BlackBerry Ltd Decides Against China Expansion

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China is regularly a target of expansion for a variety of companies looking to take advantage of the one of the largest economies in the world.  From Apple Inc. (NASDAQ:AAPL) to Yum! Brands, Inc. (NYSE:YUM), US businesses are expanding into China, as the boom in the Chinese economy over the last decade has activated a whole new, invigorated, large consumer market.

According to the World Bank, China has GDP at $9.240 trillion and GDP growth is listed at 7.7%.  With the facts presented, you would like China would be a good choice for international expansion for companies looking for growth.  Not for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB).  John Chen, BlackBerry CEO, says “It takes too long to ramp up to a size that is even reasonable [in China]”, “even if I have that time and money, I’ll probably have better return going into a different set of markets that we are already in”.

BlackBerry plans to focus on its already established operations in India and the southeast region of Asia.  Blackberry has always emphasized security and data protection, even more so these days, and the company is concerned with China’s hacking and censorship stature that goes against corporate beliefs and culture.  BlackBerry management is worried about potential situations that would require the company to provide customer data and activity to the Chinese government, leading BlackBerry to have little say and security against government intrusion.

BlackBerry’s turnaround

BlackBerry was once on the verge of going out of business, after once being a market leader in early mobile market.  However, as the mobile market continued to expand and change, new competitors such as Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) release innovative products in the market.  However, BlackBerry has been able to simplify its business, cut costs, and focus on a more niche market in order to survive and thrive.  Just over a year ago in September 2013, BlackBerry laid off 40% of its workforce to try to lower costs and increase earnings.

One of BlackBerry’s biggest focuses today is on enterprise customers.  The company’s enterprise business just released, on November 12, 2014, its latest server called BES 12, which will allow customers to manage multiple devices and software on one single platform.  This certainly attributes to why BlackBerry is so focused on security and maintaining safe data, enterprise customers are looking for shelter and safety from potential hacks and cyber attacks.

Overall, BlackBerry is still in the hunt to regain profitability and management believes that the best results can be achieved by focusing on countries and regions in which, BlackBerry already has operations in.  BlackBerry has moved out of the consumer market since falling out of favor against competitors and has since focused on enterprise solutions.  The company is still in the midst of a turnaround, but the stock is up 47% year to date and management seems upbeat on profitability and outlook of next few years.

Disclosure: None

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