home-grown Chinese companies like Huawei and Xiaomi. It’s not going to let American companies dominate.