Apple chief back in Beijing to announce China plans and lift tech firm’s visibility amid sales fall

PUBLISHED : Wednesday, 17 August, 2016, 12:03am
UPDATED : Wednesday, 17 August, 2016, 12:03am

Apple chief executive Tim Cook is in Beijing again – his second trip to the city in three months to boost visibility for the technology giant amid shrinking iPhone sales in China’s smartphone market.

Cook on Tuesday met with China’s vice-premier Zhang Gaoli, who said that China wants to let companies from the United States, including Apple, actively carry out business operations in the country and increase investment in China, according to news agency Xinhua.

Zhang added that these companies will positively contribute to the country’s economic and social development.

Cook also said Apple plans to increase its investment in China, establishing the company’s first Asia-Pacific research and development centre in the country before the end of the year.

Cook’s visit comes as Apple slid to fifth place in terms of Chinese smartphone shipments earlier this year. Apple’s market share was 10.8 per cent in May from 12 per cent in the same period last year, according to statistics by Counterpoint Research.

In its third quarter report, Apple posted US$8.85 billion in revenue for its greater China market, a 33 per cent revenue decline compared to the same time last year, and a 29 per cent dip compared to the previous quarter. The company’s performance in the greater China market shrank the most compared to its other markets – Japan was the only segment which reported an uptick of 23 per cent in revenue year on year.

China, which boasts the world’s largest smartphone market, has seen the market slow as the demographic shifts from new users to consumers who wish to upgrade existing devices, according to research firm IDC.

We are in this for the long-haul ... what we invest in is for the next few years to come
Tim Cook, Apple

In an interview with Sina, Cook attributed the decline in iPhone sales in the world’s most populous country to a reduction in sales channels for iPhones and the devaluation of the yuan, which impacted total revenue after the conversion of yuan to the US dollar.

He said that the yuan had devalued “9 to 10 per cent”, and affected Apple’s bottom line. Cook also said that although sales channels for the iPhones were reduced, direct sales to individual consumers remained sound.

“Smartphones have a cycle, there are peaks and troughs. For Apple, the peaks are when we launch a new product. But we are in this for the long-haul ... what we invest in is for the next few years to come, not just based on the current market or upcoming quarter,” Cook said in the interview.

However, he expressed optimism that Apple’s upcoming operating system, iOS 10, will spell good news for the company’s autumn quarter.

Cook also lauded Chinese entrepreneurs, saying that they hope to transform the world and praising that as good for China’s future development.

Apple is expected to unveil its next flagship device, the iPhone 7, in September.