When iPhone users typed out the Chinese pinyin word “jichen”, meaning “hit and sink”, the word “China” would automatically appear as the first recommended word of choice.

This problem has sparked speculation online that Apple’s software developers were anti-Chinese – a claim that Apple has denied.

The Chinese company, based in Zhejiang province, told staff that they would be sacked if they bought the iPhone 7 model, which is expected to be released in September.

It also said it would pay bonuses of 1,000 yuan (HK$1,160) to members of staff who replaced their iPhone 4 with a mainland-brand phone, 1,500 yuan if they replaced their iPhone 5 and 2,500 yuan for exchanging an iPhone 6.

Mainland media has reported Apple rejecting the online claims that is was anti-Chinese.

It said the problem was the result of artificial intelligence associating the pinyin words for “China” and “jichen” after many mainland internet users had searched online in March after Argentina’s coastguard vessel chased and sank a Chinese fishing boat that it claimed had been fishing illegally in Argentine waters in the South Atlantic.

The Hangzhou company told staff they would receive the bonus only if they filled in an application form and presented it – along with their newly purchased phone and existing iPhone – to the company’s general manager, and then gained his approval.

The iPhones would be collected and then destroyed by the company, the report added.

An earlier survey of employees found that the phones most widely used by staff were produced by Xiaomi, Huawei and Apple.

The report said about 13 staff had expressed interest in changing their mobile phones, and about six staff had then asked for a copy of the application form.

The company had not issued such a notice before, the report said.