Apple’s Tim Cook Reassures China Of Supply Chain Importance

Apple CEO Tim Cook is visiting China this week, and has reportedly sought to reassure the country of its supply chain importance, amid some manufacturing relocation to other Asian countries.

Reuters reported local media outlets as saying that CEO Tim Cook has hailed China’s importance in the firm’s supply chain as he met suppliers including BYD Electronics on Wednesday.

Cook’s visit to China comes as Apple struggles in that market. Earlier this month new data from Counterpoint Research revealed that Apple iPhone sales in China had plummeted 24 percent over the period, due to stiff competition and abnormally high sales in January 2023.

China worries

It should also be remembered that in January 2024 it was revealed that Apple was offering extremely unusual iPhone discounts in China, as it faced increased competition from domestic rivals, coupled with slowing smartphone demand.

In February Apple had forecast a drop in iPhone sales for its second quarter, and also forecast overall revenue $6 billion below Wall Street expectations.

China is one of Apple’s most important markets (Apple’s third-largest market by revenue), but in its first quarter financial report, the iPhone giant revealed that Q1 sales in China had declined 13 percent.

And last September officials had denied media reports that Chinese government agencies had been ordered not to use iPhones for work or bring them into the office.

China visit

During his visit to China, Reuters reported that Tim Cook in a post on his Weibo social media account, posted that he spent the morning walking along Shanghai’s historic Bund river with Chinese actor Zheng Kai and that he had eaten a local breakfast.

Cook did not disclose, however, what other plans he had for this China visit.

The China Daily reported that Cook had said in an interview that “there’s no supply chain in the world that’s more critical to us than China.”

Cook also reportedly met Wang Chuanfu, founder and president of Apple supplier BYD Electronics, as well as officials from Lens Technology at the firm’s Shanghai office, the China Daily added.

Cook’s visit comes after the iPhone maker announced that it would open a new retail store in the heart of the Chinese financial hub on Thursday.

According to Reuters, Cook made at least two visits to China in 2023. He also travelled to Beijing around the same time last year, where he visited an Apple store and attended the China Development Forum.

Manufacturing relocation

Apple has traditionally been heavily dependent on China and Taiwan for the manufacture the iPhone and other products.

But in recent years it has been ramping up manufacturing of its products in other Asia countries, most notably India, amid ongoing geopolitical tensions with Western nations, coupled with Beijing’s strict pandemic restrictions that disrupted supply chains for many industries.

Additionally, Apple manufacturer Foxconn has previously it may move as much as 30 percent of its manufacturing capacity out of China to India, Vietnam and Brazil as it and other electronics manufacturers seek to diversify and limit supply chain disruption caused by geopolitical tensions and public health challenges.

Apple is now using other Asian nations to make it flagship handsets. In September 2022 Apple admitted that it had begun manufacturing some of its iPhone 14 handsets in India, soon after the launch of the latest handsets.

And in August 2023, production of the Apple iPhone 15 began in India, just weeks ahead of its expected launch on 12 September 2023.