Apple and oranges

Apple's $1 billion plucks a strange fruit in China

Apple is joining forces with another fruit in China. The US tech giant is investing $1 billion in car-hailing app Didi Chuxing, whose Chinese name means "little orange". Apple can afford to lend Didi a helping hand in its costly battle with rival Uber. But, it's less clear how that will help revive iPhone sales or ease regulatory pressure.

When Didi's president first met Apple Chief Executive Tim Cook in April she joked that "a company named after a fruit could always achieve something big". Cook must have agreed: less than a month later, the $495 billion giant made a rare strategic investment in Beijing's tech darling, last valued at a reported $25 billion.

The timing looks ripe. The Cupertino-based company suffered its first drop in quarterly revenue in 13 years in the three months to March. Sales in Greater China - its most important market after the United States - were down by more than a quarter year on year. Relations with Beijing have also soured: regulators shut down Apple's online book and film services last month, and the company lost a key trademark case. Investors, including activist Carl Icahn, have bailed out.

The Didi investment will barely dent the more than $150 billion of cash and marketable securities that Apple had on its balance sheet at the end of March. Besides, at the rate that it generated operating cash flow last year, the company will replenish the $1 billion outlay in less than five days.

Less certain is how Didi can help Apple reverse its fortunes in the People's Republic. The two have yet to announce any details of the strategic tie up. Car technology may be one area of cooperation. Another is Apple Pay, which launched in China earlier this year. But Didi already offers competing mobile payments systems from its existing shareholders, local tech giants Alibaba and Tencent.

Meanwhile Apple is wading into the costly battle between Didi and Uber China. The two are spending billions of dollars each year on subsidies for drivers in an attempt to gain market share. Though the latest investment gives it a huge boost, Didi could burn through Apple's funds in a matter of months. The benefits Apple can squeeze out in return are harder to digest.