Apple China in damage control

With Apple China sales reaching a two-year low Apple CEO Tim Cook has undertaken a public relations offensive in the tech giant’s largest global market.

Apple had previously focused significant effort on China, believing it to be the powerhouse of future growth and expansion given the relative maturity of the US market. But as its devices lose their technological and design edge to rival brands in Korea and Mainland China, sales are falling and interest in the brand is waning. A further complication is a stringent crackdown on foreign tech companies by the Chinese government which is introducing regulations governing data storage and information sharing.

Apple’s sales in China, Hong Kong and Taiwan combined fell by 33 per cent in the latest quarter to US$8.8 billion. That is the worst fall globally. Worse, China slid down to third largest market behind the US and Europe, from a position where it was threatening to overtake the US to first.

Cook has just launched what the Wall Street Journal described as “a goodwill mission” meeting with government officials, local management and even consumers trying to recapture China’s admiration for all thing Apple. Remember, this is the country where several years ago a local sold his kidney so he could buy a new iPad.

Now, consumers seem more obsessed by the pending release of the samsung Galaxy Note 7 and new phablets from Huawei and Oppo…

On Tuesday, Cook held talks with vice premier Zhang Gaoli, promising further investment in factories and research and development facilities on the mainland. On Wednesday he visited an Apple store in Chongqing with the local mayor.

Apple released little information about the visit and did not respond to US media questions. But a spokesman confirmed the promise to open a research and development centre as it “continued to grow its talented team there”.

“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.”

This week’s charm offensive is largely about building bridges with authorities and ensuring the brand is perceived as an ally of China – a stark contrast to its earlier focus on the brand’s fashionability amongst consumers.

“He is trying to show he is learning and appreciates the local culture,” Kitty Fok, China research director for market research firm IDC told the WSJ. “This kind of investment will help build up a better relationship with the government.”

“He has to be really friendly with the government,” added Chris DeAngelis, GM of tech consultancy ADG, in the same feature.

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