Apple Ramps Up Its Far East Efforts

With more than 1.3 billion souls Apple Computer Inc. (AAPL) has got to throw in more than a few pennies for the Chinese market. After all, China is the rising star. So, at long last, after years of remaining distant from one of the world’s fastest-growing technology markets and the world’s largest cellphone market, Apple Inc. is ramping up its retail strategy in China.

On July 19, Apple opened its first direct-run store, an all-glass building at Sanlitun Village in Beijing, about 4 miles northeast of Tiananmen Square, consisting of three floors, reported to be 995 square meters in size and with typical Apple store features such as a Genius Bar, where existing users can get technical support ; signaling this way, a milestone of the US company’s efforts to change its dealer-centric marketing model in the Chinese market. Twelve hours before the opening of its Beijing store, notes WSJ, close to 100 people showed up, even though the company didn’t advertise the store’s opening.

Sensing huge opportunities from customers in Mainland China, Apple is speeding up its China strategy. It's planning to open a second store in Beijing in 2009 and then open more in Beijing, Shanghai, and Guangzhou. Apple’s stores, which are in only seven countries so far, generate 20% of the company’s world-wide revenue, Ron Johnson, senior vice president of Retail Operations at Apple, said in an interview on July 17.

However, iPhone mobile phones will not be sold at the first store tomorrow, the senior vice president noted. In order to bring iPhone mobile phones into the Chinese market, Apple has been in negotiations with Chinese mobile carriers for months; including China Mobile Ltd (CHL) and China Unicom Ltd (CHU).

One interesting fact is that even though the iPhone hasn’t officially been released in China, many tech-savvy youth have already bought and hacked the device.

According to the research firm In-Stat, despite the device never being officially launched there, China Mobile, the biggest wireless carrier in China, said, “there were about 400,000 cracked iPhones using its cellular network service at the end of 2007, representing one out of every 10 iPhone shipments announced officially by Apple”. In-Stat was surprised by the figure, as it was four times what the research firm had previously estimated.

Apple’s presence in China has been labeled by many as almost ‘invisible’. Apple, whose computers are shipped with Chinese-language options and have more than doubled in sales on year-over-year basis, says its China entry has been aggressive.

“We didn’t wait long” to come to China, says Ron Johnson. “Every year, we’ve launched in a new country. You’re not going to find another retailer on the planet that has been as aggressive at rolling out stores”.

Comments

[Do your research]

Get the name of the company right, genius. It's Apple Inc.

[User 163362]

Apple's still a buy...

20smoney.com/2008/07/2.../

[longapple]

Earnings and Growth are the two basic benchmarks for investment in any company. Does anyone really believe that Apple will stop earning great profit margins on their products or that the Company will just stop innovating and creating new products and markets?

Regardless of the health of Steve Jobs and conservative future guidance, this company will be a money machine for years to come and there is no where to go but up. China is just one big part of the Apple pie waiting to be baked to perfection.

[mollytjm]

i agree with longapple. value investors should take a good look at Apple, Inc.. this is not a one-trick-pony (which is why 'computer' was dropped from the name) like it was in the old days. Apple has amassed innovative talent, enormous $, no debt, the most profitable retail space around, and all of this while giving customers wonderful tech support and amazing products.