Apple’s latest move to compete with a resurgent Huawei and strengthen its position in the world’s largest smartphone market has resulted in the opening of a new research and development ( R&, D) center at Apple’s Shenzhen facility. It is Apple’s five product R&, D hospital in China.
The action demonstrates that Apple continues to put investor interests before the interests of anti-China US officials. It also undercuts rumors that Apple is leaving China for India, when in reality, it is just adding India to its long list of important areas and factories while even strengthening its presence in China.
Apple’s third-largest local market, after the Americas and Europe, is in Greater China, where sales have just decreased as a result of orders to outlaw iPhone use in some government and state office locations. In the nine months to June 29, 2024, Greater China accounted for 17.5 % of Apple’s entire profits, down from 19.6 % a year earlier.
Apple’s Greater China sales by volume were down 9.7 % year-on-year, while its total sales increased by 0.8 % over the same nine-month period. In the third quarter alone, Apple reported a 6.5 % year-on-year decline in sales by volume in Greater China, compared with a 4.9 % increase in total sales.
The decline came as a result of state directives mandating that employees of the government and the state-owned enterprise ( SOE ) stop bringing iPhones and other foreign smartphones to the office. As of December last season, the technical war-tinged proclamation extended across at least eight regions, including rich coastal regions, Bloomberg reported.  ,
That’s evidently given local manufacturers a dynamic increase. In August, according to Chinese consulting company CINNO Research, the value of Huawei’s mobile smartphone sales in China exceeded those of Apple for the first time in 46 weeks. In product words, Huawei overtook Apple in the first fourth of 2024, according to statistics compiled by Singapore-based business research firm Canalys.
According to the report from the Huawei Central Newsroom, Apple and Huawei are “locked ears” in the race to win the top spot in the Foreign Double 11 shopping festival, which runs through November 11.
All of the leading 10 high-end phones sold on China’s JD.com browsing site are from either Apple or Huawei. The checklist includes the phone 15 Pro Max, phone 16 Pro Max, phone 16 Pro, Huawei Mate 60 Pro, Huawei Pura 70 Pro, phone 15, phone 16, Huawei Pura 70 Pro , Huawei Mate 60 Pro and Huawei Mate X5.
Huawei made a splash on September 10 with the release of its Mate XT Ultimate Design dual-hinge, three-panel sliding handset. Priced at US$ 2, 800 or more depending on storage capacity, it preempted the release of Apple’s iPhone 16 in China with its 10.2-inch highest screen size and another top-of-the-line capabilities.
Apple announced on October 10 that its fresh “advanced software R&, D center” would be located in the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone in response to this competitive environment.
The facility will be Apple’s key applied research lab in the Guangdong-Hong Kong-Macao Greater Bay Area, succeeding an older service established in 2016. Apple maintains another R&, D locations in Beijing, Shanghai and Suzhou.
According to The Shenzhen Daily,” The test is intended to contain the business operations of Apple Greater China, including the R&, D operations originally planned for the Asia Pacific, which will further strengthen Shenzhen’s key role in Apple’s smart manufacturing and supply chain.”
Back in 2016, Apple CEO Tim Cook said,” We realized the skill level of Shenzhen’s factories was gradually leading other places in the world” . , This is even more the case now.
Over 1, 000 employees at the center will work on technology advancement, smart developing and testing for iPhones, iPads and other products. Additionally, they may work with local manufacturers to improve supply chains.
China’s Communist Party-run Global Times quoted Li Yong, a senior research fellow at the China Association of International Trade, saying,” This is a reasonable decision made by Apple amid]a ] complex global political and economic environment”.
For Apple to maintain its position in the lucrative Chinese market, it should be reasonable and likely needed. According to Global Times, Apple has increased its operations in China despite the US government’s continued efforts to “decouple” relations with China with more severe sanctions, false accusations, and repeated provocations against Chinese businesses,” according to Global Times.
According to the content, Apple’s chief operating officer Jeff Williams traveled to China in July, shortly after the Communist Party’s next ministerial conference approved a resolution calling “opening up” to the outside world a “defining characteristic of Chinese development.”
Williams claimed that more than 70 Apple suppliers are headquartered in Guangdong province only,” which determines the particular impact of the Guangdong place centered on Shenzhen to Apple’s offer network.” ( Guangdong was one of the coastal provinces that mandated government and state firm employees to stop bringing iPhones to work. )
Of 187 suppliers that accounted for 98 % of Apple’s direct spending on materials, manufacturing and assembly last fiscal year, 157 had operations in China and 56 were Chinese-owned. In comparison, only 14 were Indian-owned. Despite recent rapid growth, India still accounts for less than 5 % of Apple’s total revenues.
Apple and its CEO, Cook, have received a lot of negative feedback from US politicians who oppose the company’s business practices in China.
Senators Ted Cruz of Texas, Ron Wyden of Oregon, Tom Cotton of Arkansas, and Marco Rubio of Florida, as well as representatives Alexandria Ocasio-Cortez of New York, Mike Gallagher of Wisconsin, and Tom Malinowski of New Jersey, wrote to Cook in October to “exprim our strong concern about Apple’s censorship of apps, including a prominent app used by protesters in Hong Kong, at the behest of the Chinese government,” respectively.
Senator Josh Hawley of Missouri wrote in November 2022,” I want to know why Apple continues to support and abet the totalitarian regime in China. [Apple’s ]” activities in China pose significant material risks to your stakeholders.
Congressman John Moolenaar of Michigan, the head of the Chinese Communist Party’s House Select Committee, wrote to Defense Secretary Lloyd Austin in late September 2024 about the alleged threat posed by Chinese flat panel displays. Earlier in the month, Apple had begun sourcing OLED displays from China’s BOE Technology, a company that Moolenaar identifies as linked to the Chinese military.
However, reports in October suggested that the Biden administration is discussing renewing the US-China Science and Technology Agreement, which expired in August. The US side does not want to completely decouple from China, but rather wants to modify the agreement to better protect US intellectual property.
On the other hand, Moolenaar contends that” We absolutely should not encourage further scientific or technological collaboration with the Chinese Communist Party.” Before the US presidential and congressional elections in the coming months, how Moolenaar and other politicians ‘ anti-China sentiments might impact Apple is likely to be known.
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