Apple Inc is binding itself more closely to China as its share of the world’s biggest smartphone market slips and it becomes more reliant on selling services which require government approval.
A flurry of recent action by Cupertino-based Apple underlines its push to get on the right side of China’s notoriously tough tech regulators as it looks to revive sales there.
This weekend it moved to block apps used to evade the country’s internet censors, a decision that fits with Beijing’s recent crackdown on unapproved online content.
Apple has announced it will establish its first China data centre in the politically important province of Guizhou and has created the new position of managing director for Greater China, reporting directly to CEO Tim Cook.
Apple’s China revenues have stalled, falling for the fifth straight quarter in January-March, when sales grew in every other region. China recently slipped to Apple’s third-largest market as consumers have switched to newer domestic offerings.
The buzz around new launches has also cooled since the iPhone 6 in 2014. When it unveils quarterly earnings later on Tuesday, Apple is likely to report another dip in China smartphone sales.
Its once coveted iPhone has slipped into fifth position behind offerings from local rivals Huawei, Oppo, Vivo and Xiaomi, analysts said.
The iPhone’s share of China’s smartphone shipments fell to 9% in January-June, from a peak of 14% in 2015, according to consultancy Counterpoint. Having China’s government on-side will certainly help.
“Because others have eaten away at Apple’s market share in China, it now has to pay more attention to regulation from government,” said Beijing-based tech analyst Li Chengdong. “China is such a key market for Apple that it has to listen.”
Apple declined to comment for this article.
Apple, like other US tech brands including Facebook Inc and Alphabet Inc’s Google, has looked to woo China’s leaders to give it greater access, especially as it pushes services such as its App Store and Apple Pay.
Services were Apple’s rare bright spot in its struggling China business and logged double-digit revenue growth in Greater China in January-March.
Maintaining momentum is crucial as device sales may come under pressure again until Apple unveils its new iPhone, widely expected later this year in a milestone launch that will be key to winning back Chinese buyers.