Apple Inc. (NASDAQ:AAPL) has been focusing on China over the last year, and for several reasons. But does it really need China to turn things around? The recent attacks on Apple Inc. (NASDAQ:AAPL) by the Chinese state-run media could certainly be a problem for the tech giant has it tries to recover the hundreds of dollars its stock price has shed since September. More than one analyst has said that Apple needs a low-cost iPhone for the Chinese market, and there’s no denying that gaining a solid foothold in the nation would be extremely beneficial for any company.
After all, there are more than 1.3 billion people in China. It’s the most populous nation in the world, so companies that can make their products a trend there have a sort of one-stop-shop when it comes to market share. Why target multiple countries with multiple ad campaigns when you can target just one country and reach 1.3 billion pairs of eyes?
It’s clear that Apple’s attempts to garner attention from the Chinese market are working. The tech giant’s history in the nation stretches all the way back to July 2008 when the first Apple store opened in China. The country now makes up about 15 percent of Apple Inc. (NASDAQ:AAPL)’s overall revenue.
Unfortunately, however, the company is doing so well in China that it’s captured the attention of the Chinese state-run media, and not in a good way. Other companies that have been targeted in similar campaigns by Chinese media include Volkswagen AG (PINK:VLKAY) (ETR:VOW3) (FRA:VOW3) and Yum! Brands, Inc. (NYSE:YUM).
So clearly, the state-run media in China isn’t a fan of any foreign company that gains the adoration of the Chinese, and there are plenty of headlines showing just how much Apple Inc. (NASDAQ:AAPL) products are loved there. The company had a large chunk of the Chinese tablet market back in November, and research by Goldman Sachs Group, Inc. (NYSE:GS) found earlier this year that Chinese metro areas simply love Apple products.
What’s important to note in China’s war on Apple is that Apple competes directly with major Chinese companies—most notably, ZTE Corp. (HKG:763) (SHE:000063) Huawei Technology Co Ltd (SHE:002502). The U.S. has accused the two Chinese companies of being too close to the Chinese government—so close, in fact, that it accuses the companies of being a security threat.
In the pending deal between Sprint Nextel Corporation (NYSE:S) and Softbank Corp. (TYO:9984) (PINK:SFTBF), the two companies were told by U.S. regulators that they had to agree not to use equipment made by the Chinese companies. Therefore, we have to wonder if the attack on Apple isn’t the Chinese government’s way of hitting the U.S. back for banning Chinese-made tech products.
This battle also brings to mind one between Google Inc (NASDAQ:GOOG) and the Chinese state-run media in 2010. The search giant was forced out of the country so that Chinese search giant Baidu.com, Inc. (ADR) (NASDAQ:BIDU) could be “king of the search” in China. However, Google Inc (NASDAQ:GOOG) clearly didn’t need China, so does Apple Inc. (NASDAQ:AAPL) need it?
Arguments could certainly be made either way. But the bottom line is that if Apple has what it takes to make it in an increasingly competitive technology market, then it will make it. It’s never good for any company to put all of its attention on a single market, so maybe this is an early warning for the company not to put too much attention on just a single market. Apple Inc. (NASDAQ:AAPL) is already expanding its presence in other developing markets, more notably in India. So China may not be the only market where Apple Inc. (NASDAQ:AAPL) could gain a strong foothold in the emerging smartphone market.
At any rate, it isn’t too late for Apple Inc. (NASDAQ:AAPL) to turn things around. And there’s always the chance that the media attacks on the company will just increase its presence in China. Some would say that any media attention is good, and a recent poll conducted by an online Chinese finance magazine actually found that state-run companies are among the most hated by the Chinese. That poll was aimed at getting people to say that Apple was hated, but it backfired.
So we’ll just have to wait and see how Apple Inc. (NASDAQ:AAPL) fares in light of the media attacks, but at least the company is focusing its efforts in other developing markets as well.
