As Tim Cook’s inaugural visit as Apple’s (Nasdaq: AAPL) new CEO wraps up, I thought I’d take a quick look back at what he’s done on the trip since my previous post earlier this week, which should indicate not only where his China priorities, but also his global ones, will lie in the years ahead. After writing my first post, which included calls on China’s major telcos, an Apple store and Beijing’s mayor, Cook has gone on to visit China’s premier-in-waiting, Li Keqiang, as well as a central China iPhone-producing factory. There are also interesting new rumors on a tie-up between Apple and Baidu (Nasdaq: BIDU), though it’s unclear if Cook actually met with any executives from China’s dominant search engine during his visit. The bigger picture emerging from all these stops is that Cook is quite serious about developing the China market, and wants to strengthen not only his company’s relations with China’s top 3 telcos, but also improve its broader distribution and sales channels in a market that could easily become its largest globally in the next 5 years. Secondarily, he also seems to be more interested in his company’s image as a good corporate citizen than his predecessor Steve Jobs, whose death last year came just months after Cook officially assumed the CEO title. The visit to the Beijing Apple store underscores Cook’s determination to raise his company’s profile and sales channels in China. The company already enjoys a strong reputation in the nation’s major cities like Beijing and Shanghai, but is less well known in smaller cities that are home to the vast majority of China’s 1.3 billion people and could provide a huge new business opportunity. To cultivate this market, I wouldn’t be at all surprised to see Apple roll out some lower-end iPhones and iPads in the next 1-2 years, and in fact such initiatives have been rumored in the past. Cook’s visit with Li Keqiang also marked a rare state visit for a corporate executive with a top Chinese leader, indicating that both China and Apple want to see this relationship thrive, as China surely realizes it needs companies like Apple to push its own companies away from lower-end manufacturing and up the value chain. By visiting with both Li and Beijing’s mayor, Cook also showed he wants to have a more elevated profile compared with the lower-key Jobs as he tries to cultivate the company’s image as a good global corporate citizen in the many markets where it operates. The visit to one of the central China factories that makes iPhones also underscores this priority, as the facility operated by Taiwan’s Foxconn (HKEx: 2038) has come under scrutiny in the last 2 years for its high-pressure workplace tactics that some consider abusive. Following those ongoing criticisms, Apple said after Cook’s visit that it would work with Foxconn to improve that situation. (English article) Lastly there’s the Baidu tie-up, though that one is only rumored and would reportedly see Apple make Baidu’s search site the default for all of its iPhones sold in China. (English article) Such a move certainly seems to make sense as Baidu controls the overwhelming majority of China’s search market, and I wouldn’t be surprised to see a deal on that front in the next few months.
Bottom line: Tim Cooks’ weeklong China trip underscores that the market will become a top priority for Apple during his tenure as CEO, as will improving his company’s corporate image.
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