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Apple CEO Cook Returns to China Amid Falling Market Share

Jan. 9 (Bloomberg) -- On today's "This vs. That," Bloomberg's Betty Liu looks at what a possible $99 version of Apple's iPhone could mean in the smart phone wars as Samsung held a comfortable lead in third quarter sales. She speaks on Bloomberg Television's "In The Loop."

Apple Inc. (AAPL) Chief Executive Officer Tim Cook made his second visit to China in less than 10 months, as the company tries to revive its shrinking share of the world’s biggest mobile-phone market by subscribers.

Cook is meeting government officials and partners, Carolyn Wu, a Beijing-based Apple spokeswoman, said by phone today, without elaboration. The officials included Miao Wei, the head of the Ministry of Industry and Information Technology, according to a government statement.

Apple has almost doubled its number of outlets in China and Hong Kong since Cook’s last visit as it tries to win consumers from Samsung Electronics Co. and local phone makers. The company has slipped to sixth from fourth in market share, according to researcher IDC, and it has yet to offer iPhones via China Mobile Ltd. (941), the nation’s biggest carrier.

“They have been too slow to open points of sale,” Shaun Rein, managing director of China Market Research Group in Shanghai, said in an interview today. “We’ve also seen the introduction of tons of cheaper smartphones on Android.”

The company now has 11 stores in China and Hong Kong, compared with six when Cook was last in the country. The Asian nation is still the Cupertino, California-based company’s second-largest market after the U.S., with $5.7 billion in sales in the quarter ended September.

China Mobile

Apple has yet to design a device that can use China Mobile’s third-generation network, a homegrown system that isn’t used by other carriers. The two companies also need to agree on the business model and benefit sharing before a product can be introduced, China Mobile Chief Executive Officer Li Yue told a conference in Guangzhou last month.

Apple’s Wu declined to comment on whether Cook was meeting China Mobile officials during his trip. Li Jun, a Beijing-based spokesman for the carrier’s state-owned parent company, said he didn’t have any information on the subject.

Cook discussed China’s information technology industry, global mobile communications and Apple’s business in China with ministry head Miao, according to the government statement.

The company, which opened its first Chinese store in 2008, gained 0.3 percent to close at $525.31 in New York trading yesterday.

The phone maker may agree a deal with China Mobile when the carrier moves to a fourth-generation wireless network based on Long Term Evolution technology in the second half of the year, Neil Juggins, a Hong Kong-based analyst at JI Asia Research Ltd., said by e-mail today.

“I think there is a good chance of an agreement,” he said. “I would put the chances at better than 50 percent.”

Samsung Sales

Apple had less than 10 percent of China’s mobile-phone market in the third quarter, according to IDC. Samsung led sales, followed by four local brands -- Lenovo Group Ltd. (992), China Wireless Technologies Ltd.’s Coolpad unit, ZTE Corp (763) and Huawei Technologies Co.

Apple’s share was projected to rebound with the release of the iPhone 5 in the market last month, IDC said at the time. More than 2 million iPhone 5s were sold during the device’s weekend debut, Apple said Dec. 17. The iPhone is offered through the nation’s second- and third-largest carriers: China Unicom (Hong Kong) Ltd. (762) and China Telecom Corp. (728)

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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