Apple’s Cook In China, Xiaomi Weighs India Production
Apple (Nasdaq: AAPL) CEO Tim Cook should consider buying a second home in China, based on the growing frequency of his trips to the country since assuming his current title of the world’s biggest gadget maker 3 years ago. That’s my light-hearted suggestion, following reports that Cook is in China yet again after already paying a visit to the country earlier this year. Meantime, I might also suggest that Apple wannabe Xiaomi buy a few condos in India for its building presence in that market. In the latest headlines on that front, media are reporting that Xiaomi is eying India for its first major overseas manufacturing foray as it pushes heavily into the market.
I’ll begin with my somewhat cynical view that the latest moves by both of these smartphone giants seem somewhat PR-ish and politically motivated. Despite its popularity among Chinese consumers, Apple has a rocky relationship with Beijing due to its secretive nature and relative lack of high-profile investment in the country. The talkative Xiaomi has no such problems in terms of secretiveness, but is clearly eager to show the Indian government it wants to promote the country’s manufacturing sector as it tries to sell its cheap but popular smartphones to millions of Indian consumers.
Let’s begin with Cook, whose itinerary on this latest China trip has taken him to the usual stop in Beijing, and also to the interior city of Zhengzhou where he visited a factory operated by Foxconn (HKEx: 2038), one of Apple’s main manufacturing partners. (Chinese article) A carefully selected photo in local media reports shows a smiling Cook sitting alongside a similarly smiling Chinese worker at the factory, naming the woman as iPhone 6 assembly line worker Zhang Fan.
This kind of trip and photo opp is clearly aimed at the frequent criticism directed at both Apple and Foxconn over the last 5 years over treatment of workers at Foxconn’s massive complexes in several Chinese cities. Workers’ unhappiness at their isolation and other strict rules led to a series of high-profile suicides several years ago. Reports of suicides still crop up from time to time, even though experts say Foxconn’s suicide rates aren’t any higher than those at similar factories.
Cook’s other stop in Beijing took him to visits with government officials to discuss data security, since Apple often collects and stores data on its users through various self-operated apps and other features its iPhones. This visit also looks rather PR-ish, though it’s quite necessary in the current climate of cybersecurity tensions between the US and China. Cook also visited China twice last year, and I suspect we will see him make 2-3 more annual visits in the years ahead until he becomes more comfortable with the market.
Meantime, let’s look quickly at the reports saying that Xiaomi is considering doing some manufacturing in India, following early positive results in a market it entered earlier this year. (Chinese article) The remarks come from newly named Xiaomi India country chief and former Google (Nasdaq: GOOG) employee Jai Mani, as he tries to showcase his company’s commitment to the market just weeks after starting his new job.
He doesn’t give any details, but one intriguing possibility could see Xiaomi work in the market with Foxconn, which already has a cellphone factory in India. That factory was previously used mostly by Nokia, but has idled much of its production since the middle of this year due to a tax dispute. A decision by Xiaomi to use the plant would not only give it a reliable locally-based production partner, but also win it important PR points by helping put the factory back to work.
Bottom line: Tim Cook’s latest China visit and Xioami’s potential India manufacturing plan are both mostly PR moves designed to boost their public images and improve relations with local governments.