MULTINATIONALS: Apple Watches China, Cools With Haier
Bottom line: Apple Watch should debut strongly in China thanks to extensive partnerships with top Chinese retailers and app makers, giving the product instant relevance in the local market.
Global gadget leader Apple (Nasdaq: AAPL) has been in the local tech headlines nonstop these last few days, wowing Chinese fans with a customized version of its new Apple Watch that will debut in China next month as part of its global launch. Pundits are mixed on how the watch will fare in China, but I expect it should do quite well thanks to inclusion of China’s hottest apps together with the company’s own strong reputation for well-designed, cutting-edge products.
In a separate but probably related Apple headline, media are also reporting a new smart air conditioner that the company has developed with local appliance leader Haier (HKEx: 1169) will also debut in April. Apple first announced this alliance last June as part of a broader smart device alliance under the name of HomeKit, and I suspect the Apple Watch will be usable with these new air conditioners.
Let’s begin our Apple round-up with the Apple Watch, which will launch in China on the same day of its global debut on April 24. (English article) It’s not too surprising to finally see China become a regular stop on Apple’s global launch map, since the Greater China market now accounts for nearly a quarter of the company’s sales.
The market’s complexity, including certification requirements from the telecoms regulator, was one factor that kept China off Apple’s global launch map until very recently. But the company seems to finally have learned how to master China’s bureaucracy, at least for the new Watch product.
Apple has paid visits on all of China’s top retailers and app makers for the local edition of its new Watch, which isn’t a huge surprise due to the market’s size and unique conditions that mean most dominant names are local companies. The nation’s 2 leading e-commerce companies, Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD), will both offer the new watches at the launch date.
The new watch will come preloaded with special versions of the country’s most popular apps. Those include customized editions of Alibaba’s popular Alipay electronic payments service, as well as Tencent’s (HKEx: 700) hugely popular WeChat instant messaging service and the Twitter-like Sina Weibo (Nasdaq: WB). Also included will be a customized version of Ctrip (Nasdaq: CTRP), the nation’s leading online travel agent, allowing users to receive information about their hotels and flights.
Only a company like Apple could get most of China’s leading names to make this kind of specialized effort for an untested product with no proven market. The watches won’t be cheap but also won’t be incredibly expensive, starting at 2,588 yuan ($415) apiece. The company certainly seems to have done its homework, and therefore I would expect the watches should do quite well here when they go on sale next month.
A part of that launch could include the new HomeKit air conditioners that also will debut in China next month from Haier. (Chinese article) News of that launch was contained in a discussion of Haier’s broader smart appliance initiative detailed at a major local trade show. Haier has formed a wide range of tie-ups to try and develop the space, announcing partnerships with companies like Microsoft (Nasdaq: MSFT), Alibaba and Sina Weibo, just to name a few.
Air conditioners seems to be a hot product area for smart appliance makers, as a number of other companies have also announced similar initiatives over the last 2 years. Such a move makes sense in China where most homes aren’t centrally air conditioned, meaning such devices could be turned on and off remotely when users are outside. I doubt these Haier HomeKit air conditioners will see huge sales when the Apple Watch debuts, but this kind of product should certainly add to the attraction for potential watch buyers.
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