China has a ‘critical’ role in Apple’s business, says CEO Tim Cook, pledges more investment

Tim Cook, Apple’s CEO, emphasized the significance of China to the company’s operations during his recent visit to the country, where there are indications of waning interest among consumers in iPhones and American technology.

Cook has been making frequent trips to China, a pivotal market for the tech giant, and a major manufacturing and designing hub for Apple’s products. Cooks’s latest outreach initiative commenced in Shanghai, where he engaged in an interview with local media, expressing admiration for China and pledging increased investment in the country.

Reports from the state-owned Global Times, known for its critical stance towards the United States, highlighted Cook’s commitment to bolstering investment in China, quoting him as stating, “There’s no supply chain in the world that’s more critical to us than China.” Shanghai’s state-owned media echoed Cook’s praise for the advanced level of modernization in Chinese factories and the proficiency of its workforce.

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In addition to emphasizing Apple’s reliance on China, Cook addressed the company’s environmental initiatives and technological advancements during discussions with Chinese media. He underscored the importance of collaboration with China to achieve carbon neutrality for all Apple products by 2030 and emphasized significant investments in generative artificial intelligence.

Cook’s visit coincides with a significant downturn in sales within China, a market that contributed $21 billion to Apple’s revenues in the fourth quarter, representing 17 per cent of its total sales. However, this figure marked a notable 13 per cent decline compared to the previous year. According to research firm Counterpoint, iPhone sales in the first six weeks of the current year also experienced a substantial 24 per cent decrease compared to the same period last year.

Apple’s challenges in China have been exacerbated by various factors, including a concerted effort by the Chinese government to reduce the use of iPhones among state employees and the resurgence of Huawei, a domestic competitor. Despite facing US sanctions, Huawei managed to launch a domestically developed smartphone capable of nearly 5G speeds, posing stiff competition to Apple.

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Moreover, recent remarks from delegates attending China’s top political gathering have further compounded Apple’s woes, with several delegates expressing concerns about potential security risks associated with iPhones, alleging that the devices could be used for espionage.

In response, both Cook and Apple have been proactive in attempting to alter this narrative. The company announced plans to bolster its presence in China by upgrading its research centre in Shanghai and establishing a new laboratory in Shenzhen. These facilities will focus on research and testing for Apple’s iPhone, iPad, and Vision Pro product lines, while also deepening collaboration with Chinese suppliers.

Apple announced that these new projects would expand upon the company’s existing investment of over Chinese Yuan 1 billion ($140 million) in applied research laboratories in China. Isabel Ge Mahe, Apple’s local head, expressed pride in deepening the company’s presence in China and expanding its top-tier facilities in the country.

During his visit, Cook engaged with Apple’s Chinese suppliers, including the head of electric car manufacturer BYD, as well as executives from Lens Technology and Changying Precision Technology. The day began with a leisurely stroll along Shanghai’s waterfront area alongside Chinese actor Zheng Kai, followed by a meal of soup dumplings. Cook expressed his delight in returning to the vibrant city, sharing his sentiments on the Chinese social network Weibo.

On Thursday, Cook is scheduled to inaugurate Apple’s eighth retail store in Shanghai and participate in the China Development Forum, commencing over the weekend. Currently, Apple operates 57 stores in the greater China region, encompassing Hong Kong, Macau, and Taiwan.