Some of China’s top tech firms will soon be welcoming a famous new neighbor.
Apple has confirmed it will open a research and development center in Shenzhen, the southern Chinese city that serves as a hardware manufacturing hub for the world. The center’s launch comes as Apple looks for new ways to position itself in the world’s largest consumer market, amid sputtering iPhone sales.
“We are excited to be opening a new Research and Development center here next year so our engineering team can work even more closely and collaboratively with our manufacturing partners,” an Apple spokesperson told Quartz in a statement today (Oct. 12). ”The Shenzhen center, along with the Beijing center, is also aimed at strengthening relationships with local partners and universities as we work to support talent development across the country.”
Apple CEO Tim Cook met with Shenzhen Communist Party secretary Ma Xingrui and other government officials at the Four Seasons hotel yesterday (Oct. 11) to formally announce the new center (link in Chinese), Shenzhen’s Economic Daily reported. Terry Gou, founder of Foxconn, one of Apple’s major suppliers, also attended the event. Cook reportedly said Shenzhen’s prowess in manufacturing was key to making Apple products:
When I visited China for the first time more than 20 years ago, Shenzhen was my first destination. Terry Gou accompanied me. At the time, it was a place to look for large-scale manufacturers in China. Apple has always valued innovative products, so our manufacturing must be very advanced. We realized the skill level of Shenzhen’s factories was gradually leading other places in the world. As we released more products, especially the iPhone, Apple’s sales increased dramatically, as did our number of employees. Today, when it comes to manufacturing, Shenzhen is still a very important city for us—we now employ over 100,000 workers.
Apple did not answer questions about when specifically the center would open, and how many people it would employ.
It is, reportedly, Apple’s second R&D in China. In late September the administrative committee for Zhongguancun Science Park, a state-backed tech hub in Beijing, announced on social media (link in Chinese) that Apple would open a $45 million R&D center in the area that would employ 500 people. Apple did not respond to questions about the report at the time.
Shenzhen, often referred to as China’s Silicon Valley, is home to major Chinese tech companies like smartphone maker Huawei and social media giant Tencent, as well as a hub for countless factories that make electronics and hardware for consumer goods.
Apple’s R&D push in China comes as its momentum in the country begins to slow. Revenues for Hong Kong, Taiwan, and mainland China fell 33% annually last quarter, and the region is no longer Apple’s second-biggest market.
Meanwhile, Apple has attracted more scrutiny from the Chinese government—in April authorities forced it to shut down its iBooks and iTunes movie stores. The Communist Party wants to end its reliance on foreign technology, which bodes poorly for the hardware maker as it looks for fresh revenue sources beyond the iPhone. Setting up new R&D centers in China may be one way Apple is trying to say in the Party’s good graces.