Apple’s Move To China Is A Slow One
July 7, 2012

More Apple Stores Needed In China

Michael Harper for — Your Universe Online

Apple has been earning billions of dollars in recent years, thanks to best-selling products like their iPad and iPhone, generous profit margins and a tightly integrated supply chain, not to mention their own chain of retail stores, which are the envy of retail chains everywhere.

Now, as Apple sits on their massive pile of cash, they´ve turned their eyes eastward, looking upon China lustfully as their next great conquest.

This battle hasn´t been an easy one, of course, as different companies have tried to limit their growth and place bans on their products.

Despite these hurdles, Apple moves ever on, saying in 2010 they´d have 25 of their popular retail stores in China by the end of 2012.

They may have overshot their goals, however, as there are currently only 6 stores in China.

As Reuters points out, Apple has more stores in Pennsylvania (population 12,742,886) than China, with a population of more than 1.3 billion strong.

That´s a ratio of one store for every 216 million would-be Chinese iPhone buyers.

The Reuters report paints a dim scene for the 6 Chinese Apple stores, with iPhone owners waiting in long lines for repairs and scalpers waiting in front of the store for days when new products are released, just to resell them at a huge markup. In fact, last summer, it was discovered that there were as many as 22 fake Apple stores operating in China, some even fooling the employees themselves.

Now that Apple has paid off their Chinese antagonist Proview Technologies, (for a tidy $60 million sum) it´s likely these stores will become even more crowded, as Apple is finally free to sell their latest iPad.

Chinese government officials have said Apple plans to open two more stores in Chengdu and Shenzhen, though these stores aren´t likely to bring any immediate relief to the 6 stores currently bursting at the seams.

Of course, those Apple faithful in the East have the option to purchase their products at the online Apple store. Just like their American counterparts, however, the people of China prefer to get some hands-on experience with their products before parting with their hard-earned cash.

According to Apple´s CFO Peter Oppenheimer, Apple´s branches in China not only have the highest amount of foot traffic than any other store in the world, they also bring in the most money.

As such, David Wolf, of Beijing consultancy group Wolf Group Asia told Reuters the demand for Apple products and lack of Apple authorized outlets could end up hurting the chain in the long run. As demand grows, so too does the number of non-authorized resellers who could possibly offer subpar customer service and experiences, a point of pride for Apple.

Though they´ve often been seen as a company who likes to take their time, the slow, Eastward expansion isn´t completely Apple´s fault. The Chinese government is also to blame for the slow-pace of Apple´s growth. How important is Apple´s growth in China? According to Erik Sherman with CBS´s MoneyWatch, this growth is very important.

“That is why the slow pace at which the stores expand in China hems in what the company might do. Should that pick up, Apple could see a surge of highly profitable growth that would make what it has achieved so far seem tame in comparison,” writes Sherman.