Apple’s iPhone sales growth has somewhat slowed in international markets, especially in India and China because of competition from local players. Now, to improve its performance, at least in China, the tech giant is planning to set up two more research and development centers and boost investments in the region.
Pledging more money to China
The two new Chinese research hubs are being planned in the eastern Chinese cities of Shanghai and Suzhou. China, Apple’s largest overseas market, already has two Apple research centers slated for Beijing and the southern city of Shenzhen. The tech company has promised to spend about $507 million (3.5 billion yuan) on R&D institutions as well.
According to a statement on Apple’s China website, all four research centers are slated to open later this year. The tech giant hopes to attract local talent and graduates from local universities to work in the research centers. In its press release, the company noted that these four R&D centers will also help it cooperate better with its local partners.
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The announcement about two more research centers comes as CEO Tim Cook undertakes his most recent trip to China over the weekend to attend a high-profile business conference in Beijing. In this conference, senior government officials will communicate with the heads of some of the biggest corporations in the world, like Saudi Arabian Oil Co. and Royal Dutch Shell Plc, notes Bloomberg.
Apple needs to beat local players
China has always proven to be the most challenging market for the Cupertino-based company, as the country has many rising local smartphone makers like Oppo, Vivo, Huawei, etc. Smartphones from these local players are not only low-priced but also come with comparable (if not better) features.
This announcement by the tech giant comes at a time when iPhone shipments declined for the first time in China on a yearly basis in 2016. Greater China revenues dropped 12% year over year in the quarter ending on December 31. Local smartphone makers like Oppo, Vivo and Huawei Technologies are eating away Apple’s market share in China with high-end and low-priced devices.
Apple has no option but to overcome this competition, and it is using its money to do that. This will not only help it win favors from the government but will also allow it to tap local resources.
On Thursday, Apple shares closed up 0.16% at $140.69. Year to date, the stock is up more than 21%, while in the last year, it is up almost 38%.