“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
wise man say “the more stairs you climb the more light you see”
1. Massive black market iPhone sales at inflated prices bodes well for Apple in China.
2. Capturing even a few percentage points of the market in China will still mean HUGE profits. Apple doesn’t need to blanket the whole country, just have plenty of strategic retail outlets in the upscale markets like Beijing and Shanghai—wherever there is upscale shopping, Apple should have an Apple store. Obviously, they won’t profit by having Apple stores on the Tibetan border. Duh?
3. Apple could also go after the same creative markets it dominates in the West—publishing, photography, film, music, etc. Tidy profits without trying to monopolize the whole country. Just put Apple stores near or in strategic universities, movie industry, technical schools, publishing houses. Offer the same kind of educational discounts they offer in the U.S.
Why not? Shipping to China will cost less….. Oh yeah… Right… It’s all made in Chinas…
In that land where Wat Ju Say is not always Wa Ju Mean, I’d say Wii Doh No Ye.
Not even our attractive chinese flag ship Andrea Jung.
I’m sorry MDN but that quote you wrote in response to Elgan is kinda flimsy. He is right. China is a tough tough market and those bullet point realities he pointed out is very true and valid. Don’t try to cover up this for Apple MDN. It would be much healthier to acknowledge the problems and try to come up with some solutions. Yes, there is a growing middle class but the number of those people just does not compare to the several hundred million people living near the poverty line which make up the majority of China.
In time Apple will learn how to address that market. In time….in a lot of time. And not any time soon.
Ok let’s clear all your prejudice and realign your thinking. Repaet after me now…
1. China MAKES all the iphones,ipods and Mac Pro and MacBook Air and everything else Apple sells.
2. A car in China costs double what it cost in States.
3. In Shanghai and BJ, the number of Mercedes and Porsche Cayanne will make your head spins, Not to mention all the X5, BMW and Audi. It’s not a coincident that Mercedes is introducing their new car in China.
4. People without enough money to buy cars and apt will buy expensive phones. It’s not uncommon for taxi drivers here to own US$300-400 phones
5. Lots of people stay at home, not rent, see, mom cooks, so you get to spend your money
6. iPhones have been selling at double the costs in US and yet they sold over 1 million here, what that tells you…?
7. Apple basically has no presence here. They have been in our psyche for over 25 years in the States, how do you compare that?
8. Sometimes we are so US centric that we ignored the situations on the ground. But the truth is Apple had never had any strategy for China. No ad, no promotions, nothing. And that might have been the right decision up to now, because the market is a blackhole for advertising budgets. P&G;had been pumping in millions every year for 20 years in China. Apple had too much to take care of in the US up to now, when they have to consider bigger numbers than the US can deliver. Apple is smart to let the internet buzz to help it open people mind here. Now people are starting to talk about Jobs rather than Gates as the people they admire.
So to anyone who dismisses China offhand. You are looking at Japan in the 1980’s. Except this is bigger, and just as determined. Apple is coming because they can’t continue to ignore China anymore. Are you saying you’re smarter than the bunch at Apple?
If you think the way Elgan does, then you’re either a bad analyst or you won’t have your business running well. Or just plain ignorant about the world market. The four points given are truly the most stupidest things ever one would use as arguments in doing business in China.
Earlier comments have given very nice and more brainy reasons why those 4 points of Elgan are so very wrong.
He’s the typical western people who’d see the news where they keep showing bikes running all over the city in China (that people there still has nothing but bikes).
IP theft? They should thank these thieves because they contribute a lot to the “network effect” of a product adoption. Go back to biz school, Elgan
” width=”19″ height=”19″ alt=”grin” style=”border:0;” />
Talk about irony!
Christopher Columbus and/or Leif Erikson did not discover ‘America’ first. Chris took a Carribean cruise. Leif discovered very cold parts of Canada.
It was the Chinese in the early 1400’s who really discovered ‘America’. Australia and Africa as well.
• Apple is a mass-market luxury brand –
This is key. The majority of the Chinese population have no idea why anyone would buy a “luxury brand” when something else is available cheaper. The very concept of paying more money “for nothing” is alien.
• China has an authoritarian government
This is a stupid argument. Fascist or authoritarian governments are *ideal* environments for business. Companies line up all around the world, daily, to do business with dictators.
• There is no Chinese iTunes Store
• China is number one in intellectual property theft
These two (actually one thing) are the other key issue. If you have a culture with no laws to speak of re: IP issues, and a hundred year history of the average consumer buying stolen, copied merchandise instead of the “real thing,” why would they ever change?
Apples job is to convince the average Chinese consumer that they have a moral obligation to purchase what they have previously been stealing all these years.
Good luck with that!
” width=”19″ height=”19″ alt=”wink” style=”border:0;” />
It was either the Chinese or the Japanese… or a combination of both of them that discovered the west coast… but that’s not “proven”
Besides, where do you think the Natives came from? It’s obvious that they’re Shemetic.
“It’s obvious that they’re Shemetic.”
Do they speak Yiddish?
k-in-Shg:
No. I’m saying that Americans shouldn’t trust their health to Chinese-made crap because the bastards will do anything for a buck.
I would also add that it should be pretty apparent that leaders should govern with the consent of the governed. Leaders who govern because they control the military doesn’t impress me much.
If the U.S. hadn’t have changed its trade policy and allowed billions of U.S. dollars to flow like a pipeline into China, it would still be in the stone ages.
k-in-Shg:
One other thing. Starting in the 50s or 60s as I recall, Japan instituted a quality improvement program. Exported goods needed to have a gold, oval-shaped approval sticker that it conformed to quality standards. Japan wanted to dispel the notion that Japanese goods weren’t cheap little bamboo umbrellas for sticking into your cocktails. Quality goods were something the Japanese were good at making because they tended to be perfectionists and demanded a lot of their manufacturers.
If I were you k-in-Shg:, I wouldn’t be so damned quick to count my chickens before they hatch regarding the rise of China. No doubt, they are a billion-plus strong and are rising up from the stone ages. And they are stealing the West’s technologies as fast as they can infiltrate Chinese “emigrants” to the West. But I wouldn’t expect Japan-like dominance in any industry (like electronics), if the country makes products that are just big fat turds.