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Apple's Competitive Strategy in China

Stocks in this article: AAPL GOOG

NEW YORK ( TheStreet) -- Every successful company is guided by a vision. Sometimes that vision becomes obscured or cluttered but the successful company maintains crystal clarity. Steve Jobs articulated his vision perfectly in the 'Think Different' campaign - it resonated with people and with a single phrase from the video 'Here's to the Crazy Ones' he captured the pinnacle of the vision, when he said, referring to our leaders; "They push the human race forward."

This was Steve's vision - to push the human race forward by breaking down walls, by not constraining ourselves to conventional thinking and wisdom, to remove our fears and carapaces. To see the world for what it is, and go with it.

Little known fact - that was Steve's only contribution to the video.

Steve believed that the leaders among us are not constrained by self-imposed walls, which most of us build to feel safe. Leaders don't spend their lives constrained by rules, revel in their smartness, or by making things a big show. This is just a facade, a safe place from within which most people live, that keeps them from moving forward.

Today, Apple (AAPL) has lost some clarity of that vision. And as a result, it is being systematically marginalized by the Chinese government and state controlled media, because they have fear, they need a wall to feel safe. Companies like Apple, Google (GOOG) and Samsung are dominating Chinese markets and not allowing them to develop their own intellectual property, which they view as their ticket to independence.

The harder we try to penetrate China markets, the greater they will push back, in all manner and form. China is the second-largest world market, and they don't want to be sold to, they want to be part of. The first company to break down their own walls of competitiveness and help China realize their vision of independence will win.

So, what form does this take? Does Apple sell the rights to its technology? Become partners with the Chinese? Split up the product lines? Share in the manufacturing? I really don't know. But I do know that it's something like this, or eventually it will be nothing at all.

-- Written by Ernie Varitimos, author of the Apple Investor blog.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Ernie Varitimos has a long history with Apple as an investor, trader and consumer of its technology. He started his career as a rocket scientist and has spent the past 25 years driving, controlling and influencing technology in the financial industry. Ernie is a former hedge fund manager and current futures trader.

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