Kevin Bostic
Rumors that Apple would be opening a research and development center in Shanghai came to fruition on Sunday, as it was confirmed that the summer of 2013 will see the company opening just such a facility in Pudong, Shanghai.
The news comes via BrightWire, which cites yicai.com, the online news section of China Business News, confirming that Apple has registered three buildings in Pudong, with one of them dedicated to procurement management and R&D. The registrations were filed with the Shanghai Municipal Administration for Industry and Commerce.
Apple Store Sanlitun in Beijing, China | Copyright: 变脸.
Earlier rumors had pegged Beijing as the location for a new Apple R&D center, though those soon gave way to reports that Apple would target the Pudong economic development zone.
Previous reports on the R&D center held that Apple has been laying out the project for the past six or seven years, aiming to take up residence in the space this summer. The center's exterior is reportedly complete, though its interior has yet to be decorated. Annual rent for the facility is estimated at 50 million yuan, or more than $8 million.
Apple has identified China as a major area of growth for the future. Speaking during the company's first quarter of fiscal 2013 conference call, CEO Tim Cook described China as "already [Apple's] second largest region," noting that Apple's revenues in Greater China were $7.3 billion for the quarter.
Earlier in January, Cook made his second trip to China in 10 months, meeting with China Mobile, the country's — and the world's — largest carrier.
Despite strong demand for Apple products, the Cupertino company faces some difficulties in China. Apple's products are typically priced out of reach of the average urban Chinese worker, though the company has taken some steps toward making its products more accessible for Chinese consumers.
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8 Comments
Off-shoring???
Off-shoring???
Probably more like localising.
Off-shoring???
Hardly. It would make sense to open a substantial facility in what you anticipate will be your major market. China offered a favorable 'economic development zone' and Apple took it. Smart. It does have a double edge. China always insists on facilities in their countries so they can 'learn' the technology.
Solar manufacturers did the same thing to appease China, China learned, and now almost all solar panels are made in China. There's a good possibility China will start pumping out phones at prices that will put downward pressure on even Samsungs margins (not to mention Apple's).
Does Apple Off-shore? Absolutely. Through fancy footwork the money obviously comes out of the US, but the profits are made on paper in Ireland. That's not evil, its a stupid loophole in the system that needs to be closed. Apple would be remiss if they *did not* offshore because they would not be maximizing their shareholder value. Same with any other corporation. It is there. They do it. Google certainly does it, GE, Exxon, really every multinational. You can even argue that they are required to do it. Okay shareholders, which of you wants to let me keep my job if I lower profits by 30% and make our shares tumble? Shareholder: Ummm, why would we want that? CEO: Its the right thing to do. Shareholder: Our competition that is offshoring will easily put us out of business with that advantage! We'll lose all of our money CEO: Well, true, but it *is* the right thing to do. Now who's with me?
What is evil is they are spending a ton of dough lobbying congress to allow them to bring that off-shore money into the US tax free. Their argument sounds sweet on paper. "Mr President, Senators, times are rough for the American worker! We would love to bring the $100billion we have offshore and invest that into the US economy so we can help make America strong and support the people! Why does Washington want to prevent this for your own greedy over-spending interests? All you know how to do is tax, tax, tax! You politicians are preventing more job opportunities from happening if you don't vote for this!!"
All corporations are pushing for it. But a simple question to ask Apple: "If you are so eager to help 'the people' out, why haven't you invested the $30billion or so that you actually already have inside the US toward helping out the people you are so concerned for?
Funny thing is people are actually buying it. If it goes through it effectively mean there is zero corporate tax policy. Make all your money offshore so you can pay zero taxes on it, move it back in to the US for free. Brilliant. Enjoy all the benefits and freedoms provided by the US, that costs a lot of dough, but just have the workers you are helping out and paying less and less each year shoulder the tax burden for you. Workers subsidizing corporations. Blech.
I could't help myself and registered just to say that RnD was done in the US and manufacturing in China, and now RnD is moving to China and manufacturing to US.
Is apple years ahead of everyone again and sees where the world is heading perhaps? Roles are reversing, only thing left to complete the transitions is collapsing dollar.
Hardly. ... blah, blah, blah, ... America .... blah, blah, ... economy .. blah...... Blech.
Political arguments (about manufacturing* for some crazy reason) aside ....
I think this is an excellent move. It makes me feel a lot better about the R&D they just set up in Israel.
Although I definitely feel that setting up operations of this type in a country more committed to freedom and democracy like say Canada, or some of the Northern European countries would be a better move.
* Note how the article is not about manufacturing at all, but all the responses so far have assumed it is.