Apple’s China Expansion Plan
Does anyone here know, by amount of users which mobile network service provider is largest in the world? If you answer some company in United States or Europe, you are wrong. It is forgivable though for you to think that the likes of AT&T or O2 are some of the largest network providers, they are well publicised and well known through out the world. But the largest mobile network provider come in the form of China Mobile from China. It comes to no surprise then if Apple have been eyeing the network provider for a while. It is especially attractive now that China is experiencing a booming growth in the smartphone industry. Prove? Official statistics say that some 40 percent of smartphones that were sold throughout the world went to China in the first quarter itself. That same report also shows that the growth percentages in China stands at double digits. So as some of the largest smartphone manufacturers Apple should benefit quite a lot from China, as one of the highest sought after brands in the global smartphone market they should have a strong presence in the market especially among the growing middle class market. That is not the case however for Apple.
Apple in China is currently out of the top five largest brands when it comes to the smartphone industry. It is not even competing in the same league with Samsung when it comes to the Chinese market. Mostly this is due to the type of competition that Apple have been facing in that region. Companies like Xiaomi offers affordable smartphones and the affordability often undercuts prices offered by plenty of other manufacturers. This moves by the local companies keep them in contention and boost their position in the country. Furthermore Xiaomi, as a threat is a huge one to Apple in China especially after allegedly ‘copying’ Apple’s product design squarely. Xiaomi offers affordable smartphone with premium features, who does not like that? So even if 15 percent of Apple’s revenues comes from China it will not be easy for them to improve their market position or improve their sales numbers in the market.
Apple’s plan to improving their market position in the market is already in place. Tim Cook, in an interview with Sina.com have stated that Apple will be opening as much as 25 new stores in China over the course of two years. It is important to note also that these 25 stores are additions to the current 15 stores found around China. Opening more stores means an increase also in market awareness of the brand which should help with the brand image and availability as well, a good thing. The issue here though is that in China Apple is facing a different sort of competition and they have to come up with more ways to sell their smartphones. But it also does not mean that Apple will not increase its revenue in China through this expansion. Whatever the result time will tell. We would hate to see this being the case of Starbucks in China.