Apple CEO Cook opens new Shanghai store in show of China commitment

APPLE chief executive officer Tim Cook opened an expansive new store in central Shanghai on Thursday (Mar 21), signalling his company’s commitment to China as a market and production base.

Cook emerged from the store at seven pm to thunderous applause from the crowd, shaking hands and hugging fans. His appearance capped a much-publicised jaunt around the financial hub and comes at a delicate time for Apple and its place in the world’s No. two economy.

The wider backdrop to Cook’s outreach includes fraying relations between the US and China, and Beijing’s attempts to assuage foreign investors spooked by regulatory uncertainty.

The CEO presided over the opening of Apple’s eighth location in the city after he spent time with a local celebrity, sampled Shanghainese treats and chatted with the heads of suppliers including BYD and Lens Technology.

Cook’s highly public demonstration comes as the company tries to stem waning iPhone sales in its most important overseas market, while exploring ways to shift manufacturing to countries such as India to mitigate fallout from US-Chinese trade tensions.

Caesar Xu, a 35-year-old Shanghainese who works in the tech industry, said at the opening that the price of the newest iPhone is “acceptable” but expensive compared with domestic brands.

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“Those who love the iPhone will always love the iPhone, but there will be others switching to other brands,” said Xu, who owns both Huawei and iPhone devices and thinks Huawei excels in signal and battery life.

Jobs lieutenant

Cook is credited as the mastermind behind Apple’s sprawling Chinese-centreed supply chain. The former lieutenant to Steve Jobs emphasised in multiple local newspaper reports how China remains integral to its future. “There’s no supply chain in the world that’s more critical to us than China,” Cook was quoted as saying in the state-backed Global Times.

Apple’s most important product, the iPhone, is emblematic of the relationship.

Its multi-layered supply chain – led by Foxconn, also known as Hon Hai Precision Industry – provides millions of jobs and investment in China’s manufacturing capabilities. China, for its part, offers qualified workers, optimised logistics and the world’s largest smartphone and consumer market. But cracks have begun to show in the relationship.

Despite Cook’s best efforts, a government ban on iPhones at state agencies and government-backed firms deepened at the end of last year, as relations between Beijing and Washington worsened. Together with an ailing economy and the resurgence of Huawei Technologies, the ban contributed to a slump in the sales of the latest iPhone in China. That decline accelerated to a 24 per cent slump at the start of this year, according to independent research.

Cook’s assurances that China is the most critical supply partner come against a backdrop of his company building up capacity in places like India and South-east Asia.

Billions of US dollars’ worth of iPhone production have shifted to India, which no longer has a delay in manufacturing and selling the latest handset generation. The CEO was also present at the opening of Apple’s first stores in India in April, with the company using stone from Rajasthan to connect its Mumbai venue to the locale.

Apple is doing likewise in Shanghai, with a wall of locally sourced stone and other homages and adaptations to the area. The Jingan store is surrounded by an open plaza and has an amphitheatre-like exterior, with much of it built into a lower level with high ceilings and a circular theme akin to Apple’s headquarters in Cupertino, California.

Over the years, China has grown into one of Apple’s top markets, alongside the US and Europe, as Chinese consumers flocked to the iPhone and the wider Apple product ecosystem. That momentum has built up its retail network to over 50 stores in Greater China – second only to the US – though it’s cooled dramatically since September, when the iPhone 15 and Huawei’s Mate 60 series made their debuts. The Huawei devices, powered by a made-in-China 5G chip, have been credited with taking share away from Apple.

Beyond its flagship product, Apple has run into challenges as it seeks to develop new avenues for growth. This year, it shuttered its decade-long project to develop an electric vehicle, and its pricey Vision Pro headset remains limited in availability to the US – where some of its most dedicated fans are returning it.

Questions about how far behind the company is in developing artificial intelligence also remain, with the company negotiating with Alphabet Inc.’s Google about using its Gemini system in upcoming iPhone software.

With so many issues to resolve, Cook is making a big push to minimise friction with China, which still hosts most of Apple’s manufacturing and a vast consumer market that’s essential for the company’s long-term growth.

While the iPhone remains a desirable premium product, China’s economic woes have shifted consumer spending habits. Cook’s visit and the store opening give Apple and China something to celebrate, even if their long-term prospects and relationship remain under strain.

A first-year college student, who goes by the surname He, said at the Shanghai opening that the iPhone remains his favourite mobile device, despite the advantages of domestic brands such as Huawei.

“I think it’s very important for Tim Cook to come to China,” He said. “The visit also represents the relationship between the US and China, and I hope I can see him today and take a photo with him.” BLOOMBERG