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  • Pricing Of New iPhone Will Determine Success Of Apple In China [View article]
    With any mass produced product, there is the high margin business derived from those who want to own the best. Then there is the pure commodity end of the business that has low margin for the masses (you lack margin but gain on volume). We often think of masses when we think of China, so we think low end. Apple is now in the position to capture both markets, but obviously prefer the fat margin of the high-end consumers. A big mistake some companies make is to become revenue conscious at the expense of margin. Its a delicate balancing act and timing is everything based on your level of innovation. Think Nokia. Steve Jobs knew this. Let's hope Cook has the same finesse.
    Sep 10, 2013. 08:52 PM | Likes Like |Link to Comment
  • Pricing Of New iPhone Will Determine Success Of Apple In China [View article]
    There are three misconceptions about the China marketplace that are perpetuated in this article. One is that the Chinese prefer low cost goods. This is not true for big ticket items such as electronics and automobiles. If they are going to splurge on a smartphone, they will buy the most reputable and highest performing device to flaunt their wealth, not the cheapest. The second misconception is that a large well-know company can take their hard-earned reputation they created in the western marketplace and waltz into mainland China and reap the benefits of 1.3B prospective buyers. If you do not let the government get their share, they will crush you. Remember what happened to Google when they fought the government by not providing user info? This is one a hundred examples. Apple had their own experience with this when the government planted stories in the national newspaper about iPhones blowing-up. Apple fell on their sword even before the origin of the phone (real or fake?) was vetted. If a mobile phone manufacturer wants real access to the China market, they better play with the government's capitolist bretheren in telecommunications (i.e. China Telecom) on the mainland. There is just too much money at stake for the government to ignore. No western company will succeed without playing the game. The South Koreans certainly know this, which is why they (Samsung)have such a huge market share.
    The third misconcpetion is to use Hong Kong as a data-point for what happens in mainland China. Hong Kong is still being assimilated into the overall communist/capitolist system and its still employs many more traditional western business practices than the mainland allows - for now.

    I'm always stunned by the lack of understanding of conducting business in China by large western companies. It's really quite straight-forward. Big business is tied to the government. If the government doesn't get their share, you fail. Get connected to their capitolist entities and you get access. But the negotiation can take years. Just look at Microsoft!
    Sep 10, 2013. 04:20 PM | Likes Like |Link to Comment
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