SMARTPHONES: Apple CEO in Search of Good News on China Call

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Bottom line: The latest China trip by Apple’s CEO is designed to spotlight the company’s new mega-investment in Didi Chuxing and show its continued relevance for local app makers, as it seeks positive media coverage to halt a recent series of negative news.

Apple CEO looks for positive news on China trip
Apple CEO looks for positive news on China trip

Less than 2 weeks after media first reported plans for a new China trip by Apple’s (Nasdaq: AAPL) CEO, Tim Cook has appeared in Beijing for the eighth visit to his company’s second largest market. This particular visit comes at a sensitive time for Apple, which has experienced a number of China setbacks recently, led by a sharp drop in sales during the first 3 months of the year.

Against that backdrop, I previously said that Cook’s new trip looked partly aimed at damage control, though we should also note that he was already a frequent visitor to the country. In keeping with the past, Cook was relatively low key this time and didn’t even announce his arrival in China until he was spotted at a meeting with some of the company’s local app development partners in Beijing. (Chinese article)

According to the latest reports, Cook arrived at the developers meeting in a car supplied by Didi Chuxing, the homegrown Chinese equivalent of Uber. (Chinese article) Apple announced late last week that it would invest $1 billion in Didi, so it’s not too surprising that Cook would want to test-drive and publicize his latest investment that is easily Apple’s largest to date in China. (previous post)

It’s also not surprising that Cook was accompanied in the car by Didi President Liu Qing, daughter of the founder of Chinese PC giant Lenovo (HKEx: 992). The pair attended the developer meeting at an Apple Store in Beijing’s popular Wangfujing shopping district. The reports also note that representatives from some of China’s top app makers were in attendance, including top group buying site Meituan Dianping, news app Toutiao and mapping app Meitu.

One reporter from the influential CBN financial news organization was somewhat miffed at Cook’s and Apple’s lack of access to reporters, which again is somewhat consistent with past actions. (Chinese article) The report even uses the word “arrogant” to describe Cook’s and Apple’s manner, which echoes back to a crisis the company suffered several years ago when it came under assault in an investigative report from central broadcaster CCTV .

In Search of Good News

Now that we’ve reviewed what happened and was publicly revealed, it’s time to try to interpret what’s happening behind the scenes and what message Cook is trying to send with this carefully scripted public appearance. In addition to sharply falling sales, Apple’s other China setbacks in the last few weeks include its loss in a trademark dispute involving the iPhone name, and the blockage of its online movie and book services.

The prominence of Didi on this trip isn’t surprising due to Apple’s big announcement about its new mega-investment last week, and is designed to spotlight the company’s commitment to investing in China. The attendance of some of the country’s top app developers at the conference also looks strategically released to show that Apple’s products and services remain a major focus for such top tech companies.

Outside this highly scripted developer event, Cook will almost certainly attend meetings with China’s powerful online censors who were responsible for the blockage of its book and movie services. Apple said at the time of that setback that it hoped to get the services back online soon (previous post), and I expect that Cook is hoping to get the service restored before he leaves Beijing later this week.

Some might say that the “arrogant” comments from CBN could look ominous for Apple, though in this case the words look less threatening since they don’t come from a big central media like CCTV or Xinhua. Instead, I would close with the conclusion that this trip looks largely symbolic and is unlikely to produce any major new results right away. But it could provide some positive publicity, which is sorely needed for Apple right now to halt the recent string of negative headlines.

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