In the news: Apple talks data security, Costco partners with Alibaba and MOFCOM speeds up merger reviews

Apple CEO visits China to discuss data security

Apple chief Tim Cook has met with Chinese government officials, including vice-premier Ma Kai, to discuss data security, following reports that state-backed hackers intercepted Apple customers' login details as the users logged into iCloud. A group called GreatFire.org which investigates Chinese internet censorship identified the cyber attack first and has reported similar attacks on Google, Microsoft and Yahoo! in China in the past. It suggested the authorities were behind the data interceptions. Apple issued a warning on its support pages telling customers how to spot a potential attack and that it takes threats to user information privacy and security very seriously.

Source:
Financial Times

Apple's latest iPhone 6 and iPhone 6 Plus have strengthened encryption capabilities that prevent even the company from accessing data stored on the phone, which has prompted frustration among law enforcement even in the US. The attack on iCloud through web browsers was seen by many as the hacker's attempt to get around this added security feature. Although the company has high expectations for the PRC market as it beefs up operations and opens up more retail stores in the country, it still faces challenges such as its storage of user data in mainland servers as well as criticisms of its location tracking and of national security risks. The launch of the latest iPhone models was also delayed last month. It looks like Apple's China troubles won't go away anytime soon.

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Costco partners with Alibaba to enter China

Costco Wholesale aims to sell products directly to Chinese consumers on Alibaba's Tmall platform. It is learning from the mistakes of Walmart, Best Buy, eBay and Home Depot (which was forced to exit the market) by employing local knowledge and a low-cost structure. Many global retailers that have opened in China have struggled to find product mixes and store designs that appeal to Chinese customers. Costco's online storefront on the Alibaba site will help the company study consumer shopping habits with no foundation costs and fewer risks, which signals a new approach to expanding retail in China.

Source:
The New York Times

Walmart, though China's third largest retailer now, has admitted the mistakes that it made. It stuck to its big-box format even though Chinese consumers prefer neighbourhood stores, and its slogan “Everyday Low Prices” backfired as local consumers equate low prices to low safety and quality. It also faced several supply chain problems, which led to recalls of several food products. Costco's choice to work with Alibaba is about bringing local credibility to the table and Tmall is one of the world's fastest-growing B2C marketplaces. However, its reliance on Tmall warehouses to cut logistics costs and delivery times may create logistics and safety problems similar to those faced by Walmart, though analysts say letting Alibaba handle the supply chain is a good short-term solution.

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Simple case procedure halves approval time

MOFCOM has sped up its approval of both foreign and domestic deals and cut legal costs for companies doing M&A. The antitrust bureau has been criticised for years for being slow to clear even small deals and for imposing strict remedies on foreign mergers that have been cleared already in the US and EU. The new simple cases procedure set out in April has halved the length of time it takes to win clearance. MOFCOM published a data set tracking both transaction filing and approval dates, which practitioners hailed as a milestone and improvement in terms of transparency.

Source:
Reuters

An analysis by Norton Rose Fulbright has found MOFCOM took an average of 26 days to approve deals filed as simple cases. The fastest clearance, which was Rolls-Royce Holdings' takeover of full control of its joint venture Rolls Royce Power Systems, was approved in only 19 days. Despite a pre-acceptance period of four to eight weeks, acquisitions that used to take five to eight months to clear are now being passed in three to five months under the simple cases procedure, bringing the process on par with that in the EU. MOFCOM has been aware it has delayed deals around the world, which has caused frustration for many foreign companies. Although some aspects of the law remain unclear such as exact qualifications for a “simple” case, the quickened process was one of the biggest developments in competition law in recent years.

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