Global Business

Apple Shows China the Respect It Deserves


An Apple store in Hong Kong on July 16

Photograph by David Paul Morris/Bloomberg

An Apple store in Hong Kong on July 16

If it wasn’t already clear that Apple’s (AAPL) priorities lie in the East, the company is beating the point home when it introduces its newest products next week. As always, Apple will trot out executives in a California auditorium to show off its latest mobile devices. New for this year, the company also sent invitations to the Chinese press for a separate event, to take place the next day in Beijing. The invitations look almost identical to the U.S. ones and are reportedly for a re-stream of the event in Cupertino, sparing Chinese reporters a late night. Similar events are scheduled for Berlin and Tokyo, according to AllThingsD. Apple did not respond to a request for comment.

It’s hardly a surprise that Apple is making a gesture to the Chinese. The country is the future of the smartphone market. Sales are expected to grow 50 percent to 60 percent this year and to continue at 20 percent compounded annual growth through 2016, according to Mark Li, a senior research analyst at Sanford C. Bernstein in Hong Kong. Chief Executive Officer Tim Cook has said that China will eventually become Apple’s largest market. (It’s No. 2 right now.)

At the same time, Chinese phone makers have become quite deft at serving this market themselves. Local brands now account for more than 70 percent of Chinese sales, up from 28 percent two years ago. Apple stumbled last year and needs to make sure it doesn’t fall too far behind.

Cook recently traveled to China, paying a visit to top executives at China Mobile (CHL), the world’s largest wireless carrier. Apple has been trying to establish a partnership with the company for years, without success. But increased competition from other carriers has China Mobile more receptive to a potential alliance. Such a deal would be huge for Apple.

Apple is also expected to release a cheaper version of the iPhone, largely to capture a greater portion of the Chinese market. This will likewise help in other developing economies, which are poised to account for most of the growth in the global smartphone market in the coming years. An unsubsidized iPhone 5 now costs $650, one and a half times what the average Chinese person makes in a month.

The company’s plan has to reach beyond carrier deals and cheaper handsets, though. Earlier this year a flap over Apple’s return policies provoked public anger in China and led to a campaign by the state-run media to shame the company. At one point the People’s Daily ran an article that made a call to “Destroy Apple’s Incomparable Arrogance.” Cook eventually issued a direct apology and promised to improve customer service. The contrition played well.

By planning an event in Beijing, Apple is doing more than explaining its latest products directly to the Chinese press. It’s letting the Chinese people know they’re important, too.

Brustein is a writer for Businessweek.com in New York.

Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • AAPL
    (Apple Inc)
    • $101.86 USD
    • 0.07
    • 0.07%
  • CHL
    (China Mobile Ltd)
    • $61.76 USD
    • 0.17
    • 0.28%
Market data is delayed at least 15 minutes.

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus