Apple announced that features showcased during the 2024 WWDC enhancing Siri would be delayed. Apple Intelligence delayed represents a serious breach of trust for Apple’s early adopters and the developer community. On its own whilst that’s rare from Apple, it’s survivable.
Apple has made other FUBARs: the Newton, some of the Performa model Macintosh computers in the 1990s, the Apple Pippin, Apple QuickTake cameras and the Apple Cube computer from 2000.
The most recent game-changing product has been the AirPod series of headphones which have become ubiquitous on the tube and client video calls. But there has been a definite vibe shift around perceptions at Apple.
Recent product upgrades to the MacBook Air were given a muted welcome. Personally I think Apple came out with a banger of a product: the M4 processor in the MacBook Air M1 form-factor at the Intel MacBook Air price of $999.
The Vision Pro goggles are at best a spoiler on the high-end market for Meta’s VR efforts, and an interesting experiment once lens technology catches up with their concept. At worst they are a vanity project for Tim Cook that have a very limited audience.
Conceptually Apple Intelligence told a deceptively good story. Let others develop the underlying LLMs that would power Apple Intelligence. This solution is partially forced on Apple due to the mutually exclusive needs between China and its other markets. But it also meant that Apple had a smaller AI challenge than other vendors. On-device intelligence that would work out the best way to solve a problem and handle easier problems without the latency of consulting a cloud service. More complex problems would then be doled out to off-device services with privacy being a key consideration. The reality is that Apple Intelligence delayed until 2027 because of technical challenges.
One of my most loved films is Chungking Express directed by Wong Ka wai. It was one of the reasons that I decided to take up the opportunity to live and work in Hong Kong. This YouTube documentary cuts together some of the oral history about the making of the film. The story of the production is nuts.
Drone deliveries
Interesting documentary by Marques Brownlee on the limited use cases and massive leaps in innovation going into drone delivery systems.
Effective Marketing for Financial Services
Les Binet presents a financial services-specific view on marketing effectiveness. It has some interesting nuances, in particular how brand building is MORE important in subscription services.
Tony Touch set
Tony Touch did a set for Aimé Leon Dore. It’s an impeccably programmed set.
LUCID Air focus on efficiency
It’s rare to hear the spokesperson for an American car company quoting Colin Chapman’s design philosophy – which he shared with Norman Foster.
‘China evac‘ or China evacuation is something that I have been hearing more about from my network. Its less dramatic in it sounds in some respects. It isn’t an immediate bailout like the fall of Saigon in 1975.
China evacuation in this case is about businesses moving processes and supply chains out of the country to more stable and friendly environments. This has resulted in net capital outflows from China.
China’s policy of lockdowns and Ukraine have brought a ‘China evac’ to the fore in terms of public discussions, but its actually been on the the minds of business people and think tanks for far longer. The reality of a china evacuation for businesses is more like apocryphal tale of a slow boiled frog.
The China of Xi Jingping isn’t the China of 20 years ago when it ascended to joining the WTO. China has an unusual concentration of direct and indirect government funding in business. The state uses this funding to direct industry. In some respects this is similar to the development model deployed by Taiwan, South Korea and Japan. The difference is that the Chinese industry has kept up this investment for both military and economic purposes – what’s known as military civil fusion.
A second aspect was forced technology transfer that happened. And ongoing industrial espionage on a scale that has been unprecedented in world history to date. China now leads in certain technological areas that it intends to use for diplomatic coercion and military advantage.
Xi Jingping is looking to direct the economy more under the government and looking to remove any dependencies on western countries – including foreign companies doing business in China.
Why China evac now?
In order to understand the forces driving the consideration of China evacuation, one has to go back to the Initial incentives to invest in China.
Initial incentives
Stability
The government was literally prepared to crush dissenting voices. The government controls the labour unions and isn’t afraid to use force. Home markets and stakeholders shamefully ignored June 4th, but the Hong Kong protests and Xinjiang have brought the dark side of stability to the fore. Many brands are having to choose between China, or their western stakeholders and customers – they have straddled both sides but a China evacuation is only a matter of time.
China’s market size
The size of the local Chinese market. However this is better for some markets than others. KFC benefited for a while. As have luxury goods manufacturers. FMCG and technology brands have seen them ‘make a market’ for local brands to then come in and fill, pushing the pioneering multinationals to the sidelines. In the meantime their western market middle class customer base was declining due to globalisation.
Secondly, the spending power of a Chinese middle class on a per person basis is way lower than in the west. Just because there is an increase in middle class, doesn’t mean that there will be a like-for-like spending boost like one would get in the west. In absolute terms, incomes and tax are both lower than the UK, but then there isn’t much of a social welfare safety net and no health insurance.
China’s regulatory environment
China is skilled in the use of non-tariff barriers to punish businesses and countries. This skill was used previously to ‘compel’ foreign direct investment in order to sell within the Chinese market.
Changing macro-environment
COVID-19 demonstrated the fragility of global supply chains with China at the centre of them. China’s foreign policy stance has forced companies and governments to ask what would happen when they get into the kind of conflict with China that is currently happening with Russia.
China like Russia has maximised its actions in the grey zone so far. It is only a matter of time when open conflict happens. Whether its over North Korea, a Chinese invasion of Taiwan, military action against the Philippines, Australia or Japan.
Policy thinkers are also conscious of the way China wilfully acts against western aligned countries with less and less regard to the mutually beneficial relationship that they currently have.
What are the limitations of leaving China?
China’s rise has led to a catastrophic wilful destruction of capability by multinational companies in other countries. What made sense from a short term shareholder value perspective, was strategically deadly for their home countries. (The only bigger bit of corporate criminality would be Lee Raymond’s time at Exxon which excessively aggregated climate change, despite the early work on alternative energy done under the likes of previous CEO John Kenneth Jamieson.)
So China is the single source for a lot of products, and the more one relies on it, the worse things get in terms of doing a China evacuation:
90 percent of the world’s rare earth metals that are key for everything from wireless chips to battery technology comes from China
We could rebuild the plants, but rebuilding the expertise base will be harder and take longer. Its so hard that policy experts are looking at friend shoring; working with partners to move production where it makes the most sense from an economic competitive advantage perspective
One of the reasons why this all happened is that businesses believed you could design products without having to understand deeply how the products are made. But the situation has now moved from CEOs being misguided, to being willing agents of the Chinese state. In foreign countries from the UK to Australia political and business elites have been willing participants against their countries own interests.
Businesses often don’t realise when the gap that they are trying to straddle has become too wide. Examples of this include law firms in Hong Kong and clothing brands Nike and H&M. Professional services firms have actively looked to profit from the deteriorating relationship between China and the west.
Finally executives that have built their careers on saying that China is the future are emotionally, intellectually and personally invested in staying put rather than doing a China evacuation. Examples of this would be companies like Apple, Swire and HSBC.
Policy implications of a China evacuation
Dealing with the enemies within
China’s state capture of a country’s elite is the single most problematic aspect of preparing for, and dealing with a widespread China evacuation of business functions and processes. The UK and Australia have made baby steps in this regard. The challenge will be realigning the incentives of the business elites away from short term stakeholder value to a longer term view that takes into account stakeholders and national expectations. (There is a certain irony in this when you realise that it was the short termist shareholder value crowd who bankrolled Sir David Sterling’s efforts to cling on to the British empire by his fingertips.) It will mean unwinding long tentacles sown by the United Work Front and Chinese state media without alienating Asian minority communities, including effective policing actions against operators as diverse as social media influencers and organised criminals.
Understanding the limitations
Policy makers will have to understand the difference between what’s possible, all be it painful and what can’t be done at the present time. This means navigating between the nay-saying short-termist interests of business elites and reality of operations. Certain things will take decades to reshore as part of a China evacuation of business precesses. Expertise and knowledge will need to be learned, plants built on the rubble of bankrupt retail parks
Building effective defences
Any sign of concerted China evacuation will see a dramatic Chinese response. Countries would need to learn lessons from the experiences of Norway, Lithuania and Australia who have incurred responses from China in the past. At the present time the European Union is failing its members in this regard.
Long term planning
Maintaining secure supply lines and economic growth requires long term planning. The financialisation of western economies rewards short term opportunism and there lies a fundamental tension in how things are done. There could have been no China without the asset strippers of the 1960s onwards and a narrow interpretation of ‘shareholder value as god‘ mantra.
Why Apple Is Trash? Because Apple has demonstrated a moral bankruptcy in its behaviour. In the west, it is pro-LGBTQI, pro-security, pro-freedom etc. However its conduct elsewhere shows that it supports and strives to please authoritarian regimes.
The Information on Apple in China, Apple’s Deal, Evaluating Apple’s China Risk – Stratechery by Ben Thompson – This analysis of what Apple did is, of course, distinct from the question of whether or not it was right. That is certainly something worth debating, but I suspect it is more of an academic question here in 2021. The time for Apple to decide whether to start the process of decoupling itself from China was when this deal was made; the company decided to go in the opposite direction — deepening its dependence in the process — and I don’t see it reversing anytime soon. The fact of the matter is that Apple isn’t simply the preeminent example of China’s manufacturing prowess – Apple Is Trash.
Is Britain entering an age of aggravation? – The Face – “My own, lefty inclination is that this is what happens when you continue to grind people up against each other in an increasingly competitive society. That years of austerity rule and a “fuck off” discourse are really starting to show”
Do AI-Powered Mutual Funds Perform Better? – ScienceDirect – AI-powered mutual funds significantly outperform their human-managed peers. AI-powered mutual funds show superior stock selection capability and lower turnover ratios to humans. – index trackers still important
The Amazon Empire Strikes Back – Stratechery by Ben Thompson – For years, Amazon has been quietly chartering private cargo ships, making its own containers, and leasing planes to better control the complicated shipping journey of an online order. Now, as many retailers panic over supply chain chaos, Amazon’s costly early moves are helping it avoid the long wait times for available dock space and workers at the country’s busiest ports of Long Beach and Los Angeles… By chartering private cargo vessels to carry its goods, Amazon can control where its goods go, avoiding the most congested ports. Still, Amazon has seen a 14% rise in out-of-stock items and an average price increase of 25% since January 2021, according to e-commerce management platform CommerceIQ… Amazon has been on a spending spree to control as much of the shipping process as possible. It spent more than $61 billion on shipping in 2020, up from just under $38 billion in 2019. Now, Amazon is shipping 72% of its own packages, up from less than 47% in 2019 according to SJ Consulting Group. It’s even taking control at the first step of the shipping journey by making its own 53-foot cargo containers in China. Containers are in short supply, with long wait times and prices surging from less than $2,000 before the pandemic to $20,000 today.
Hong Kong newspaper Apple Daily closed down. It closed under government pressure. If we’re honest about it, it had been under government pressure for years. Advertisers were reluctant to be in the paper for years, partly due to government sentiment. Despite being Hong Kong’s most popular paper, it was running on loans that Jimmy Lai gave it.
Final print edition of the Apple Daily published in Hong Kong
It’s end came with a series of cuts. Jimmy Lai has had his assets frozen as part of the national security law related investigation. The Hong Kong government extended these charges to further senior employees of the Apple Daily. Then the Hong Kong government froze the bank accounts of Apple Daily and the related companies.
The business had 67 million US dollars; so could have kept going for another 18 months until that freeze kicked in. As it was, the last paper would have come out on Saturday. On Wednesday the lead writer was arrested and the board decided to publish its last paper on Thursday. They printed 1,000,000 copies of the final edition which sold out. On previous days they had printed 500,000 to mark the asset freeze as Hong Kongers came out to support them. Back in the late 90s the paper was around 300,000 copies a day. The typical print run was 150,000 copies a day. The paper had about 500,000 paid subscribers. I was one of them. Yes their English copy was almost sub-Guardian standard (but with less typos of course). But their English language news has stories about Hong Kong business and China that other English language outlets didn’t cover.
The security secretary John Lee warned people not to associate with Apple Daily employees, creating a white terror style scenario.
A lot of the commentary from people who should know better has been about the Apple Daily‘s tabloid nature. Apple Daily was Hong Kong’s most popular paper for a number of reasons
Classism with it’s ‘estate boys’ and ‘estate girls’ referring to Hong Kongers living in public housing
But they conveniently ignore Apple Daily‘s pioneering work in internet video journalism. Its investigative journalism and an editorial stance that called government to account. Stories last year included expat police officers breaking planning and property laws. But the Communist Party of China doesn’t want to be examined, let alone held to account.
Hong Kong writer Sum Lok kei summed it up really well with this post that he put on Twitter
Yes, ppl are aware of Apple Daily’s failings, their paparazzi arm and all. What is being mourned isn’t exactly the paper, but the possibility of its existence in this city that had prided itself for its witty discretions – now replaced by a monotonic, absolute drone.
The Hong Kong government has been very opaque about the kind of journalism that is allowed. It is arbitrary and designed to promote severe self censorship.
images of the now closed Apple Daily fence with tributes from Hong Kongers via Guardians of Hong Kong Telegram channel
It all hinges around the national security law:
Seccession includes acts ‘whether or not by force or threat of force’
Subversion or colluding with foreign countries are vague. So Apple Daily were accused with colluding with foreign countries without being in touch with them
The law isn’t supposed to be retroactive, yet Apple Daily content from before the July cut-off date is included in its alleged violations
China’s definitions of state interests are expansive
It is extra-territorial in nature. So this post that I have written could fall foul of inciting hatred of the Hong Kong and Chinese government. Despite the fact that this post is written and hosted outside Hong Kong. If I get shanghai-ed whilst transferring through an Asian airport you know what has likely happened
But its just the media isn’t it? No.
if you’re a strategist in an advertising agency writing about consumer attitudes and touch on areas like what Hong Kong localism means for brands. This would affect how brands position themselves, I wrote similar positions for brands on Brexit supporters versus remain supporters. (Brexit supporters preferred local brands with nostalgia compared to remainers.) Or changes in attitudes to home ownership and buying homewares due to immigration. The kind of things that the government won’t like then you could be doing eight years to life in jail
If you write critical piece of analysis on bonds, Chinese or Hong Kong ‘well connected companies’ or forward-looking views on government policies. You could be doing eight years to life in jail
If you create a legal opinion on any of the above for a client. You could do eight years to life in jail
If you did a frank audit of a well connected company as part of the audit team of an accountancy firm. You could do eight years to life in jail
You do legitimate academic research in an area that the Chinese or Hong Kong governments and their hangers on don’t like. You could do eight years to life in jail
All of this sounds like a bit of an exaggeration?
While the world was looking on at trials of Apple Daily, major retailer Watsons withdrew special edition water bottles. The water bottles were designed with the slogan #Hong Kong is very beautiful. Presumably, they had originally been created to tap into Hong Kongers love of limited edition things celebrating their city and their love of hiking in oppressively hot weather.
They were withdrawn due to perceived seccessionist overtones. Hong Kong is actually achingly beautiful with its futuristic skylines and natural environment. By comparison lot of the Chinese mainland is butt ugly like Hubei province or Beijing in winter.
Bao Choy, a freelance producer who worked at RTHK was fined for ‘improper car plate searches’ carried out investigating Pro-Beijing forces inspired Triad violence at Yuen Long.
A reporter at pro-Beijing paper Ta Kung Pao who accessed the same database, but was bound over instead.
The Department of Justice said it agreed with the order, as Wong had a clean record and was working for the pro-Beijing newspaper when he made the licence plate searches.
This would give Hong Kong increased insights into NGOs and political parties. Professional bodies in accountancy and law have been seen as a roadblock by the Chinese and Hong Kong governments. The movement against accountancy bodies is mirrored by moves against the legal profession. The latest move to make solicitors senior counsel turns the legal profession upside down.
You are now restricted in accessing company registry data, making ownership structures opaque. This will provide boundless opportunity for corruption and fraud and Hong Kong becomes as opaque as mainland China.
And in a news report from Hong Kong’s public service broadcaster RTHK:
“If it’s a police state, why not? I don’t think there’s any problem with a police state. When we say a police state, I will view the other side, that is the emphasis on security,”
June is pride month and one of the best adverts that I have seen is by Pinterest. It has members of the LGBTQI community from around the world talking about sexuality and how they learned about themselves.
MACAU DAILY TIMES 澳門每日時報 » Hong Kong | Thousands flee for UK, fearing China crackdown – What’s surprising is not the content of the article itself. There are plenty of pieces in the English language media around the world about the fear of a China crackdown due to the Hong Kong National Security Law driving Hong Kongers away. (The reality is less likely to be a China crackdown and more likely to be a progressive anaconda-type squeeze.) I am surprised to see this article in the usually tame Macau media. Which left me with the question why? My initial thoughts were that space constrained Macanese could take up some of the slack in Hong Kong as locals vacate? If so it would solve problems in the housing market and the need to build additional infrastructure in Macau.
Majority of B2B advertising is ‘ineffective’ | Marketing Week – Of the 1,600 B2B ads shown to a sample of 6 million people worldwide over the past four years, 75% scored one star or less on System1’s FaceTrace emotional measurement tool – so ineffective in brand building, but potentially effective in terms of performance marketing? We don’t know
Today’s jet fighter designers don’t get the point – Asia Times – the cockpit itself is “beautiful,” full of screens that allow you to bring up an incredible amount of information about the fighter with just a few finger swipes, and customize the data to tailor it for the particular mission. The F-35 is the first to use touch screen technology. Unlike switches, which take up permanent cockpit space, touch screens allow the same LCD screen space to be instantly repurposed, the report said. One minute, a display could be used to pull up data on an aircraft’s fuel reserves, and the next, it could help target an enemy position on a mountainside. That goes a long way toward simplifying the cockpit and not overwhelming a pilot with wall-to-wall physical switches, dials, and single-use displays, the report said. But the problem with touch screens, the pilot explains, is a lack of tactile feedback. Switches have a nice, satisfying click that instantaneously lets the user know they were successfully flipped, the report said. The anonymous pilot reports failing to get a result from a touch screen about 20% of the time – the need for haptics has never been clearer
China Raises Threat Level Over Rare Earths — Radio Free Asia – “Rare earth ore exports are limited in value, and the global demand for raw materials is relatively low,” said Liu Enqiao of Anbound Consulting. But Liu added that the decline “might be partly due to China’s tightening of regulations on strategic resources” under the country’s new export control law, which took effect on Dec. 1.
Artificial Intelligence Will Define Google’s Future. For Now, It’s a Management Challenge. – WSJ – most of Google’s problems related to AI are rooted in the company’s approach to managing staff, adding that science, and not ideology, should guide ethical debates. “Google is the coddler-in-chief,” he said. “Their employees are so coddled that they feel entitled to make more and more demands” regarding how the company approaches AI and related issues. – TL;DR – millennial and gen-z Googler snowflakes preventing the company from creating amoral shareholder value
