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China’s Relationship with Apple Concerns Carl Icahn

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Aug. 18 2020, Updated 6:31 a.m. ET

Slowdown in China doesn’t concern Carl Icahn

The widely discussed slowdown in China isn’t what made Carl Icahn worried about staying invested in a company with a lot of exposure to China (ASHR) (MCHI). It’s more related to the trade barriers that China’s regulators might put in place. Icahn views Chinese authorities as benevolent dictators. Icahn isn’t worried about Apple. He’s worried about China’s attitude toward the company.

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China’s attitude towards foreign technology firms

In the past, China hasn’t been friendly to foreign technology (XLK) firms. There have been several instances of arbitrary lawsuits and restrictions being imposed on foreign firms to hinder their growth in the economy. Microsoft (MSFT) and Qualcomm (QCOM) are prominent examples. They came under the axe. It remains to be seen whether this attitude is changing.

Icahn is worried that the Chinese government may make it difficult for Apple to sell there. Regulators in Beijing could “come in and make it very difficult for Apple to sell there … you can do pretty much what you want” he said. Apple’s relationship with Chinese authorities already received criticism from activist groups such as anti-censorship campaigners GreatFire.

Recently, we saw China shutting down Apple’s iBooks and iTunes Movies services. The move followed new regulations introduced in China in March. The regulations imposed strict restrictions on online publishing, particularly for foreign firms.

“I got out because I’m worried about China,” said Icahn.

While a large part of the investment community follows Carl Icahn, Jim Cramer had something to say to investors who might be prompted to sell their stake in Apple on Icahn’s cue.

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