The Secret to Apple's Recent Success in China
Apple having a great quarter financially isn't a huge surprise, but when you look at the two previous quarters, one reason for its success is obvious. Apple's revenue from China rose 71 percent to $16.82 billion compared to $21.3 billion in the Americas region. Samsung was making the right moves in China, but Apple seems to have turned that trend upside down and emerged as a leader. In doing so, Apple has challenged some beliefs about succeeding in these markets. So, what's the secret to Apple's success in China recently?
Smartphone shipments to China declined for the first time in six years, but despite this fact, Apple continued to dominate the market. One of the main reasons attributed to Apple's marketshare is their reputation as a luxury brand. With China's economy growing and the salaries and aspirations of the middle class rising, there's an increased desire to own branded products. Apple seized an opportunity and introduced promotional campaigns to make it easier for customers to afford the new phones.
In his book Conquering the Chaos: Win in India, Win Everywhere, Ravi Venkatesan mentions that one of the key reasons for Apple being a non-starter in India is due to extreme standardization. As much as Apple products suffered early on because of their standard design-limited models paradigm, Apple has recently focused on carefully localizing its offerings without diluting its brand image.
Apple signed on with China Mobile, the world's largest mobile carrier, which helped it give access to an estimated 760 million subscribers and helped make its brand mainstream in China. Around 40 percent of these subscribers are either on a 3G or 4G network, and Apple's primary target with the advent of iPhone 6 has been consumers who are on a 4G network and those who are about to be transitioned to a 4G network.
Another element of localization that worked in Apple's favor has been the larger screen size of the iPhone 6 Plus. "Most people don't have TVs in their homes here, and the young Chinese use their mobile phones for everything—to watch movies, talk to friends and play video games," said Rein. "So having that big screen was critically important." The larger screen size also makes it easier to write Chinese characters with a finger or stylus.
Riding on this recent wave of success, Apple has been ramping up its sales and marketing footprint in China, opening five new stores ahead of the Chinese New Year, with a target of having forty stores in the country within the next two years. Given the ultra-competitive business climate and perceptions surrounding government interference, not many western companies can claim to have cracked the China market as well as Apple has managed to. Looking at Apple's plans, it seem to be betting big on its future in China.