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Apple Store Expansion in China Said to Have Slowed Due to Red Tape, Fraud, and Other Factors

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In 2015 and 2016, Apple aggressively expanded its retail presence in China with 30 new stores, according to the Apple Storefronts tracker. Since the start of 2017, however, Apple has opened just five new locations in the country.

apple-suzhou.jpg
Apple's newest store in China in Suzhou​

The Information's Wayne Ma has shared a report today that offers explanations for the slowdown, including China's bureaucratic government, scalpers, previously-reported fraud, and increasing competition from Chinese smartphone makers. The report is based on interviews with 17 former Apple employees.

On government bureaucracy:
Apple had to navigate a maze of government bureaucracy to obtain everything from business and tax licenses to construction, fire and customs permits for imported building materials, former employees say. The regulatory framework in China is far more complicated than in the U.S., with many more layers of government, these former employee say, and it’s far more opaque. Employees frequently scrambled to chase down permits and local approvals to keep store openings on track, they said.
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On scalpers:
Apple, too, had to contend with scalpers, known as "yellow cows" in colloquial Chinese. These scalpers swarmed its stores and elbowed out other customers during product launches and in-store promotions. …

Apple executives worried they were losing control of the customer experience in their stores, and along with it opportunities to interact with real consumers. The scalpers showed little interest in the accessories and add-on services Apple likes to offer customers.
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Other factors, according to those interviewed, included low-level government officials asking for free iPhones and other products as a form of bribery, a tug-of-war between the Beijing and Shanghai local governments over taxes, and a vibrant gray market for iPhones smuggled from Hong Kong.

As a result of these difficulties, Apple is said to have "abruptly changed" its retail expansion plans in mainland China in 2017, resulting in the dramatic slowdown in grand openings. Apple's latest store in China opened in the city of Suzhou on September 21, coinciding with iPhone XS and iPhone XS Max launch day.

Last quarter, Apple brought in revenue of $9.5 billion from the Greater China region, including Taiwan, Hong Kong, and Macao. Greater China accounted for 17.9 percent of Apple's revenue in the quarter, making it the company's third largest market, behind the United States and Europe.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Apple Store Expansion in China Said to Have Slowed Due to Red Tape, Fraud, and Other Factors
 
Article Link
https://www.macrumors.com/2018/10/29/apple-store-expansion-slows-in-china/
Last edited:
RogerWilco

RogerWilco

macrumors 6502a
Jul 29, 2011
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Spare parts shenanigans and unseen pressure from local officials and regulators with their hands out surely makes for an interesting business environment. Apple portrays itself as above all the riff raff. What’s that old Chinese saying, “all fishes swim in the same water”?
 
ilikewhey

ilikewhey

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May 14, 2014
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don't blame them, this article brought up so much memory when i was in china couple years back and i had to fight bunch of ppl who were cutting in lines to get a taxi,

alot of these low-level gov't officials grew up with the peasant revolution and therefore don't have an education, its really a dog eat dog world over there often times.

when they see apple trying to open up a store on their turf they want to exploit them for $$$ as much as possible. hence the red tape nightmare
 
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Juicy Box

Juicy Box

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Sep 23, 2014
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DrJohnnyN said:
Why are scalpers known as Yellow Cows?
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That was the most interesting part of the the story for me.


DrJohnnyN said:
China is all over the MacRumors site today.
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Actually, they have been all over MR for a while now, I just can't remember it ever being a positive story for Apple.

If Apple's push into China ends up working out for them, it will look like a genius move. So far, it looks like it is nothing but problems.

iapplelove said:
So anything China related is automatically in the social and political forum?
Click to expand...
Probably because every China related story on MR, including this one, involves something political.
 
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koruki

koruki

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PG(Austin) said:
WHAT!!?? Fraud!!?? In CHINA!!?? I just can't believe that!

But it doesn't matter...soon there will be an Aple Store right next door, backed by the Chinese Government.

View attachment 799271

Aple.png
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I really think China should be smart like the U.S and create a degree for fr..Lobbying. That allows much more control and means other countries can't ride a high horse. Though spending millions to wine and dine politicians to get what you want instead of a box of iPhones might still work out cheaper.
 
szw-mapple fan

szw-mapple fan

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Jul 28, 2012
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DrJohnnyN said:
China is all over the MacRumors site today.

Why are scalpers known as Yellow Cows?
Click to expand...

That's just a poor translation on MR's part. The translations should just be cows or cattle. In Chinese water buffalo is "water cows" and cows are "yellow cows" because of their fur color, among other types of cows that has a prefix to describe them. They are called cattle because ticket scalpers (and now phone scalpers) would swarm the seller like a herd of cattle.
 
A

alexgowers

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Jun 3, 2012
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China has grown so fast that its these new corruption issues that Apple has faced that will break its growth and prosperity. They appear nimble for such a large country but really Apple has seen the many new issues no other country ever gives it. I’m not surprised they basically pulled out. The same is true with India, where they ethnically cleanse businesses. It might seem like a good idea but it’s out and out racism we don’t tolerate in the west.
 
J

JimAtLaw

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Sep 26, 2006
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alexgowers said:
China has grown so fast that its these new corruption issues that Apple has faced that will break its growth and prosperity. They appear nimble for such a large country but really Apple has seen the many new issues no other country ever gives it. I’m not surprised they basically pulled out. The same is true with India, where they ethnically cleanse businesses. It might seem like a good idea but it’s out and out racism we don’t tolerate in the west.
Click to expand...

Er, I’m not sure I’d characterize those corruption issues as “new.” (We have the Foreign Corrupt Practices Act precisely because they are not new... maybe you were thinking new for Apple, though I don’t think that’s likely true either.) It will be interesting to see if this changes materially during our lifetimes, color me doubtful.
 
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