Apple to set up R&D centre in China as sales dip

Apple will increase investment in China and build its first Asia-Pacific research and development centre in the country to bolster its presence as sales of its products dropped there in the last three months relegating it to fifth place.

Apple CEO Tim Cook who called China's Vice Premier Zhang Gaoli said that Apple plans to set up an independent research and development centre in China before the end of 2016, the first in the Asia-Pacific region, though he did not reveal the specific location, state run Xinhua news agency reported.

Cook also said that smartphones are growing in importance as they add new functions, and will not be replaced by other products any time soon.

"For most people, the smartphone is either the primary or the sole window that they have to the Internet... And there is nothing that eclipses it any time soon or maybe any time in the distant future," he said.

Cook is optimistic about the world smartphone market as penetration in many markets is very low, such as India, where the 4G network is just rolling out this year.

"It's not something you use once a month or once a week. You are gonna be using it all the time. It's a constant companion," he said.

The company plans to release a new iPhone model in September. Its sales in China in recent quarters have not been that favourable.

Figures show the quarterly revenue of Apple in greater China, including Hong Kong and Taiwan, dropped by 33 per cent year on year to $8.848 billion from April to June.

According to statistics released last month by Counterpoint Research, Apple dropped to the fifth place in China's mobile market in the first quarter, after Huawei, Vivo, Oppo and Xiaomi, which secured 53 per cent of combined market share.

Cook responded that the company saw a significant reduction of channel inventory, particularly in the quarter from March to June, meaning customers are buying more products than the shown revenue.

Another factor that has influenced the financial figures is the depreciation of the Chinese yuan, he said.

Cook said he is optimistic about the company's sales prospects in the fall, especially as the iOS 10 operating system will be launched.