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With Apple’s local fortunes in flux, Tim Cook back in China

For the second time this year, Apple’s CEO is reportedly visiting China. This time, however, things are a bit different: Apple(s AAPL) is coming off of a not-so-great quarter in the country. Sales momentum has slowed and the company itself has, for the second time since April, found itself dealing with negative press concerning its local business dealings.

Cook’s trip was first reported by the local news outlets early Tuesday morning.

The reports say he’s in town to meet with local carriers — which would be the second time since January — and his third such trip since he became CEO. Apple already has partners in China Unicom(s chu) and China Telecom(s cha). But the partner who Cook still needs to work on wooing is China Mobile(s chl), the world’s largest carrier and a potentially huge coup for the iPhone’s sales growth if the two were able to come to an agreement. (It would, however, likely require Apple to make a special variant of the iPhone to run on the carrier’s network.)

But compared to his trip in January,  the mood isn’t quite as upbeat this time. Apple had an off quarter in China between April and June. Overall, sales growth increased just five percent year over year in mainland China, “a slower growth rate than we’d been seeing,” Cook said in a bit of an understatement on the company’s quarterly earnings call last week. Greater China overall saw a drop in sales of 14 percent during the quarter, down from 8 percent growth the previous quarter and 67 percent growth during the 2012 holiday quarter.

Cook said during his last trip to the country in January that he foresees it displacing the U.S. eventually as its largest market.

Things hit a snag during the last quarter though. Besides a weakened Chinese economy, Apple was pilloried in China’s state-run media during the spring over the course of two weeks, first for its warranty policies, then for its “arrogant” response to the attack. Cook personally apologized, but it wasn’t a great episode in the company’s fruitful-but-sometimes-fraught relationship with the country. Neither was the report that appeared yesterday from China Labor Watch, which asserted more labor abuses at one of Apple’s main Chinese contract manufacturing partners, Pegatron.

Cook also said last week that “in the arc of time here, China is a huge opportunity for Apple. I don’t get discouraged over a 90 day kind of cycle that can have economic factors and other things in it.” But he apparently thinks the country — and reportedly local carriers — needs some more of his personal attention right about now.

Thumbnail image from Tim Cook’s visit to China in January 2013.

2 Responses to “With Apple’s local fortunes in flux, Tim Cook back in China”

  1. fredhstein

    Worth noting: Huawei, after being a white-label supplier of Android phones, launched their own branded smartphones earlier this year. National pride, and other larger issues are at play. (PS – still a fanboy and long apple.)