China has 2-3 (due to different standard) of the top smartphone manufacturers in the world, I don't think govt cannot replace Apple. Yet apple is still there.
http://www.nytimes.com/2016/04/22/technology/apple-no-longer...
> Last week, Apple’s iBooks Store and iTunes Movies were shut down in China, just six months after they were started there. Initially, Apple apparently had the government’s approval to introduce the services. But then a regulator, the State Administration of Press, Publication, Radio, Film and Television, asserted its authority and demanded the closings, according to two people who spoke on the condition of anonymity.
The biggest threat may be a security/encryption related court case similar to the one the US just backed down on. Apple would be put in a very tough place.