Here’s What Apple Is Doing at its First Research Center in China

September 29, 2016, 4:34 PM UTC
Apple Inc. Unveils Next Generation iPhone And New Watch
Tim Cook, chief executive officer of Apple Inc., speaks during an event in San Francisco, California, U.S., on Wednesday, Sept. 7, 2016. Apple Inc. unveiled new iPhone models Wednesday, featuring a water-resistant design, upgraded camera system and faster processor, betting that after six annual iterations it can still make improvements enticing enough to lure buyers to their next upgrade. Photographer: David Paul Morris/Bloomberg via Getty Images
David Paul Morris — Bloomberg via Getty Images

Apple is planning its first research center in China, and its focus will be on hardware.

Apple plans to open the research center, a $45 million facility, in Beijing, the site’s landlord told the state-owned Zhongguancun Science Park Administrative Committee. The Committee released the news on Chinese social media sites, adding that it will house 500 employees and focus on everything from computer hardware to audio and video equipment, according to The Wall Street Journal, which obtained a copy of the post.

China has proven to be a critical but somewhat vexing market for Apple. For years, Apple’s China-based revenue was soaring as the country’s booming middle class anxiously bought the company’s iPhones, iPads, and other products. But as time has gone on, Apple’s devices have proven less popular in China and consumers have increasingly turned to local companies. In turn, Apple’s China revenue has plummeted in recent quarters, falling a whopping 33% year-over-year in Apple’s last-reported period.

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Apple (AAPL) has responded with claims that it can turn around its Chinese business, and Apple CEO Tim Cook has visited China purportedly to improve his company’s relations with the government and business leaders. Meanwhile, Apple has faced intensifying local competition and strict regulations.

Last month, Cook announced plans for Apple to open a research-and-development center in China as part of a broader initiative to grow investment in the country. He didn’t say what his company might have planned for the center, and Apple did not respond to a request for comment on the investment the site’s landlord announced.

The revelation from its landlord, however, sheds light on the notoriously secretive Apple’s Achilles heel: a country like China where withholding information to benefit a company like Apple isn’t always thought to be important. Many Apple rumors and product leaks come from China, and information on Apple’s research center is just the latest third-party leak to come from the country.

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The news comes a day after another Apple landlord—developers of the Battersea Power Station—announced the iPhone maker would move its London headquarters to the decommissioned power plant site near the River Thames. Apple plans to move more than 1,400 employees to the location when it moves to the site in 2021. Its offices will span six floors and nearly 500,000 square feet.

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