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Chinese mobile phone market set to overtake US as Apple preps China retail push

post #1 of 9
Thread Starter 
Chinese consumers will spend more than $87 billion on mobile phones in 2014, a Wednesday report predicts, pushing revenues in the Asian giant's mobile market well past those in the U.S. in advance of Apple's planned Chinese retail expansion.

China Mobile


In contrast, mobile phone revenues in the U.S. are forecast to reach just $60 billion this year, predictive analysis firm Strategy Analytics said. That would represent a 15 percent year-over-year increase in China against flat growth in the U.S.

"China's impressive mobile growth is being driven by the country's rapid shift to 3G and 4G smartphones," said Strategy Analytics senior analyst Woody Oh.

Apple has played an important part in that shift, with the iPhone responsible for about half of the 2.8 million 4G subscribers on China Mobile, the world's largest wireless carrier. Meanwhile, on smaller competitor China Telecom, the iPhone has helped boost 3G revenues by nearly 30 percent.
China will surpass the U.S. in overall revenue, but America continues to lead in mobile phone profits.
"The United States is maturing and has now lost its crown to China as the world's largest mobile phone market by revenue," added Strategy Analytics executive director Neil Mawston. "However, it is important to remember the US remains by far the mobile industry's most valuable country by profit."

The U.S. maintains that position thanks in large part to a preference for more advanced handsets that command higher average selling prices and larger subsidies from wireless carriers.

Apple booked a 21 percent revenue increase in China during the first two quarters of 2014, making the country Apple's fastest-growing market. Apple CEO Tim Cook has committed to serve that growing clientele with a massive retail expansion led by new retail stores chief Angela Ahrendts, who oversaw a similar expansion for British fashion label Burberry.

"We plan to triple the number of Apple Retail Stores [in China] over the next two years. We're continuing to expand in online. We're continuing to build out channels," Cook said during the company's last earnings call. "We're up to 40,000 points of sales now in iPhone, but we're not nearly where we need to be on the rest of our product line and even the 40,000 is a low number in considering the broad landmass and the number of folks in China. And so, I feel like there's still loads of opportunity there, and feel really, really good about how we're doing."
post #2 of 9
but but but USA is the only country that matters. Not third world countries like China.
post #3 of 9
This is obviously bad news for Apple. Everyone knows China is full of poor people and they can't afford a new iPhone. I predict growth for those white box phones and Android. Apple will fall to -10% market share. Why minus? Because rich folks will buy overseas and return them in China. Duh. /s
post #4 of 9

One thing I would be curious to know as time goes by is how app purchase and related types of expenditures compare between the two (US and China).  Could be interesting.

post #5 of 9
Quote:
Originally Posted by AaronJ View Post

One thing I would be curious to know as time goes by is how app purchase and related types of expenditures compare between the two (US and China).  Could be interesting.

Spend a little time with AppAnnie. They have a wealth of data including comparables by country.
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post #6 of 9
Quote:
Originally Posted by Gatorguy View Post
 
Quote:
Originally Posted by AaronJ View Post

One thing I would be curious to know as time goes by is how app purchase and related types of expenditures compare between the two (US and China).  Could be interesting.

Spend a little time with AppAnnie. They have a wealth of data including comparables by country.


It would be somewhat unwise for you americans to exercise your usual arrogance with regard to the chinese market. There is going to be some hot competition for Apple from "native" Chinese manufacturers who will meet Apple on technology and manufacturing quality, and beat Apple on chinese language Apps and Voice-based functionality. As far as the Online market goes, Local Chinese will be very hard to beat by "foreign" APP and service providers. Its going to be an interesting battle, but not a done deal for Apple by any means. Much will be fought on price, but also Chinese national pride will play a big role. How often have we seen American national pride as an "argument" for Buying American. .. it is silly to pretend that the coin doesn't flip the same way in China.

 

Does anybody know what the tax situation is in China for foreign companies ? Are there tax-haven benefits that Apple may be able to reap, or is it more of a disadvantage to be foreign tax-wise in china ?.  What would also interest me is what security and privacy laws have to be taken into account. Anyone know about that area ??

post #7 of 9
Quote:
Originally Posted by Taniwha View Post
 


It would be somewhat unwise for you americans to exercise your usual arrogance with regard to the chinese market. There is going to be some hot competition for Apple from "native" Chinese manufacturers who will meet Apple on technology and manufacturing quality, and beat Apple on chinese language Apps and Voice-based functionality. As far as the Online market goes, Local Chinese will be very hard to beat by "foreign" APP and service providers. Its going to be an interesting battle, but not a done deal for Apple by any means. Much will be fought on price, but also Chinese national pride will play a big role. How often have we seen American national pride as an "argument" for Buying American. .. it is silly to pretend that the coin doesn't flip the same way in China.

 

Does anybody know what the tax situation is in China for foreign companies ? Are there tax-haven benefits that Apple may be able to reap, or is it more of a disadvantage to be foreign tax-wise in china ?.  What would also interest me is what security and privacy laws have to be taken into account. Anyone know about that area ??

 

Actually you have been hearing the "Buy American!" argument for at least 40 years.  But it's 99% rhetoric.  Those same people who make a big deal out of "Buying American!" actually don't.  For example, there is not one native USA maker of TVs that I'm aware of.  But I'm pretty sure almost all Americans have a TV.  Toyota is one of the best-selling auto manufacturers in the USA.

 

Believe me, "Buy USA!" is 99% bluster, 1% actual reality.

post #8 of 9
Apple only has about ten stores in China now, whereas Burberry already has 70. Therefore Angela Ahrendts is in a good position to lead the charge to the tripling in the number of stores Tim Cook has outlined.

Apple is obviously a very aspirational brand in China, so even though not everyone can afford an iPhone who might desire one, there are still plenty of people who will make the necessary sacrifice to keep the desire to own the best a priority. After all, what consumer product is more personal and important?

Remember too, there are two types of Android: Google-Android and NonGoogle-Android. Only "NonGoogle" Android is allowed in China.
post #9 of 9
Quote:
Originally Posted by Jared Porter View Post

Apple only has about ten stores in China now, whereas Burberry already has 70. Therefore Angela Ahrendts is in a good position to lead the charge to the tripling in the number of stores Tim Cook has outlined.

Apple is obviously a very aspirational brand in China, so even though not everyone can afford an iPhone who might desire one, there are still plenty of people who will make the necessary sacrifice to keep the desire to own the best a priority. After all, what consumer product is more personal and important?

Remember too, there are two types of Android: Google-Android and NonGoogle-Android. Only "NonGoogle" Android is allowed in China.

Actually I won't cry for Google. I like (some of) their stuff, but the're dangerous as hell in regard to privacy and human rights. I personally have no problems at all with anything that competes with google outside of silly court-wars. I love to see real competition, consumer choice and innovation that is worthy of the description.  

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