Are Apple and China incompatible?

“The Beijing Olympics begin in two weeks. But for Apple, the China games have already begun. The company opened a shiny new Apple store in Beijing Saturday — the ‘first of many’ in China, according to an Apple official. The race is on,” Mike Elgan writes for Datamation. “But is this an event Apple can win?”

“China is a coveted market. But so far, things aren’t going well. Apple has less than 8 percent market share in China for media players, and far less than 1 percent of either PC or cell phone market share,” Elgan writes. “Although Apple has successfully launched the iPhone in more than 70 countries, China isn’t one of them. The company has not yet been able to reach a deal with any Chinese carrier.”

“Apple’s second biggest hit in China, the iPhone, isn’t authorized. One Chinese analyst estimates that some 1 million Apple iPhones are currently operating on just one Chinese carrier — China Mobile — with a smaller number on other carriers. Most Apple ‘Authorized Resellers’ in China sell black-market iPhones, and many even offer illegal cracking services — a process that reportedly takes less time than activating an iPhone 3G in California,” Elgan writes.

“Apple’s struggle to sell iPhones legitimately in China is part of a larger problem: China is simply incompatible with Apple,” Elgan writes. “Here’s why.”

• Apple is a mass-market luxury brand
• China has an authoritarian government
• There is no Chinese iTunes Store
• China is number one in intellectual property theft

Elgan writes, “Yes, Apple must and will do business in China. But the company’s pristine new Apple store masks the very messy reality of a company like Apple trying to do business in a country like China.”

More in the full article, with discussion of the four bullet points listed above – recommended – here.

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

“The last I heard, there are 3.3 million people who own a car in Beijing. If you can afford a car, I think you can afford an iPod or a Mac.” – – Ron Johnson, Apple’s senior vice-president for retail, July 23, 2008

38 Comments

  1. ‘Elgan writes. “Here’s why.”

    • Apple is a mass-market luxury brand
    • China has an authoritarian government
    • There is no Chinese iTunes Store
    • China is number one in intellectual property theft ‘

    Here’s my replies:
    1) China’s rising upper and middle classes love foreign luxury
    brands as in Italian clothes, Japanese electronics, Buicks,
    Mercedes, BMWs and so on. Apple products fit this market.
    2) China has an authoritarian government hell-bent for
    contradiction: they are communists backing the hell outta
    capitalism.
    3) OK. Just create one.
    4) Every global brand has to deal with this one. There is nothing
    special about Apple with this issue.

  2. I saw Andrea Jung on Charlie Rose a few months ago. She’s a very sharp, very remarkable woman.

    And easy on the eyes, too!

    Apple will ultimately succeed in China. Just give them time.

    Peace.
    Olmecmystic ” width=”19″ height=”19″ alt=”cool smile” style=”border:0;” />

  3. If Mercedes Benz or Louis Vuitton products are sold in China and successful there, so we’ll be Apple products.
    It’s just a matter of Apple starting to take overseas markets seriously. For now it really has been US centric

  4. The author is proving himself wrong: “they will never sell in China”. Plus, “there are already 1 million of them there”, despite the fact that they are not even for sale there yet.

    Mike Elgan is not logical.

  5. “• China has an authoritarian government”

    Gee, ya think that might be one reason it’s taking Apple a little more time to get things rolling in China? These asswipes act like Apple should be able to just walk into a country and tell them how it’s gonna be.

    Elgan’s just another moron.

  6. Wow, Elgan is a moron. Last year, BusinessWeek did a story on how China is already the 3rd largest luxury goods market in the world.

    I have a home in Shanghai, and believe me, the large cities like Shanghai and Beijing amongst others have a booming upwardly mobile upper middle class, who can afford iPhones.

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