Apple plans to open its first research and development centre in China this year, the latest in a series of steps to bolster its presence in a vital region as sales slow down.
Tim Cook, Apple’s chief executive, revealed the plans to increase investment in local R&D during a meeting this week with Zhang Gaoli, China’s vice premier.
The move comes after Apple reported that revenues fell one-third in the latest quarter in Greater China, where Apple faces growing competition from local smartphone makers such as Huawei and Oppo as well as tougher economic conditions.
The new R&D centre will be made up of both new and existing staff. Apple already has 9,000 staff in China, roughly half of whom work in its 42 retail stores. In the past four years, Apple has doubled the number of corporate offices in China to 45.
“We look forward to expanding our operations in China with a new research and development centre as we continue to grow our talented team here,” Apple said, without specifying the scale of staffing or financial investment in the effort.
“The centre will open later this year, bringing together our engineering and operations teams in China as we develop advanced technologies and services for our products, both for our customers in China and around the world,” Apple added.
Even as revenues slide, Apple is increasing its investment in future products and international expansion. Last month, the US tech group revealed a 26 per cent increase in its quarterly R&D spending to $2.6bn, a record 6 per cent of revenues. Its annual R&D spending is now approaching $10bn.
In May, Apple invested $1bn in Didi Chuxing, a Chinese car-hailing service — an unusual move for a company that has typically favoured much smaller deals. As well as providing a strategic partnership as a secretive Apple team works on developing its own car, the investment was widely seen as an attempt to build goodwill with the Chinese government after a series of setbacks in the region.
Earlier this year, Apple’s iTunes films and iBooks services were blocked in China as part of a wider crackdown on foreign content. Apple also lost a patent case in Beijing that threatened to block sales of the iPhone 6.
“The new centre is also aimed at strengthening relationships with local partners and universities as we work to support talent development across the country,” Apple said.
China has also become a growing focus for Apple’s environmental efforts as it pushes its supply chain partners to use more renewable energy. On Wednesday it said that Lens Technology, a glass manufacturer, would obtain 100 per cent of its electricity from wind power by the end of 2018 — the first Apple supplier to make such a commitment.
In last month’s earnings call Mr Cook stressed the “long-term opportunity” in China, where sales grew 55 per cent to $40bn during the first three quarters of Apple’s fiscal year. Revenues from its books and movies stores in China were “less than $1m” before they were blocked, he added.
