Apple’s Cook Meets China Regulators
It may be cold and wintry in Beijing as the Year of the Snake approaches, but that isn’t stopping some of the world’s top high-tech CEOs from passing through the Chinese capital in pursuit of their own varied agendas. First Google (Nasdaq: GOOG) Chairman Eric Schmidt made a high-profile stop in Beijing en route to a visit to North Korea, and now we’re learning that Apple (Nasdaq: AAPL) CEO Tim Cook has also come calling on the nation’s capital this week. But whereas Schmidt’s visit seemed a bit whimsical to me, Cook’s trip looks much more practical, including an all-important stop at the nation’s telecoms regulator, the Ministry of Industry and Information Technology (MIIT). (Chinese article)
Sticking to its usual low-profile policy, Apple wasn’t saying anything about the visit publicly. But the MIIT was feeling much less bashful, issuing a brief story on Cook’s meeting with MIIT Minister Miao Wei on its website. (MIIT article) I suspect the MIIT just wanted to post the photo of Miao meeting with Cook to show the importance that the world’s biggest technology company places on China. The brief text to the MIIT article says only that Miao and Cook exchanged ideas on Apple’s development in China, and on the development of smartphone technology both in China and globally.
But I have no doubt that the item at the top of Cook’s agenda was discussion of how to speed up China’s slow-moving bureaucracy that almost certainly is the main obstacle preventing the timely launch of Apple’s new products in China. Readers will recall that Apple’s new iPhones and most of its other telecoms-related products never get released in China until 2-4 months and sometimes even longer after their global launches.
Such was the case with the latest iPhone 5, which didn’t launch in China until December, even though the product was launched globally in September and was available around most of the world before it finally made its official China debut. Such huge delays ultimately cost Apple millions or even billions of dollars in lost sales, since far fewer Chinese are interested in buying iPhones and iPads by the time they finally arrive in China, by which time the global buzz associated with such product launches has long since faded.
I previously blamed China’s 2 telcos that offer the iPhone, China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA), for the big delays, since those companies are ultimately responsible for preparing the way for new products to enter the China market on their networks. I still do think the 2 telcos could do more to expedite the arrival of the new Apple products into China; but it’s becoming increasingly apparent that the MIIT is the critical link that is causing these huge delays by placing burdensome testing requirements and other bureaucratic obstacles for the introduction of new smartphones into the market.
Cook seems to realize the important role the MIIT is playing, which is why this meeting with Miao has become the first and probably most important stop on his current China tour, his second in just 10 months. Following this meeting, look for Apple to work more closely with the regulator to assure a more timely introduction of its products to China in the future, with the result that China could possibly be included in the global launch for the next big iPad or iPhone either this year or next.
Bottom line: Apple CEO Tim Cook’s visit with China’s telecoms minister is aimed at creating a better working relationship so that China can be included in future global iPhone and iPad launches.
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