Apple CEO, Tim Cook is looking forward to China, the world’s most populous country, to become the topmost market for the company. The other tech juggernauts are nowhere near Apple Inc. (NASDAQ:AAPL) in China, not because they did not focus on this particular market, but due to their entirely different business.
The water tight security of Chinese government on the flow of communication applies mainly to the internet affecting tech giants like Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB). The social media are blocked in China because as per the Government; these platforms could be potential hotspots for publicizing politically or socially inappropriate content. So it is the Chinese government which is affecting the business of Social networking sites like Twitter and Facebook in China.
On the other hand, Apple Inc. (NASDAQ:AAPL) is into Hardware business and sells the same, so it does not come in the purview of Chinese Government censorship. Consumers in China love electronic gadgets. Apple’s iPhone has become the hot favorite due to its attractive features, and it is highly perceived as a status symbol. Same was the case with iPad when it was launched.
Chinese consumers love electronic gadgets. Mobile phones are ubiquitous. Apple is doing incredibly well because its products are much more attractive and pricy. The iPhone quickly become a status symbol in Chinese social circles since its debut. Likewise, the iPad also joined the must-have list as soon as it was launched. The iPad also became the most favorite gadget of Government officials.
There is a strong social pressure to have an Apple product because the trend is set by the wealthy in China. If a middle class consumer cannot afford an expensive car or watch, he still can maintain his status symbol by possessing an iPhone.
China is set to become an important market for Apple in the future. China Mobile, which is the largest network service provider in China, with an user base of 700 million subscribers, is the only telecommunication company in the country without the support of Apple’s iPhone. The reason why many high end Chinese subscribers preferred to stay with the 2G network of China Mobile Ltd. (NYSE:CHL) was that its 3G network did not support the Apple iPhone.
Apple Inc. (NASDAQ:AAPL) dominates in China, primarily due to hardware. Its iTunes has had a negligible contribution in its success story, mainly because consumers are reluctant to pay for intellectual properties when they can get the free content elsewhere on the web.
There is the latest buzz that Apple is planning to launch a cheaper version of iPhone for the Chinese market. If true, the development makes sense as there are still million of Chinese who cannot afford an iPhone, which sells at 5000 Yuan. But this step can backfire in the face of Apple if it looses its premium class image.
What happened to Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) can also happen to Apple. Nokia was the darling of Chinese elites, but the brand became so popular all over China that it lost its appeal to the elites. Nokia tried to bring Vertu in the premium segment, but it didn’t turn out to be successful.
Apple Inc. (NASDAQ:AAPL) will try to capture more market by building more retail stores. The challenge it will face is to maintain its prestige so that consumers wouldn’t not give up their interest and explore for a new elite brand.