With demand for Apple’s iPhones nearly drying up in China, the American tech titan is doubling down. Apple has announced plans to increase investments in China, and build its first Asia-Pacific research and development centre there. China is, after all, the world’s biggest smartphone market. On a recent visit, Chief Executive Tim Cook told Vice Premier Zhang Gaoli that the centre will be built by the end of the year.
For Apple, Greater China was once seen as the next big growth engine. However sales in what has become a very challenging market for the company fell by one-third in the third quarter, after more than doubling a year earlier. On a brighter note, demand may not have been as weak as it seemed, as the results did not reflect inventory drawdowns.
The slowdown in China’s economy is likely a factor, and this has heightened concerns about Apple’s future there. The company’s online stores closed in China in March, after Beijing imposed strict curbs on online publishing, particularly for foreign companies. Adding to its troubles, Apple has lost intellectual property battles in China, and may be facing anti-US sentiment from consumers.
Cook appears to be making efforts to win favour with Beijing. Many experts point to Apple’s $1 billion investment in Chinese ride-hailing giant Didi Chuxing, announced in May. It is believed this backing helped Didi Chuxing overtake Uber China, which ultimately agreed to give up its independence in return for a stake in Didi.
Overall the Chinese government remains wary of foreign technology. But as Reuters reports, earlier this year the head of China’s industry and technology regulator told Cook that he hopes Apple can deepen its cooperation with the country in research and development, and stressed information security.
In a statement, Apple said the new Chinese R&D centre “will unite Apple’s engineering and operations teams in the world’s second-largest economy, and is also intended to deepen the company’s ties to partners and universities”.