Apple Still Faces Hurdles Even With China Mobile Deal In Place

Apple Inc. (NASDAQ:AAPL) is still waiting for their agreement with China Mobile Ltd. (NYSE:CHL) (HKG:0941) to prove fruitful. Unfortunately, their initial reception was less than impressive thanks to low turnout during the launch.

Apple’s recent China Mobile deal

Apple Inc. (NASDAQ:AAPL) product launches usually garner long lines that span around the block, but Friday’s launch only yielded a dozen customers who lined up at the Beijing store opening. What made this even more surprising is the special guest appearance of Tim Cook, Apple’s chief executive officer.

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It was five years ago when China Unicom (Hong Kong) Limited (NYSE:CHU) introduced the iPhone in China’s market. Soon after, China Telecom started carrying the iPhone but it wasn’t enough. Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and its lower-priced phone are better sellers in that market.

The New York Times added, “Apple’s challenges mirror those of some other Western brands in China, which gained a loyal following as the country’s economy boomed. From Gillette razors to Chateau Lafite-Rothschild wine, imports were generally seen as superior to the domestic alternatives. More recently, foreign brands have been subjected to intense scrutiny by the Chinese news media, especially the state-run CCTV, prompting consumers to reconsider domestic alternatives. In one of the most recent examples, Wal-Mart Stores, Inc. (NYSE:WMT) this month recalled donkey meat that it was selling at several outlets in China after it was found to have been tainted with fox meat.”

The uncertainty of Apple’s future

What is most interesting is that Apple Inc. (NASDAQ:AAPL) used to be considered an important brand, especially with middle class Chinese consumers. One United States company, Microsoft Corporation (NASDAQ:MSFT), hasn’t seen a decline in China’s market as it’s still the leading provider of personal computers.

The main problem Apple Inc. (NASDAQ:AAPL) could have with China Mobile Ltd. (NYSE:CHL) (HKG:0941) is a possible subsidy war with other carriers. RedTech Advisors’ Michael Clendinen predicts such thing will happen. It’s also estimated sales for China Mobile’s iPhone will reach 12 million during the fiscal year of 2014.