Doug Guthrie spent 1994 riding a single-speed bicycle between factories in Shanghai for a dissertation on Chinese industry. Within years, he was one of America’s leading experts on China’s turn toward capitalism and was helping companies venture East.
Two decades later, in 2014, Apple hired him to help navigate perhaps its most important market. By then, he was worried about China’s new direction.
China’s new leader, Xi Jinping, was leaning on Western companies to strengthen his grip on the country. Mr. Guthrie realized that few companies were bigger targets, or more vulnerable, than Apple. It assembled nearly every Apple device in China and had made the region its No. 2 sales market.
So Mr. Guthrie began touring the company with a slide show and lecture to ring the alarm. Apple, he said, had no Plan B.
“I was going around to business leaders, and I’m like: ‘Do you guys understand who Xi Jinping is? Are you listening to what’s going on here?’” Mr. Guthrie said in an interview. “That was my big calling card.”
His warnings were prescient. China has taken a nationalist, authoritarian turn under Mr. Xi, and American companies like Apple, Nike and the National Basketball Association are facing a dilemma. While doing business in China often remains lucrative, it also increasingly requires uncomfortable compromises.
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That trend raises the question of whether, instead of empowering the Chinese people, American investment in the country has empowered the Chinese Communist Party.
“It was always difficult for Western companies to do business in China, but in many ways the challenges have shifted,” said Samm Sacks, a China specialist at the New America Foundation, a nonpartisan research center, who consults for U.S. companies. “The Communist Party is firmly in control, and both Western companies and Chinese companies in the private sector have been under attack.”
Mr. Guthrie’s career arc and evolving view of China tell the story of Western industry’s complicated dance with the country over the past three decades. Mr. Guthrie and many executives, politicians and academics had bet that Western investment in China would lead the country to liberalize. It is now clear that they miscalculated.
“We were wrong,” Mr. Guthrie said. “The wild card was Xi Jinping.”
In recent years, China shut down Marriott’s website after it listed Tibet and Taiwan as separate countries in a customer survey. It suspended sign-ups to LinkedIn after the site failed to censor enough political content. And the Communist Party urged a boycott of Western apparel companies that criticized forced-labor practices in Xinjiang, a Chinese region where the government is repressing Uyghurs, the country’s Muslim ethnic minority.
Apple, more than any other company, has been vulnerable to the government’s harder line. As a result, over the past several years, Apple has made compromises in China that undercut the values its executives have put at the center of its brand. To placate the authorities and keep its global business running, Apple has put its Chinese customers’ data at risk and aided the Chinese government’s vast censorship operation, The New York Times reported last month.
The company has said it is following the law in China and doing everything it can to secure its customers’ data. “We have never compromised the security of our users or their data in China or anywhere we operate,” an Apple spokesman said. He added that Mr. Guthrie had been a midlevel employee and hadn’t set policy at Apple.
Mr. Guthrie’s obsession with China began in 1989. He was a sophomore economics major studying Mandarin at the University of Chicago when Chinese soldiers killed hundreds of pro-democracy protesters occupying Tiananmen Square in Beijing. Immediately, he said, “I became captured by the idea of China.”
He paused school, borrowed money from his grandparents and spent his next year in Taiwan. An avid cyclist, he trained with the national cycling team in the mornings, and studied Mandarin and taught English in the afternoons.
After completing a Ph.D. at the University of California, Berkeley, and a book about the emergence of capitalism of China — “Dragon in a Three-Piece Suit” — he began teaching at New York University in 1997. He lectured on China’s economic potential and companies sought him out for advice.
