Apple Sales Growth May Plateau in China
Even though Apple sales in mainland China, Hong Kong and Taiwan skyrocketed by 300% to $7.9 billion in Q1, a trajectory which would double last year’s total sales of $13.3 billion, some analysts think that this expansion will soon begin to slow. Apple in China has been on a bit of a rocky road – Beijing still sees Shenzhen-based manufacturer ProView as the rightful owner of the iPad name, mobile network support problems for iPhone, various knockoff copies of Apple products being circulated, and even reports of full-on fake Apple Stores popping up around the country. Still, sales rates of legitimate Apple products are still remarkable, in the world’s largest mobile market, where iOS devices are seen as a status symbol.
Though, Candice Wang, an analyst with research firm Analysys International, states, “We may not see a repeat of this year’s stellar pace of growth in coming years unless Apple comes up with great products to keep up with consumers’ demand and tastes.” Apple might also get its Siri system to speak Chinese. A problem with Apple in China relates to the fact that the vast majority of mobile users don’t reside in affluent first or second-tier cities, and much of the population plainly can’t afford the iOS devices, which has fostered a market where other companies can come in with lower-cost products. A basic iPhone 4S costs about $790 in China, which is more than most of its people earn in a month. Rural disposable income is about $1105 per year in China – not exactly enough to blow almost $800 on a handset.
CK Lu, an analyst at Gartner, states, “There is no doubt that Apple’s sales will keep rising, but market share is a different story – If Apple wants to maintain or grow its market share, it will have to cooperate with its partners to roll out more affordable smartphones.” Many less affluent Chinese users are buying into lower-cost Android devices, even though Apple products are generally preferred and regarded as being fashionable. It’s evident that Apple need to introduce some more affordable devices in order to keep momentum in China – Wong Teck Zhung, senior analyst at IDC, states that, “consumers, increasingly aware of non-iPhone alternatives, might also just get tired of waiting.”