I'm an American who happens to be in Beijing at this moment, and I just had lunch with a group of Chinese. One, decidedly middle class, pulled out her iPhone during the meal. It had cost her about 6,000 RMB =~ $915. (White 3GS, by the way.) And I've seen a fair number of iPhone 4's on the street, although I can't speak to the relative wealth of those folks. But I think it's accurate to say that Apple is gaining mind share and cachet at a steady clip here. My MacBook Air (on which I'm typing right now) gets attention.
I don't know how many stores is the optimum number. Earlier this week I was in Chengdu, a "second-tier" city with a population greater than New York's, and many middle-class high-tech workers (and probably even more low-paid factory workers.) I would guess that it could support an Apple Store, if not now then in a year. In any case, China is an enormous opportunity for Apple.
I'm also a stockholder, so I hope I'm right.
I hope you are right too. But actually Apple will make a ton of money in China even if they only sell to an extremely small portion of the population.
My point is that most Foreigners visit Beijing, Hong Kong, and Shanghai and then extrapolate their experience not only to the whole of those cities, but to the whole of China. It's a common error of the application of personal experience over hard facts and its hard to avoid. If someone is likely to spend a large portion of their annual income on an iPhone and phone service, you are likely to meet them.
For example, foreigners in Beijing are automatically self selected to meet atypical Chinese without even knowing it.
Location: Beijing or Shanghai are extraordinary concentrations of elite and highly educated Chinese, unlike the rest of China.
Being foreign: this attracts a very different set of people to you than if you were not a foreigner.
English: even if you speak Chinese, by virtue of speaking English a whole other group of people join your orbit.
Having a MacBook Air, etc.etc.
As someone who has lived in China for a couple of years and visited on and off over the last twenty-five years, I can attest to the fact that it is impossible to avoid getting a skewed view of things.
It gives me the impression that you may be more clueless than Gene Munster, about China and Chinese, or Asia and Asians in general -- not an uncommon failing among many Americans and Westerners (even the most educated and even journalists). I am appalled sometimes by the pontifications of arm chair experts who are actually making decisions about our foreign policy here in the United States.
If you really want to know the potential market in China and many Asian countries, you may want to study the demographic and economic data included in the
beyond population. It is not by accident that students in Beijing has average test scores among students (worldwide) even better than the United States and even many Western countries. If you go to many universities and research institutions in the US (all over), you will find that many of the research and graduate students and even the staff are Chinese and Asians -- that is no accident. This is true in even the most elite schools, like MIT, Harvard, and especially in the West Coast. Even those who graduated in China and other Asian countries, they are very much sought after in biomedical and technology research. I knew a professor who headed a huge federally funded (National Institutes of Health) multi-million dollar biomedical program who rely on his Chinese post docs, not his American or European staff or postdocs to spearhead the most complicated surgical operations in animal research. They graduated in China, not in the US with passable English skills. And, yet even if they are younger, the other postdocs rely on their expertise too. And that is true also in the private sector here in the US.
It is not an accident that many multinationas chose China as their manufacturing base for the most precised and advanced technologies, including the iPhone. True, that the cost of labor in China is much cheaper than in the US, but that is only part of the reason. Add to these the tech savvy business entrepreneurs backed by a vast base of equally competent science and technology manpower pool.
Worldwide, China has replaced the US, Japan and many advanced European countries in long term investment and gobbling raw materials sources for their inceasing industrialization. I would not be surprised if China would ultimately eclipse the US, as the industrial power by 2050.
So, how many of these tech-savvy and highly educated Chinese in China? More than you might think. There is also an impression that only the middle class and super rich could afford luxury products. Quality and status symbol motivate the purchasing habits even among the less well-off.
And finally, unlike the US and many European countries. China and many Asian countries have not been victims to the financial crisis. This is one reason why China and many Asian countries also are increasing sources of sales for Apple.
CGC
Maybe I am more clueless than Munster, but let me just say:
I lived there for several years (my first time in China was probably before you were born.) I did some post baccalaureate studies in China.
As far as Chinese students etc., it's not terribly surprising. The best, hardest working students in China get to go to University, go abroad, etc. It's their way ahead. For Americans, getting an advanced degrees in the US is expensive, time consuming, and entails huge opportunity costs (notice that Chinese go to the US for these opportunities, and BTW, they often stay here.)
Those manufacturing technologies your refer to are transplanted from the countries where they were created (not China.) Cheap labor, established infrastructure, the conveniences of a command economy, etc. are the major factors that make China attractive for manufacturing. The command economy is also the reason China is efficient at gobbling up resources, which is a simplistic, reactionary, and old-fashioned response to the problem. Western countries under pressure from such activities are instead innovating to reduce the need for those resources which is far more sustainable and economical.
As far as financial crisis. Just wait. There is an extraordinary and unsustainable real estate bubble in China and it will burst. Only the Party's ability to command the economy has avoided it thus far.
Comments
I'm an American who happens to be in Beijing at this moment, and I just had lunch with a group of Chinese. One, decidedly middle class, pulled out her iPhone during the meal. It had cost her about 6,000 RMB =~ $915. (White 3GS, by the way.) And I've seen a fair number of iPhone 4's on the street, although I can't speak to the relative wealth of those folks. But I think it's accurate to say that Apple is gaining mind share and cachet at a steady clip here. My MacBook Air (on which I'm typing right now) gets attention.
I don't know how many stores is the optimum number. Earlier this week I was in Chengdu, a "second-tier" city with a population greater than New York's, and many middle-class high-tech workers (and probably even more low-paid factory workers.) I would guess that it could support an Apple Store, if not now then in a year. In any case, China is an enormous opportunity for Apple.
I'm also a stockholder, so I hope I'm right.
I hope you are right too. But actually Apple will make a ton of money in China even if they only sell to an extremely small portion of the population.
My point is that most Foreigners visit Beijing, Hong Kong, and Shanghai and then extrapolate their experience not only to the whole of those cities, but to the whole of China. It's a common error of the application of personal experience over hard facts and its hard to avoid. If someone is likely to spend a large portion of their annual income on an iPhone and phone service, you are likely to meet them.
For example, foreigners in Beijing are automatically self selected to meet atypical Chinese without even knowing it.
Location: Beijing or Shanghai are extraordinary concentrations of elite and highly educated Chinese, unlike the rest of China.
Being foreign: this attracts a very different set of people to you than if you were not a foreigner.
English: even if you speak Chinese, by virtue of speaking English a whole other group of people join your orbit.
Having a MacBook Air, etc.etc.
As someone who has lived in China for a couple of years and visited on and off over the last twenty-five years, I can attest to the fact that it is impossible to avoid getting a skewed view of things.
It gives me the impression that you may be more clueless than Gene Munster, about China and Chinese, or Asia and Asians in general -- not an uncommon failing among many Americans and Westerners (even the most educated and even journalists). I am appalled sometimes by the pontifications of arm chair experts who are actually making decisions about our foreign policy here in the United States.
If you really want to know the potential market in China and many Asian countries, you may want to study the demographic and economic data included in the
International Datab Base (IDB) of US Census
http://www.census.gov/ipc/www/idb/rank.php
beyond population. It is not by accident that students in Beijing has average test scores among students (worldwide) even better than the United States and even many Western countries. If you go to many universities and research institutions in the US (all over), you will find that many of the research and graduate students and even the staff are Chinese and Asians -- that is no accident. This is true in even the most elite schools, like MIT, Harvard, and especially in the West Coast. Even those who graduated in China and other Asian countries, they are very much sought after in biomedical and technology research. I knew a professor who headed a huge federally funded (National Institutes of Health) multi-million dollar biomedical program who rely on his Chinese post docs, not his American or European staff or postdocs to spearhead the most complicated surgical operations in animal research. They graduated in China, not in the US with passable English skills. And, yet even if they are younger, the other postdocs rely on their expertise too. And that is true also in the private sector here in the US.
It is not an accident that many multinationas chose China as their manufacturing base for the most precised and advanced technologies, including the iPhone. True, that the cost of labor in China is much cheaper than in the US, but that is only part of the reason. Add to these the tech savvy business entrepreneurs backed by a vast base of equally competent science and technology manpower pool.
Worldwide, China has replaced the US, Japan and many advanced European countries in long term investment and gobbling raw materials sources for their inceasing industrialization. I would not be surprised if China would ultimately eclipse the US, as the industrial power by 2050.
So, how many of these tech-savvy and highly educated Chinese in China? More than you might think. There is also an impression that only the middle class and super rich could afford luxury products. Quality and status symbol motivate the purchasing habits even among the less well-off.
And finally, unlike the US and many European countries. China and many Asian countries have not been victims to the financial crisis. This is one reason why China and many Asian countries also are increasing sources of sales for Apple.
CGC
Maybe I am more clueless than Munster, but let me just say:
I lived there for several years (my first time in China was probably before you were born.) I did some post baccalaureate studies in China.
As far as Chinese students etc., it's not terribly surprising. The best, hardest working students in China get to go to University, go abroad, etc. It's their way ahead. For Americans, getting an advanced degrees in the US is expensive, time consuming, and entails huge opportunity costs (notice that Chinese go to the US for these opportunities, and BTW, they often stay here.)
Those manufacturing technologies your refer to are transplanted from the countries where they were created (not China.) Cheap labor, established infrastructure, the conveniences of a command economy, etc. are the major factors that make China attractive for manufacturing. The command economy is also the reason China is efficient at gobbling up resources, which is a simplistic, reactionary, and old-fashioned response to the problem. Western countries under pressure from such activities are instead innovating to reduce the need for those resources which is far more sustainable and economical.
As far as financial crisis. Just wait. There is an extraordinary and unsustainable real estate bubble in China and it will burst. Only the Party's ability to command the economy has avoided it thus far.