Tim Cook flew to China for the second time in almost eight months, making a surprise trip to one of Apple’s most important markets. The Apple CEO unveiled a flurry of posts on his personal Weibo account showing meetings with university students and local artists. China is a major market for Apple, making up 19% of its total revenue last year. Yet the iPhone maker is struggling with intensifying competition in the world’s largest smartphone market, and regulatory challenges in getting its buzzy new AI service in the hands of Chinese consumers. On Wednesday, Cook met with Jin Zhuanglong, China’s minister of industry and information technology, on Wednesday. The Chinese official expressed hopes that Apple would deepen its presence in China, according to a statement shared on the ministry’s WeChat account.Cook responded that Apple would increase its China investments and help develop supply chains in the country, according to the ministry’s statement.Apple’s CEO last visited China in March, as part of a high-profile summit in Beijing. During that visit, Cook opened a new Apple store in Shanghai, the company’s second-largest retail outlet globally.Cook’s visit comes as Apple nears the release of its new AI product, Apple Intelligence. The English-language service could be released globally in just a few days, with other languages like Japanese and Chinese coming over the next year. But Apple has yet to announce a release date for Apple Intelligence in mainland China. The company has admitted that its new service won’t work on iPhones bought in mainland China, nor will it work on any iPhone used in China.“It’s hard not to speculate that the Apple CEO’s trip is largely focused on AI, especially since Apple Intelligence is the major selling point of new, and potentially future, iPhones,” Will Wong, senior research manager at market research firm IDC, says. Chinese users have griped about Apple’s delay in releasing its AI in mainland China. The iPhone maker faces tough domestic competition from brands like Huawei, Honor and Xiaomi. Independent research suggests that Apple is slipping from the top-selling brands in China versus domestic manufacturers.Still, Apple’s new iPhone is selling 20% more in China compared to its 2023 model, according to research firm Counterpoint Research earlier this month, though overall iPhone sales dipped 2%. Apple is offering discounts on its official stores on Chinese ecommerce platforms ahead of the massive Singles Day shopping festival on Nov. 11, according to the South China Morning Post. China has strict rules on the use of AI, such as its requirement that all models adhere to “core socialist values.”Apple may need a local partner to launch its AI services in China. All of the current models approved for use in China thus far are developed by firms based in mainland China. According to the Wall Street Journal in June, Apple explored the possibility of using a foreign large language model in China, yet determined that regulators were unlikely to approve it. Apple has complied with Chinese regulations before. In 2017, Apple agreed to partner with Guizhou Cloud Big Data Industry Development, a local firm, to handle iCloud services for users in mainland China. Then, in 2018, Apple moved its iCloud data for Chinese users to a new data center in Guizhou province. The company said the shift was to comply with local cybersecurity laws. Wong notes that Apple still plays an important role in China’s manufacturing sector, which might help the iPhone maker overcome hurdles in getting approval for its AI plans.Cook may be following in the footsteps of Tesla CEO Elon Musk, who made his own surprise visit to China in April. Soon after the trip, Beijing tentatively approved Tesla’s assisted driving service, Full Self-Driving, for release in the country. Tesla plans to launch the service next year. Like Apple, Tesla also has a large manufacturing footprint in China.Recommended newsletter Data Sheet: Stay on top of the business of tech with thoughtful analysis on the industry's biggest names. Sign up here.
