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darekz

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  • Why Apple May Not Dominate China [View article]
    IMHO there are no real iPhone fakes yet... unless you would argue that Yugo is a copy of a Porsche because both are hatchbacks, have four wheels, steering wheel and two doors...
    Apr 23 11:10 PM | Likes Like |Link to Comment
  • Why Apple May Not Dominate China [View article]
    I second your opinion. Many people in China cannot afford flashy cars, swanky condos or a second kid, that takes a serious income and years of saving. On the other hand $1000 for an iPhone, for many and increasingly more Chinese it is not even one month salary. And Chinese save money in other ways what makes things like iphone more affordable though not immadiately apparent from the numbers. My monthly electric and water bill in US is higher than one year bill in similary sized apartment in Beijing. My mobile phone bill in Beijing was $30 vs $80 for similar package in US. You can have custom made cashmere suite for $200 in Beijing what would cost you easily a $1000 here.... You spend less on groceries, public transport, cable TV, etc. etc... So the $1000 salary in China takes you a lot further than it would in US.
    Apr 23 08:04 PM | Likes Like |Link to Comment
  • Why Apple May Not Dominate China [View article]
    I feel that your knowledge of China is somewhat superficial at least with regards to fakes. The fake iphones in China don't run iOS. If a real Apple Store sold a fake iPhone, a customer would be right back and I guarantee you he/she would make such a stink you would be able to read about it in Chinese medias and hear on CNN.
    Apr 23 07:51 PM | 2 Likes Like |Link to Comment
  • Why Apple May Not Dominate China [View article]
    Google withdrew from China because it could not crack Chinese market. After years of effort, it barely scratched 10% of the search market. Putting a political spin is a good PR. If Google was making money in China, they would find a way. For some reason everybody thinks that Chinese are preoccuppied with searches for "truth" (Tiananmen, Falungun, etc.). From my personal experience, most Chinese simply use search engines to find games, music and movies and update their blogs... Would Google pay more attention to Chinese customer, perhaps would find a way to crack this market and we would not have to feed us with tall stories of "ratious" Google fighting with "tyranic" China.
    Apr 23 07:40 PM | 1 Like Like |Link to Comment
  • Why Apple May Not Dominate China [View article]
    While I accept that the author has been to every major city in China, I happened to live there between 1997 and 2009 and since have been back in China at least twice a year. I think this article makes couple significant errors. Chinese that buy fakes (Gucci bags, or True Religion, etc.) arefully aware that they buy fakes, they do not confuse that with a real thing and they are not the Gucci's market. They buy it because it looks close enough to a real thing, but costs a fraction of a real thing. You seem to portray Chinese as being easily duped by imposters. They are not.

    The people that can afford real thing, want real thing and with middle class expending that market is rapidly growing. The best customers of LV and fine Swiss watches shops in HK are Mainland Chinese, because they want the real thing. The best customers for fake products in China are cheapskates of the world, from what I saw mainly Europeans, Africans,and yes, some Hongkongese.

    There was a famous story not so long ago in US medias about Chinese suing an Italian furniturestore for selling Italian designed furniture made in China under Made in Italy label (and pricing accordingly). That was not the manufacturer that sued the store, these were Chinese customers that were POed when they found out they were duped.

    On top of this is the "show-off" effect as Mostserene1 mentioned,and here is a real life example, a friend that is a salesperson in a shopping center in Beijing, making $1200 per month has iPhone 4 and an iPad. All her friends (making similar money) have iPhones too. How many people with even twice their income you know in US that would even approach doors of an Apple store (unless it is placed inside Wal-Mart;-)) that would spent that kind of money on Apple products.

    Then there is one child policy effect - if the only son wants iPhone, he will get it even if that means that a grandma has to empty her bank account.

    Then the gift giving culture and maintaining guanxi culture (mentioned).

    I have seen fake iPhones in China and they are optically (when turned off) a close copy. They however do not have the operating system that Apple has, nor have they resolution or the memory. Even a salesperson told me they will likely break after 3 months. The manufactures of fakes have failed so far to come up with technologically close enough copy and that is for a reason. They will not put retina display into their fakes, load it with memory and high-endcamera, can't or don't want to get A4 or A5 processor. For them it is all about looks and $50-100 price range. I admit I have seen a fake MacBook that happened to run OSX, but it would only take a blind person to confuse it with a real thing (I have seen also a Dell netbook in US running OSX). While running OSX on Intel computers is not a big deal, getting a fake running IOS has yet to be witnessed.

    Again, the people buying fake iPhones are not the potential Apple customers, so until someone comes up with iPhone fake that runs IOS, accepts apps, syncs with iTunes and iCloud, and takes 5-8 megapixels pictures syncs to iCloud,I don't think we have to sweat about copy cats. And even then... If you are a Chinese I can't think of a worse embarrassment than being flashed out with a fake iPhone in your hand. If you cannot afford iPhone in China, you better get a Huawei and stop being pretentious.

    But forget the whole fake thing! Chinese do not even want Samsung when the Samsung price approaches iPhone or iPad. I Heard many times Chinese customers saying in a store that for that price or for just a little more they can get a real thing (and the real thing meant iPhone or iPad)...

    So regardless of whether the author visits China, flies over China or just reads Apple future of the fortune cookie, I am confident that Apple will be a huge success story in China.
    Apr 23 07:05 PM | 7 Likes Like |Link to Comment
  • Why Apple Will Dominate China [View article]
    A friend in China makes about $1200 a month as a salesperson in a department store. She has an iPad and iPhone 4. She keeps upgrading her iPhone to the latest model even though she never bother to create iTunes account.... If she wants some app she goes to one of her more technologically advanced friends and they do that for her. The phone functionality is not important to her. I noticed that the only app she was using was a messenger, which replaced sms these days. She has it as a status symbol and all her friends have iPhone too. The author's comment on apple products as status symbols than anything else is right on target.
    Apr 22 12:07 PM | 4 Likes Like |Link to Comment
  • The Case For Selling Apple Puts [View article]
    Would you mind sharing some of the stocks in your folio?
    Apr 21 12:38 AM | 1 Like Like |Link to Comment
  • Apple: Here It Comes [View article]
    About a year ago after I bought iPad 2 I stumbled upon a Samsung clone and was turned off by the plastic shell and overall cheap and plasticy feel. When Samsung comes up with clones closer to the real thing, they have a hard time doing it at materially substantial price difference. There will be always a market for Samsung clones just like there is for fake LV bags. That did not stop LV from prospering, and with enough innovation, built in quality and clever marketing, Apple can survive a predicted by the author onslaught of cheap clones for years just like LV does.
    Apr 17 03:13 PM | 3 Likes Like |Link to Comment
  • Apple Vs. A Portfolio Of Solid Brand Names: Still No Comparison [View article]
    I am in the same shoes as you almost literarily (Boston, age, AAPL, retirement, SE Asia experience and interest)... I am currently tossing the thought about moving to Thailand/Cambodia... Don't want to side track this thread, but perhaps we should start a SE Asia retirement thread?
    Apr 2 03:16 PM | Likes Like |Link to Comment
  • Time To Make Apple Share The Cost Of Data? [View article]
    I am just not sure if using the word "subsidy" is most appropriate here , given the fact that carrier, recoups the initial 'subsidy' through the higher monthly fees. If you tried to ditch ATT in the middle of your contract than you know who really "subsidies" the iPhone price. I think the word "pricing model" would be more appropriate.
    Apr 2 02:31 PM | 1 Like Like |Link to Comment
  • Apple (AAPL -1.6%) is underperforming today on above-average volume. The Fair Labor Association's discovery of "non-compliances" at Foxconn's Chinese facilities, together with Apple and Foxconn's agreement to address the issues via new hiring and other measures, could have investors worried Apple will see higher manufacturing costs and lower margins.  [View news story]
    I would like to encourage you to revisit this factory a year from now and verify if this was the case (keeping the pay)... I am almost certain that what Foxconn was referring to was RMB/hr and not total pay to the employee (their wording might have been purposely vague). I hope I am wrong and you are right for the workers sake....

    And just out of curiosity I was wondering how would you technically do it (keep the same pay and reduce OT), when the OT varies from employee to employee and from month to month for the same employee... No matter what you do, some workers will feel that they are loosing on that new deal.

    In addition, even if Foxconn increases hourly pay, the workers will only want the OT even more. I am not taking sides here, just stating my observations based on my experience in China.

    BTW, I also feel it is likely that potentially sloppy assembled iPhone by an overworked Foxconn worker, may endanger far fewer lifes (if any) than a tired airline pilot (hance the pay differential as well). But what you or I think may not be so relevant, again I am not advocating excessive OT. I was only trying to shed some light on mentality of Chinese worker in these factories and potential repercussions steming from half-informed media requested changes.

    From management point of view it actually might be cheaper to hire more workers if the OT seems to be an ongoing affair at Foxconn rather than pay 150-300% rates for the same assembly work with overworked workers being more prone to errors.
    Mar 30 04:28 PM | Likes Like |Link to Comment
  • Apple (AAPL -1.6%) is underperforming today on above-average volume. The Fair Labor Association's discovery of "non-compliances" at Foxconn's Chinese facilities, together with Apple and Foxconn's agreement to address the issues via new hiring and other measures, could have investors worried Apple will see higher manufacturing costs and lower margins.  [View news story]
    One of the factories I visited in China, was using glue to assemble their products. This assembly was performed in a huge hall that was neither airconditioned in summer or heated in winter (even though the equipment existed and was operational i was told). The suction fans drawing glue vapors out of the building were turned off to save the energy. In winter time, the workers were wearing thick gloves to keep hands warm... I am not sure how they were able to work there 8 or sometimes even 12 hours a day, when I was getting a headache after only 20 minutes at the production line... This factory was european owned.... This makes the chinese (Taiwanese) Foxconn factory look like a resort...
    Mar 30 04:02 PM | Likes Like |Link to Comment
  • Apple (AAPL -1.6%) is underperforming today on above-average volume. The Fair Labor Association's discovery of "non-compliances" at Foxconn's Chinese facilities, together with Apple and Foxconn's agreement to address the issues via new hiring and other measures, could have investors worried Apple will see higher manufacturing costs and lower margins.  [View news story]
    I was just wondering if anybody thought of asking the Chinese workers at Foxconn about reduction in overtime? Reuters article here partially refers to it in http://reut.rs/HztIks. There they cite a worker saying that they came to Foxconn to work, not to play... They are not there to strike right "work/life balance" another words.

    I worked in China for nearly 9 years, I can almost guarantee that the workers will be unhappy about this change... Less O/T = less pay, no matter what the company says. These workers came from deep countryside with one and only one goal in mind - make as much money as possible in as short time as possible. O/T is a very profitable way to make money for them and they do want that. By law in China they can earn between 150% to 300% of their hourly rate for OT. They have no life after work and don't want life after work, they just want to make money and send it back to their families to build house, buy land, etc.. This ill conceived western worry about Chinese worker life-work balance, without deeper understanding of this issue, will backfire in employee dissatisfaction and lowered productivity.

    Somehow reading these articles about Foxconn one can get an impression that this bad, bad Foxconn (or for many it is that really awful Apple) enslaves Chinese workers to work OT to satisfy gadget cravings of western customers... You couldn't be more wrong. At the place I worked, if I did not specifically banned OT that day, the employees would work OT undeterred. They would pocket the lunch allowances for OT or taxis and provide phony receipts, all with one and only one goal in mind to pocket as much cash as possible. And now comes that "carrying" western customer and deprives them of this extra income... Let's see how this will play out...
    Mar 30 03:34 PM | 2 Likes Like |Link to Comment
  • Why Apple Will Succeed In China [View article]
    Perfect analysis of Chinese mentality. Many Chinese may never be able to afford a Beemer or a swanky downtown condo, yet they still can save enough to buy an iPhone or iPad. They do want the best and they do not want to be seen as worse than their friends.

    Apple products are perfect to demonstrate the status; they are relatively expensive, small, portable and highly visible, and they scream - "Look! I am doing well".

    In addition, decades of one child policy created a society where the only offspring is put on a pedestal and all their wishes and desires are getting fulfilled no matter what the cost. And if one day that off-spring says "iPhone", that is what he/she will be getting the next weekend (or sooner), even if that means that a grand ma needs to pilferage her savings account, trust me.

    In fact iPhone is not all that expensive to Chinese as we are lead to believe. To put iPhone price in China into perspective, it is roughly 1.5 minimum salary in most cities or about the a month of a salary of an "exploited" Foxconn worker that makes them...

    iPhone is not subsidized in China, so if you compare their price to full price in US, they are only marginally more expensive. Besides whatever Chinese cough up extra for the iPhone, they save on monthly bills. A 450 min package with 200 SMS and unlimited data in China will cost you roughly $30 when in US it will set you back probably a cool $80...

    If you happen to go to a phone store in China and listen to people considering phone marvels by Samsung, you will likely hear one of the two comments, a salesperson will be quick to point that it is just like "iPhone", and the buyer hearing the price will retort "but for this money I can get an iPhone"...

    All this makes me very confident in the future of Apple products in China.
    Mar 28 05:18 PM | 7 Likes Like |Link to Comment
  • 3 Strikes: The Apple You Loved Is Now Google [View article]
    Let's have this straight, Apple is not replacing Google, it is just adding more choices for Chinese consumer, that is different from replacing... For those Chinese bent on googling rather than baiduing, they can still use google on their iphones.

    The truth is that even in it's heydays Google never exceeded 10% of Chinese search market. Chinese simply prefer to use search engines that cater more towards Chinese consumer tastes and Google failed to discover what that was even before pulling out of China. Apple is simply recognizing the reality. I thought more choice was always better...

    In fact, email choices on iPhone in China include 163.com in addtion to Yahoo and Gmail, a Chinese email provider that is a lot more popular in China than their "more independent" western alternatives.

    If you think people in China use search engines solely to find every little bit of information about Falun Gun and Tiananmen, then you might be up for surprise. One of the more popular areas that Chinese love to search for is movies, music, and software (not always legitimate), and Google engine is not up to snaff there;-)

    Besides, the Chinese efforts to block certain content can be at best described as half-hearted. Facebook is offically not accessible in China, but most Chinese that want, find no problem circumventing this blockade and keep their profiles up-to-date. The problem (as with Google search) is though that Chinese themselves don't care much for Facebook and prefer to use their Chinese equivalent....
    Mar 27 05:38 AM | 2 Likes Like |Link to Comment
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