According to Yahoo Finance, what is unusual about Apple? When the company became the first company in the history of the United States to break through the trillion-dollar market last week, people tried to answer this question.
The answer may be Apple’s innovative technology and high-quality products, or it may be a smart business model for building an ecosystem. However, it is probably China that allows Apple to open the gap with several other rivals in the $1 trillion market capitalization competition.
China is not only the place where Apple’s iPhone is produced; the world’s largest smart phone market contributes about one-fifth of Apple’s total revenue. Other US tech giants have either failed to build business (Facebook and Google) in China, or have been marginalized (Amazon), and Apple has successfully built a strong presence in China. The third-quarter earnings report released last Wednesday showed that Apple Greater China’s revenue increased by 19% year-on-year, achieving double-digit growth for the fourth consecutive quarter.
According to data from market research firm Counterpoint Research, in the first quarter of 2018, the iPhone’s share of the Chinese smart phone market was 13%. Although it faces strong challenges from local companies such as Huawei (the most recent quarter of which sold more than Apple), the market is the fastest growing consumer market in the world, with a large middle class, and Apple’s performance is still very good. Big boost. Let’s talk about how Apple has become a household name in China.
iPhone as a symbol of identity
Since 2008, Apple has been adopting a multi-channel strategy to work with local telecom operators to bring their mobile phones into China’s mainstream market. Some retailers put their mobile phones in locked glass counters, while Apple puts the mobile phones on the counters so that consumers can play them at will. Apple currently has more than 40 stores in China and will open more stores in inland cities in the future.
The iPhone is a high-end product in the United States, especially in China. In China, most people can’t afford the iPhone X for $1,000. The iPhone’s high-end and relatively high-priced image has made consumers more yearning for it. Using the latest iPhone will also make consumers feel more face-saving.
When Apple introduced the iPhone 6 and iPhone 6 Plus in 2015, the craze reached its peak. Chinese consumers are scrambling to buy a larger iPhone model, even though China was not among the first countries and regions of the new iPhone. The black market came into being: getting iPhone stocks from overseas markets and selling them to Chinese people. In the quarter, Apple’s revenue in the Chinese market doubled to $12.5 billion.
Shaun Rein, founder of China Market Research Group, a high-end brand consultancy, said, “Chinese consumers are fascinated by buying high-end brands that can demonstrate social status.” He helped the iPhone rise to become a “buy” Luxury goods.”
For foreign companies in China, dealing with the local government may be a severe test. Internet companies in the United States often face regulatory pressures in the country.
Apple CEO Tim Cook maintains close ties with the Chinese government. He actively participated in the conference held in the country, and he often took the stage to deliver a speech. Apple will remove the offending app from the Chinese app store. Earlier this year, Apple transferred the iCloud account of Chinese users to Guizhou on the cloud.
For Apple, doing this work in China is especially important. “Even if Apple does not sell products to Chinese consumers, they have to purchase products from China. If there is mistake, their entire business may be destroyed.” Ryan told Yahoo Finance.
Other Silicon Valley giants are also closely watching Apple’s success in China.
“In terms of regulation and lobbying, Apple is an example that Google wants to emulate.” Rehn said.
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