Apple to set up second R&D centre in the world's largest smartphone market

US tech giant Apple will open a second research and development centre in China to focus on manufacturing and software development as it looks to increase its foothold in in the world's second largest economy amid tough competition from domestic rivals.

The announcement to set up a second R&D centre was made by Apple CEO Tim Cook during a meeting with top Shenzhen officials on Tuesday at the sidelines of 2016 National Mass Innovation and Entrepreneurship Week, according to sources with the municipal government.

Around 100,000 people are developing software for Apple in Shenzhen currently, Cook, who rated the quality of Shenzhen software developers' products as the best in the world, said. He said that Apple planned to seize the worker advantage to increase investment on research, state-run Xinhua news agency reported.

China is Apple's major overseas market, but iPhones are facing growing challenges posed by Chinese competitors like Huawei, Oppo and Vivo. During his visit to China in August, Cook unveiled Apple's first research centre in Beijing. Shenzhen is China's hi-tech hub, investing a whopping 4.05 percent of its gross domestic product (GDP) into research and development, and hosting a number of top tech firms like Huawei Technologies Co Ltd and ZTE Corp.

Apple had established its first directly invested research and development centre in Beijing last month to develop advanced technologies. It was established with a registered capital of RMB 100 million ($16 million), and the total investment is RMB 300 million ($50 million).

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China is the largest smartphone market in terms of shipments. Apple is currently placed fifth in the market in terms of mobile phones sold, behind local brands Huawei, Vivo, Oppo and Xiaomi, which are now the top four smartphone makers in China, with a combined market share of 53 percent.