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Why Apple’s $1 billion investment in China is a smart move

by Todd Haselton | May 13, 2016May 13, 2016 7:30 am PST

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Apple, which has spent billions on things like research and development, is often very quiet when it comes to acquisitions or investments in outside firms. Thursday, the company said it invested $1 billion in a Chinese version of Uber named Didi Chuxing.

It’s a smart investment.

It’s a lot of money, for sure, but it’s far from a risky move for a company with more than $200 billion in cash. Apple CEO Tim Cook said he made the investment to learn more about China – but perhaps he also made it to appease government regulators there who have seemed afraid of Apple’s power and products. With a new investment in the Chinese economy, Apple now shows it has more than just an interest in selling smartphones and computers.

“We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market,” Cook told Reuters. “Of course, we believe it will deliver a strong return for our invested capital over time as well.”

Ride sharing services like Didi and Uber can lead to big money, especially in markets like China where there are millions of people to shuffle around. It’s also the first time outside of CarPlay that we’ve seen Apple make a move into cars – perhaps there’s some strategy with the Apple Car involved here, too.

Google and Chrysler Fiat teamed up in the U.S., for example, to deliver autonomous minivans that may soon serve as taxis. Apple could be using Didi Chuxing in China in a similar fashion. While the company typically launches products in the U.S. and then expands elsewhere, it may be doing the opposite this time by getting its footing in a massive market first.

Reuters

Todd Haselton

Todd Haselton has been writing professionally since 2006 during his undergraduate days at Lehigh University. He started out as an intern with...

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