China Lands On iPhone Global Launch Map
China will reach an important milestone in the week ahead when it becomes included for the first time in the global launch for Apple’s (Nasdaq: AAPL) newest smartphone, the iPhone 5S. The move reflects the growing importance of China to Apple, which now counts the market as its second largest. China’s inclusion in the global launch also reflects an effort by Apple to try and win back local consumers, many of whom have recently abandoned the US tech giant due to long waits to get the latest iPhones and a series of negative media reports.
While Apple should be commended for finally putting China onto its global launch map, it should use this positive development as just a starting point to show its commitment to the market. It could demonstrate that commitment most openly by investing more in China and taking Chinese tastes into consideration for its product designs, rather than simply treating the market as a sales center.
Gadget junkies throughout the world are all eagerly awaiting this coming Tuesday, when Apple is expected to unveil its new iPhone 5S and possibly a new, less expensive model, the 5C, and announce a global launch schedule. For the first time the company has scheduled a parallel event in Beijing on Wednesday, where it’s expected to announce that the new models will launch in China concurrently with other major global markets. (English article)
That will enable local Apple enthusiasts to immediately buy authorized iPhones in China rather than having to purchase them on the gray market or wait several months for their official local launch. Reasons for the previous delays have never been clearly stated, though many believe that China’s bureaucracy and lack of determination by Apple and its local partners were major factors.
All that has changed recently, as Apple’s fortunes in China have taken a sudden downturn. One factor behind the decline has simply been a lack of new iPhones, since the last new model was released in China late last year. Another factor has been the rapid rise of a new generation of cheaper smartphones from domestic players like Lenovo (HKEx: 992) and Xiaomi, which are often half the price or less of the iPhone. Apple has also been dogged by a series of negative reports in the Chinese media that have hurt its image.
As a result of all those factors, Apple reported its Greater China sales slipped 14 percent in its latest reporting quarter, a sharp contrast with the strong double-digit gains it previously reported. In a bid to halt the decline, Apple CEO Tim Cook has made 2 trips to China this year, including one in July.
Apple should seize on the positive momentum it’s likely to get from including China in its global launch, and quickly follow this week’s Beijing event by unveiling other major initiatives to show its commitment to the market. Those could include an aggressive expansion of its China store count, which now stands at a meager 8. It could also announce a previously rumored China R&D center, showing it plans to incorporate the tastes and needs of Chinese consumers into future iPhones and other Apple products.
Bottom line: Apple should seize on momentum from its iPhone 5S launch in China to announce new Chinese investments.
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