Apple CEO Tim Cook plans to meet with high-level Chinese officials in Beijing later this month as the company faces a number of obstacles in the mainland as well as slowing growth globally.
The Cupertino-based company, which two weeks ago suffered its first quarterly revenue drop in 13 years, reported iPhone sales fell for the first time since the iconic device was launched in 2007.
iPhone sales in China, its second largest market after the US, declined 8 per cent in Q1, and last month the Chinese government demanded it shut down its online book and movie services after the country’s video and publishing regulator imposed stricter guidelines on online content.
In its last earnings call, Cook talked up its services businesses, which expanded 20 per cent last quarter and represented the company’s second largest revenue-generating category last quarter. But with Apple suspending its iBooks and iTunes Movies services in China, its growth prospect in services could be severely dampened.
Last week it also lost a long-running battle with a local firm, which a Chinese court ruled can continue to use the iPhone name on its wallets and purses. Apple is likely to appeal.
Activist investor Carl Icahn said last month he pulled out his entire investment in Apple due to concerns about China’s economic slowdown and possible interference from the government.
Some analysts believe Apple could face the same types of obstacles in China that forced Google to pull out in 2010. SeekingAlpha commentator Bram de Haas said: “It seems naïve to expect Apple to [more] easily manage its relationship with PRC than Google did.” He cited the court ruling on the iPhone brand as an example of how China “consistently undermines Apple’s competitive position”.
During his visit Cook, who has traveled to China frequently since taking the helm five years ago, will meet senior government and Communist Party leaders, including officials in charge of propaganda, Reuters reported.