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Apple Belatedly Opens China R&D Centre

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

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CEO Tim Cook visits China again and announces Chinese R&D centre to bolster stuttering performance

Apple is to open its first research and development centre in China later this year, as the company faces increasing competition in that market.

The announcement came during CEO Tim Cook’s second visit to the country this year, following his previous visit in May.

R&D Centre

Apple did not reveal exact details about the new R&D centre, but Bloomberg reported that the location of the site had yet to be determined, as would the number of staffers. It is thought that Apple already has 9,000 staff in China, with 45 corporate locations.

But Apple did say the new centre would bring together engineers from some of Apple’s existing R&D centres.

“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 reportedly said.

iphone 6SApple has already announced its first Asian R&D centre would be located in India. Yet India is a much smaller market for Apple compared to China.

It is worth remembering that China is the world’s largest smartphone market, and is Apple’s second-largest market after the US, with its revenues in the country largely driven by the iPhone. But Apple is facing an increasingly stiff challenge in China as local rivals such as Huawei and Oppo flood the market with cheaper handsets.

And this is having an impact. Apple’s third quarterly results in late July for example revealed that its global revenue and net income had fallen for the second consecutive quarter.

This decline was not helped by a 15 percent drop in global iPhone sales to 40.4 million units, down from 47.5 million a year earlier. Sales of iPads dropped 9 percent to 9.95 million, while Mac sales fell by 11 percent to 4.3 million.

But Apple’s performance in China was even worse, as it witnessed a 33 percent year-on-year drop in revenue in China. It made $8.9bn (£6.8bn) in Q3 sales in China, compared to $13bn in the same quarter last year.

Its share of the world’s largest smartphone market also reportedly plunged to 7.8 percent from 11.9 percent a year earlier.

China Problems

Apple, like many other Western technology firms, is having to contend with a number of problems in China. Earlier this year Apple’s iTunes and iBooks services were blocked in China.

The company has also lost a patent court case when the Intellectual Property Office ruled that the iPhone 6 has an identical design to a handset from a local rival.

Apple also has to contend with local Chinese regulations. In March this year Apple revealed tthat during the first six months of 2015, the Chinese government had asked Apple for data on over 4,000 devices. It did not reveal how many requests it had compiled with.

And Apple has been accused by the US Department of Justice of making special deals in China. Apple of course famously refused to help the FBI unlock the iPhone belonging to a dead terrorist, responsible for the mass shooting in San Bernardino.

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