Apple CEO Tim Cook has pledged to increase investment in China, as the company struggles to maintain its position in the region. Yesterday, the iPhone maker came under the limelight as Mr. Cook announced his plan to open its first Research and Development (R&D) center in China by the end of this year.
The move seems to be a small part of Apple’s bigger plan to fight off stringent regulations for foreign companies in the country. According to the spokesman, the new R&D center will focus on bringing new services and products in the country, and “strengthening relationships with local partners and universities.” He added: “We look forward to expanding our operations in China with a new Research and Development center as we continue to grow our talented team here.”
The announcement emerges almost two months after the head of China’s industry and technology regulator told Mr. Cook that he hopes that his company will increase cooperation with the country in R&D, stressing upon information security. It has faced several challenges in the region such as stringent cyber security regulations on publishing, which resulted in the closure of Apple’s iBooks and movies in the country.
Over the past few months, Apple has experienced a significant fall in iPhone sales in China, which was a significant contributor to the company’s revenue stream. The earnings report for the recent quarter indicates that sales plunged 33% year-over-year (YoY) in China.
Mr. Cook latest trip to China is the second in the last four months, which indicates the region’s importance for the iPhone maker. Though the Chinese regulating bodies are wary of foreign companies, Apple has not given up on its efforts to win over Chinese officials.
Industry pundits believe that Apple may have two reasons to establish R&D center in China. First, the company plans to hire the best research staff from across the globe and some of them will not be willing to relocate to the US. Secondly, the tech giant is gearing up to develop closer ties with the local regulating bodies, in a bid to safeguard its interest in the county.
The company refused to reveal any further information about the R&D center including its location and the amount of capital it plans to invest. It currently boasts of 42 retail stores in China, and as of last October, it had 10,000 employees working in the Chinese region.
Apple announced in May that it had invested $1 billion in the Chinese ride-hailing firm, Didi Chuxing. The company’s rare investment in Uber’s Chinese rival and its latest decision to build an R&D center in China are clearly strategic decisions that will improve Apple’s relations with the Chinese government, and subsequently make survival easier in the region.