Apple in Chinese market is saturated

[Gaoxiang]

Hi,
China has become the second largest sales market for Apple products in the world. But I think Apple products have reached saturation point in Chinese high-end market. In recent years, more and more Chinese people abandoned the traditional cell phone then purchase the high-priced smart phone. It caused more and more competitors. And with the current situation in China, the next wave will focus on the relatively cheap price of smart phone. So Apple will face a dilemma: if Apple chooses the low-end market to meet. it will lead to profit margins shrink. But if Apple insists the high road the sales, it will be stagnant.
I think Apple is not going to give up the Chinese market. May I ask how Apple company think about this issue?

 

[vrDrew]

This seems unlikely.

To begin with, it assumes that the number of Chinese consumers with the financial means to purchase an iPhone remains stagnant. Even with (relatively) slower GDP growth in China, this simply will not be the case. If the Chinese "middle class" grows by a mere 1% each year, this suggests a minimum of ten to twenty million new potential customers will come onto the market. It would be strange indeed if Apple were not able to win at least a significant fraction of them.

Secondly, it appears to me that Apple has so far failed to exhaust all the potential carrier and distribution opportunities available inside China. If - and or when - China Mobile begins offering the iPhone it will open up a massive pool of some 700 million subscribers. Again, Apple won't win all of those customers, but if it got merely 2-3% it would be a massive growth opportunity.

Lastly, I think the simultaneous release of both the iPhone 5S and 5C models marks a significant step towards Apple broadening its product lineup without sacrificing its margins.

 

[Gaoxiang]

Thank you for your respond!