Apple Debuts Chinese Online Store, Chinese Language App Store

[ericschmerick]

It's worth remembering that Apple competes only in the high end of the market. The question in a year isn't market share so much as how profitable operations are. Apple may well become highly profitable in China very quickly by slicing off a chunk of the very top tier of the market. That's where most of the profits are anyway, not competing to see the most low-end low-margin boxes.

Totally agree. I'm looking forward to seeing it unfold over the next few years.

 

[Nanasaki]

I think there is a quite a bit of wealth that funnels from Shanghai directly westward through Jiangsu (SH->Suzhou->Wuxi->Changzhou->Nanjing), and in recent years really pouring into Hefei. The 250km high-speed train (动车) really sped up that process, and it connected to Hefei a few years back. Now there are lots of people doing business from Hefei into Shanghai, because the 3.5 hr train trip made it extremely convenient and not expensive to do so. That may explain why my experience in Hefei is different than what you see in Taiyuan. According to the 2000 census, Taiyuan actually has a larger population than Hefei (though I expect explosive population growth for Hefei will be shown in the 2010 census).

Anyway, the "Apple" shop I referred to before is in-fact the only "Apple" shop I've seen in Hefei so far outside of the wholesale mall (ours is 百脑汇).

I keep rambling here, but I think it's interesting to postulate about Apple's future in China. I really hope they do well.

I find it useful sometimes, even if not totally accurate, to think of China as two countries - a country of maybe 300 million, with a wealth distribution somewhat like the US (at least in real-living terms), attached to a country with 1 billion quite poor people. The wealth distribution curve as I visualize it would be bi-modal, with a hump at the top, a long space in between, and a hump at the lower end. The people in the hump near the top have the means and possibility of (and strong desire for) buying high-end products, but the much bigger hump at the bottom doesn't. However, even if apple only penetrates the top part of the curve, it's a giant market, perhaps as big as the US.

I think one of the interesting challenges, though, is that in general it seems Chinese people are not accustomed to paying for non-physical things. Songs and movies are freely available for download on the internet. So is software. My wife thinks all software is free. Her head almost exploded when I told her I spent S$1600 on the final cut pro suite. It just didn't make any sense to her.

My first experience with one of these non-apple apple stores was in Shanghai some years back. Aperture had been released and I wanted to buy it. The guys inside looked at me like I was crazy - why would they have boxed software on the shelf? But then they went to the counter, grabbed a portable drive, hooked it up to my machine, and offered to copy anything I wanted (they had literally EVERY apple software product on this drive) over to my computer. They wanted 20 RMB (S$4) for their trouble.

If you live in the windows world, you can go to nearly any wholesale computer market and they will have boxes and boxes filled with CDs of basically any software product ever made, hacked cracked and ready to go (Windows, Photoshop, AutoCAD, whatever). It costs money at that point only because it's become something physical to trade - but the price is not much more than the cost of the DVD/CD and the package itself, plus the trouble to put it together. Windows might be 50RMB (S$10). Sure it might be some weird hacked up version of the software that crashes all the time. But the time-value of money is perceived as basically zero in China, so most don't get the idea of someone who doesn't mind paying a few hundred dollars to get legitimate, working software and avoid the hassle of having to mess around with making it work.

Anyway, to some extent I found myself surprised that there's even a "paid" section in the China iTunes store, and that they actually have "top grossing" apps. It will be interesting to see how the paid software market works out in China for Apple, because my sense is that piracy is a much smaller part of the Apple eco-system than it is for the Windows eco-system.

</ramble>

Very true. Doesn't like people here in North America. People here like spending, especially people in United States. They can spend all their monthly income for whatever they want. But that just not gonna happen in China. Chinese people are more adopted in earning-saving model. They could just saving as much as they would like and spend as little as they could. Look at the software piracy. People just won't go ahead spend good thousand RMB for single copy of Windows, given there are OPTION for downloading. So that people in China just wouldn't go for Mac given lesser functionalities and LOT more EXPENSIVE than PC.

Apple would face dramatically more challenge in China given average low income and VERY VERY high software piracy rate. Plus, there are lots of Mac-Clone, iPod/iPod Touch clone in China.

Very true as you said. China has huge cap between rich and poor. Rich family can afford whatever the wish to have, poor family can't even maintain their most basic living standard. China doesn't have social program or social aid program like here in Canada. The minium wage for my city is around $300 yuan per month (that is only around $50CAD). CAN you ever image those people buying Apple stuff. NO!!!!! So only rich ppls are able to buy Apple's premium product and premium price. However, it still a huge market.

 

[The13thDoctor]

I guess Hefei is larger city than my city Taiyuan. LOL...Not seen lots of Apple shops around the town. NOT A SINGLE APPLE SHOP in DOWNTOWN area (which aren't happen in North America). The only shop i have seen is inside wholesale mall (电脑城). That's about it. How about in your city?

hmmm....i live in hong kong and basically every single computer store you can think of sells apple products

 

[Nanasaki]

hmmm....i live in hong kong and basically every single computer store you can think of sells apple products

hmmm.... There is just no way my city even close to size of Hong Kong... I mean, Hong Kong is one of the biggest city in East Asia area. So there is no surprise Apple product selles everywhere in Hong Kong, but it just not happen in my city. LOL... i am living a pretty small city.