Apple CEO Tim Cook is shuttling through China, facing increasing challenges in this important market due to weak local iPhone 15 sales and increased government scrutiny.
The whirlwind visit was not announced in advance, and the itinerary included a tour of Apple stores, a visit to a major supplier, and meetings with several senior officials, including Chinese Commerce Minister Wang Wentao.
This is Cook's second visit to China in about seven months, highlighting the increasingly complex relationship between Apple and the world's second largest economy. China is not only the company's manufacturing center and important consumer market, but also a source of significant risks.
Although Apple devices, especially the iPhone, are still popular in China, they face increasingly fierce competition from their Chinese counterparts and a weak consumer economy. At the same time, due to the increasing geopolitical competition between China and the United States, Apple has had to deal with the growing suspicion of American technology companies among officials.
According to Counterpoint Research, Apple's most popular iPhone 15 series models - the iPhone 15Pro, 15Pro Max, and iPhone 15- saw a 10% decrease in sales in the first 17 days after release compared to similar iPhone 14 series models last year.
The Wall Street Journal reported last month that the Chinese government has required government workers not to use iPhones at work, and Apple employees have been meeting with Chinese officials to discuss new regulations that will limit foreign applications currently available on iPhone app stores in China. Apple has not yet commented on the aforementioned ban or this new regulation.
According to official reports, during a meeting with Cook in Beijing on Wednesday, Wang Wentao stated that China will continue to expand market access for foreign companies and is committed to creating a market-oriented business environment. According to the report, Cook said that Apple values the achievements made in its 30 year development in China.
In a conference video released online by official media, Cook said, "My trip to China has been very smooth." On Thursday, Cook told the Minister of Industry and Information Technology of China that Apple supports the growth of industry and supply chain partners together.
Cook's visit began on Monday in southwestern Sichuan Province; Many of Apple's tablets and laptops are produced here. Cook visited a mobile game competition held by a local Apple store and experienced a lesson in elementary school students using iPads to control drones. Subsequently, he visited the factory of Luxshare Precision in the eastern region of China; This Chinese supplier's role in assembling Apple products has rapidly improved in the past few years.
As Apple shifts some of its production to other locations, there are still doubts about the future of its supply chain in China, while the consumer segment of its Chinese business has raised more urgent concerns.
The iPhone was once very popular, and Chinese consumers had long queues outside Apple stores on its release day. However, analysts said that the economic downturn had suppressed consumer demand.
The confidence of Chinese consumers has changed, "said Will Wong, a smartphone analyst at International Data Corporation (IDC). The Chinese economy is no longer the same as before the pandemic, and consumers are now more rational in their consumption habits. They are no longer eager to be the first to receive iPhones
Meanwhile, despite Apple's new phones offering options such as titanium casing and camera upgrades, fierce competition from local smartphone rival Huawei is eclipsing the iPhone. Chinese securities firm China Securities stated in a report that Huawei's share in the Chinese smartphone market had almost doubled in the month ended October 2nd, thanks to the unexpected release of its high-speed smartphone Mate 60 Pro series.
Some online dealerships in China have started selling iPhone 15 series phones at prices lower than official channels, in stark contrast to the high prices sold in the gray market in the past few years. Unlike previous versions, the iPhone 15 series did not make it on the popular search list of mainstream Chinese social media platform Weibo on the day of its release.
Counter point analyst Ethan Qi said that with the increasing supply of high-end iPhone models, Apple's sales in China are still likely to improve. The high-end iPhone is usually the best-selling model in China.
Apple did not respond to a request for comment on iPhone sales in China.
As the governments of China and the United States increasingly prioritize national security issues over commercial issues, Apple, like many American companies, has also been impacted in the political exchange between the two countries. Apple's stock price has fallen by more than 3% after news emerged that China will ban central government workers from using iPhones.
Han Lin, China manager of Asia Group, a business consulting firm, said that the Chinese government's iPhone ban indicates that Apple may suffer collateral damage in the Sino US conflict.
Han Lin said that this is a signal sent by China, indicating that even Apple is not untouchable.
According to research firm TechInsights, China became Apple's largest iPhone market for the first time in the second quarter, measured by shipment volume.
In the second quarter of this year, Greater China accounted for about one-fifth of Apple's global revenue, becoming the company's third largest market after the Americas and Europe.
On Tuesday morning, with the news of Cook's visit to China spreading, several items on the Weibo hot search list were related to Apple: the company's weak sales in China, being at a disadvantage in competition with Huawei, and consumer complaints about issues with the latest iPhone display screen.
In Sichuan, Cook met with the highest level Communist Party officials in the region and announced a donation of 25 million yuan (3.4 million US dollars) to the government supported China Foundation for Rural Development to revitalize the development of rural areas in China. Earlier this year, Apple also made donations to China's education and flood relief efforts.
Cook posted on Weibo that over the past decade, Apple has collaborated with the China Rural Development Foundation to support rural development in Sichuan.
Han Lin from Asia Group stated that foreign companies often use such donations to demonstrate their commitment to the Chinese market and improve their relationships with decision-makers; In China, corporate social responsibility is usually driven by the central government.
Han Lin stated that Apple's move can be considered a win-win, releasing goodwill to grassroots people and aligning with the goals of the Communist Party of China.