Apple Reportedly Opening an R&D Center in China

Apple Inc. is reportedly planning to open its first research and development center in China, allowing the tech giant to extend its reach in a vital market and maintain goodwill with the Chinese government.

The Cupertino tech giant will eventually invest 300 million yuan, or $45 million, in the facility, which will have 500 employees, according to the state-run China Daily newspaper.

Zhongguancun Science Park, a Beijing tech hub that the Wall Street Journal and CNBC described as Apple’s future landlord, posted the China Daily story on its website Friday.

Apple did not immediately respond to a request for comment.

China is a hugely important market for Apple.

But its iTunes movies and iBooks platforms have been suspended in China since April. A month after the suspension, Apple invested $1 billion in Chinese ride-hailing firm Didi Chuxing.

“When you’re in someone else’s country, you want to be a good guest,” said Brian White, global head of technology, hardware and software at investment banking firm Drexel Hamilton. “You want to be a good member of the community.”

Last year, Apple reported strong growth in its greater China market, which includes China, Hong Kong and Taiwan, with an increase of 84% in year-over-year net sales. As a whole, greater China represented 25% of Apple’s net sales in 2015.

But while Chinese consumers have embraced Apple’s products, especially iPhones, local companies have started to cut into sales with similar products at lower prices. In March, Apple tried to battle back by introducing the iPhone SE, a smaller version of the smartphone with a lower price tag.

A research and development center in China could help the company understand differences between Chinese and American users, said Laura Martin, Internet analyst with Needham & Co.

“If you’re a consumer company, having a presence in China is good,” she said.

© 2016 Los Angeles Times under contract with NewsEdge. All rights reserved.

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