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Apple Will Build R&D Center in China as Part of Amped-Up Investment

August 16, 2016, 1:11 PM UTC
Apple Pay launched in China
A Chinese clerk instructs a customer to use the payment system Apple Pay on her iPhone smartphone at a branch of China CITIC Bank in Hangzhou city, east China's Zhejiang province, 18 February 2016. Shoppers in China can now use contactless payment system Apple Pay to make purchases, after tech giant Apple and Chinese bankcard association UnionPay launched the system on Thursday (18 February 2016). Users of the iPhone 6 or more advanced versions, certain iPads and Apple Watches will be able to use these devices, equipped with near field communication (NFC) technology, to buy items in stores in China, Apple's second-largest market. Nearly 20 Chinese banks have let their customers tie their bank accounts to Apple Pay, and UnionPay has provided compatible point-of-sale (POS) terminals for users to complete the transactions. McDonald's said on Thursday that it will accept the contactless payment in 1,700 restaurants in China. Apple also lists Lane Crawford, 7-Eleven, Burger King, KFC among merchants already accepting Apple Pay in China. Chinese restaurant review and group buying services Meituan and Dazhong Dianping and online retailer have also made Apple Pay-compatible versions of their apps available to iPhone users. China UnionPay has previously worked with the country's three telecom operators to promote NFC-based mobile payment services in competition with the payment solutions offered by Alibaba and Tencent. Yet the project failed to gain a sizable share of the mobile payment market, in part because of different technical standards employed by telecom operators and lack of adoption by merchants.
Shan he — Imaginechina/AP

Apple will boost its investment in China, one of its most important but increasingly difficult markets, and build its first Asia-Pacific research and development center in the country, chief executive Tim Cook said Tuesday.

Demand for Apple’s phones has plummeted in China, and the government maintains a wary attitude toward foreign technology. This is at least the CEO’s second trip to the country in four months.

Apple’s new research and development center will be built by the end of the year, Cook told Vice Premier Zhang Gaoli, one of China’s most senior officials, according to the official Chinese state broadcaster.pp

The pledge comes after the head of China’s industry and technology regulator in May told Cook he hoped Apple (AAPL) could deepen its cooperation with the country in research and development and stressed information security.

Apple did not immediately respond to a request for comment.

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Sales in China, once touted as Apple’s next growth engine, decreased by a third in its most recent quarterly results, after having more than doubled a year earlier.

Not only is a slowdown of the world’s second-largest economy stoking concerns, but the company’s stores for books and movies also went dark in China earlier this year. Apple has also lost intellectual property battles and faced anti-U.S. sentiment from consumers.

Before Cook’s charm offensive in Beijing in May, Apple announced a $1 billion deal with ride-hailing app Didi Chuxing, a move many experts saw as an attempt to curry favor with Beijing.

Other tech firms have in the past pledged investment in China while facing difficulties in the country, including Microsoft and Qualcomm, but often with mixed results.