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Jul 23, 08 - 05:48 pm Comment from: Ampar

Two and four hasn't stopped Wal-Mart or McDonald's from success in China.

Andrea Jung (newest Apple board member) needs to open some doors for Apple!

'Elgan writes. "Here's why."

• Apple is a mass-market luxury brand
• China has an authoritarian government
• There is no Chinese iTunes Store
• China is number one in intellectual property theft '

Here's my replies:
1) China's rising upper and middle classes love foreign luxury
brands as in Italian clothes, Japanese electronics, Buicks,
Mercedes, BMWs and so on. Apple products fit this market.
2) China has an authoritarian government hell-bent for
contradiction: they are communists backing the hell outta
capitalism.
3) OK. Just create one.
4) Every global brand has to deal with this one. There is nothing
special about Apple with this issue.

Jul 23, 08 - 06:05 pm Comment from: Olmecmystic

I saw Andrea Jung on Charlie Rose a few months ago. She's a very sharp, very remarkable woman.

And easy on the eyes, too!

Apple will ultimately succeed in China. Just give them time.

Peace.
Olmecmystic

Jul 23, 08 - 06:21 pm Comment from: james73

remember, when doing business in china it's not a good idea to give a bribe, but a "gift" is customary and shows good faith.

If Mercedes Benz or Louis Vuitton products are sold in China and successful there, so we'll be Apple products.
It's just a matter of Apple starting to take overseas markets seriously. For now it really has been US centric

Jul 23, 08 - 06:33 pm Comment from: GizmoDan

The author is proving himself wrong: "they will never sell in China". Plus, "there are already 1 million of them there", despite the fact that they are not even for sale there yet.

Mike Elgan is not logical.

Apple hasn't yet launched in 70 countries, just 20 or so. How do these mistakes get made?

Jul 23, 08 - 06:34 pm Comment from: Sir Gill Bates

"• China has an authoritarian government"

Gee, ya think that might be one reason it's taking Apple a little more time to get things rolling in China? These asswipes act like Apple should be able to just walk into a country and tell them how it's gonna be.

Elgan's just another moron.

Jul 23, 08 - 06:35 pm Comment from: Anonymous©

Wow, Elgan is a moron. Last year, BusinessWeek did a story on how China is already the 3rd largest luxury goods market in the world.

I have a home in Shanghai, and believe me, the large cities like Shanghai and Beijing amongst others have a booming upwardly mobile upper middle class, who can afford iPhones.

Jul 23, 08 - 06:37 pm Comment from: Anonymous©

Also, another report showed that over 25% of cellphones sold in China cost over $500. That's USD. They don't subsidize the price there.

Mac+ said : For now it really has been US centric.

Not entirely US centric. We have a Boutique Apple in Montréal (opens Friday).

http://img139.imageshack.us/img139/7821/boutiquegt9.png

A wrier who would rather rely on racial stereotype than actual knowledge of the market. Shameful ignorance that is only too typical I'm afraid.

Yes, "China is number one in intellectual property theft"!

The Chinese people in general make or buy a cheep PC and install pirated Windows OS software. As long as Apple can keep their OS X of those crap PCs, the Chinese will have to buy a Mac to run OS X.

The same will go for the iPhone. They have to keep the OS X of the other touch phones.

At first, just the top 1% or 3 % will buy the best, so they will have to buy it from Apple. They will have to pay up for 3 to 8 years until Windows 7 can be pirated.

How about huge room for growth ? Just don't let them copy the thing Apple!

While the 8% iPod market share is probably true (country pumpkins just dont have the money) in major cities iPods are doing well. In Shanghai metro trains I see iPods, iPhones and Sony PSPs. Some people are listening from their cell phones, it's very rare to see mp3 players.

There is actual iTunes store in the works with songs costing about 5 cents (very limited selection because it's only Chinese music). Don't ask me how they would make money, probably just covering bandwidth cost. Of course that is only a rumor, but now it seems to make more sense when you add the AppStore.

Anyway, it would not make much difference, in China you give away the mp3 music so you can get people to come to your concerts where u can sell your CDs. Or u just sell the CD as the concert ticket. How is that for a succesful buisines model in China? Maybe Apple is about to figure it out.

Jul 23, 08 - 07:16 pm Comment from: Lurker_PC

Apple and China are not incompatible. Our dishwasher and china are incompatible, but not apple.



Peace.

According to the latest Merrill Lynch Cap Gemini survey (2007?), China had 320,000 millionaires (those with $1 million in investible assets) in 2005, up 6.8% from 2004. China’s millionaire growth rate is the same as that of the U.S.

National Geographic estimates that there are 100 million to 150 million Chinese with household income of at least $10,000 a year. Let's suppose that only 10% (10-15 million) of them can afford an iPhone; that's still a lot of sales!

China has a huge population, 1.3 billion, over 4 times that of the US. If just 1% end up able to afford Apple products, that's 13 million people.

Jul 23, 08 - 07:28 pm Comment from: Greg L

So…

China, which is perfectly willing to spike wheat gluten with chemicals to game the analytic tests on protein, and which makes cheap crap, isn’t a big buyer of a premium American label for electronics goods.

Is this a surprise to anyone?!?

Jul 23, 08 - 07:37 pm Comment from: The Other Steve

What does "China has an authoritarian government" and "China is number one in intellectual property theft" have to do with Mac vs. Windows/other cell phone makers?

Is he saying Windows is a better fit because Microsoft has more experience with intellectual property thievery?

Jul 23, 08 - 07:37 pm Comment from: ken1w

Doesn't the fact that there are so many "unauthorized" iPhones in China, probably purchased for close to $1000 each, mean there is demand for a legitimate iPhone being sold by the official carrier.

But maybe Apple should forget about trying to make a deal in with a Chinese mobile carrier. Just start selling it at the unsubsidized price. As long as it is under the gray-market price, Apple will sell as many as it can make.

Jul 23, 08 - 08:03 pm Comment from: Spark

Apple will get its deal with China Mobile.

Apple + China = reduced gross margin. Now you know the real reason Apple stated the next Qtr will have lower margins, the new products will be luxury cheepo Apple manufactured Knock offs of there own products, something no other competitor can match.

"MDN Take" is a bit off and uses faulty logic. In China, a new car can easily cost less than what a Mac will cost. Hmmm, car vs Mac?

Jul 23, 08 - 09:09 pm Comment from: R

The push into China just started. Not going well? The same would have to be said once The New World was discovered by Lieftopher Columbukson or whatever his/her/their name(s) was/were.

Things have changed a bit with time, no?

wise man say "the more stairs you climb the more light you see"

1. Massive black market iPhone sales at inflated prices bodes well for Apple in China.

2. Capturing even a few percentage points of the market in China will still mean HUGE profits. Apple doesn't need to blanket the whole country, just have plenty of strategic retail outlets in the upscale markets like Beijing and Shanghai—wherever there is upscale shopping, Apple should have an Apple store. Obviously, they won't profit by having Apple stores on the Tibetan border. Duh?

3. Apple could also go after the same creative markets it dominates in the West—publishing, photography, film, music, etc. Tidy profits without trying to monopolize the whole country. Just put Apple stores near or in strategic universities, movie industry, technical schools, publishing houses. Offer the same kind of educational discounts they offer in the U.S.

Why not? Shipping to China will cost less..... Oh yeah... Right... It's all made in Chinas...

In that land where Wat Ju Say is not always Wa Ju Mean, I'd say Wii Doh No Ye.

Not even our attractive chinese flag ship Andrea Jung.

I'm sorry MDN but that quote you wrote in response to Elgan is kinda flimsy. He is right. China is a tough tough market and those bullet point realities he pointed out is very true and valid. Don't try to cover up this for Apple MDN. It would be much healthier to acknowledge the problems and try to come up with some solutions. Yes, there is a growing middle class but the number of those people just does not compare to the several hundred million people living near the poverty line which make up the majority of China.
In time Apple will learn how to address that market. In time....in a lot of time. And not any time soon.

Ok let's clear all your prejudice and realign your thinking. Repaet after me now...
1. China MAKES all the iphones,ipods and Mac Pro and MacBook Air and everything else Apple sells.
2. A car in China costs double what it cost in States.
3. In Shanghai and BJ, the number of Mercedes and Porsche Cayanne will make your head spins, Not to mention all the X5, BMW and Audi. It's not a coincident that Mercedes is introducing their new car in China.
4. People without enough money to buy cars and apt will buy expensive phones. It's not uncommon for taxi drivers here to own US$300-400 phones
5. Lots of people stay at home, not rent, see, mom cooks, so you get to spend your money
6. iPhones have been selling at double the costs in US and yet they sold over 1 million here, what that tells you...?
7. Apple basically has no presence here. They have been in our psyche for over 25 years in the States, how do you compare that?
8. Sometimes we are so US centric that we ignored the situations on the ground. But the truth is Apple had never had any strategy for China. No ad, no promotions, nothing. And that might have been the right decision up to now, because the market is a blackhole for advertising budgets. P&G;had been pumping in millions every year for 20 years in China. Apple had too much to take care of in the US up to now, when they have to consider bigger numbers than the US can deliver. Apple is smart to let the internet buzz to help it open people mind here. Now people are starting to talk about Jobs rather than Gates as the people they admire.

So to anyone who dismisses China offhand. You are looking at Japan in the 1980's. Except this is bigger, and just as determined. Apple is coming because they can't continue to ignore China anymore. Are you saying you're smarter than the bunch at Apple?

Jul 24, 08 - 06:27 am Comment from: Shiroi iBook

If you think the way Elgan does, then you're either a bad analyst or you won't have your business running well. Or just plain ignorant about the world market. The four points given are truly the most stupidest things ever one would use as arguments in doing business in China.

Earlier comments have given very nice and more brainy reasons why those 4 points of Elgan are so very wrong.

He's the typical western people who'd see the news where they keep showing bikes running all over the city in China (that people there still has nothing but bikes).

IP theft? They should thank these thieves because they contribute a lot to the "network effect" of a product adoption. Go back to biz school, Elgan

Talk about irony!

Christopher Columbus and/or Leif Erikson did not discover 'America' first. Chris took a Carribean cruise. Leif discovered very cold parts of Canada.

It was the Chinese in the early 1400's who really discovered 'America'. Australia and Africa as well.

• Apple is a mass-market luxury brand -

This is key. The majority of the Chinese population have no idea why anyone would buy a "luxury brand" when something else is available cheaper. The very concept of paying more money "for nothing" is alien.

• China has an authoritarian government

This is a stupid argument. Fascist or authoritarian governments are *ideal* environments for business. Companies line up all around the world, daily, to do business with dictators.

• There is no Chinese iTunes Store
• China is number one in intellectual property theft

These two (actually one thing) are the other key issue. If you have a culture with no laws to speak of re: IP issues, and a hundred year history of the average consumer buying stolen, copied merchandise instead of the "real thing," why would they ever change?

Apples job is to convince the average Chinese consumer that they have a moral obligation to purchase what they have previously been stealing all these years.

Good luck with that!

It was either the Chinese or the Japanese... or a combination of both of them that discovered the west coast... but that's not "proven"

Besides, where do you think the Natives came from? It's obvious that they're Shemetic.

Jul 24, 08 - 01:34 pm Comment from: Sir Gill Bates

"It's obvious that they're Shemetic."

Do they speak Yiddish?

Jul 24, 08 - 04:50 pm Comment from: Greg L

k-in-Shg:

No. I’m saying that Americans shouldn't trust their health to Chinese-made crap because the bastards will do anything for a buck.

I would also add that it should be pretty apparent that leaders should govern with the consent of the governed. Leaders who govern because they control the military doesn't impress me much.

If the U.S. hadn't have changed its trade policy and allowed billions of U.S. dollars to flow like a pipeline into China, it would still be in the stone ages.

Jul 25, 08 - 02:34 pm Comment from: Greg L

k-in-Shg:

One other thing. Starting in the 50s or 60s as I recall, Japan instituted a quality improvement program. Exported goods needed to have a gold, oval-shaped approval sticker that it conformed to quality standards. Japan wanted to dispel the notion that Japanese goods weren’t cheap little bamboo umbrellas for sticking into your cocktails. Quality goods were something the Japanese were good at making because they tended to be perfectionists and demanded a lot of their manufacturers.

If I were you k-in-Shg:, I wouldn't be so damned quick to count my chickens before they hatch regarding the rise of China. No doubt, they are a billion-plus strong and are rising up from the stone ages. And they are stealing the West’s technologies as fast as they can infiltrate Chinese “emigrants” to the West. But I wouldn’t expect Japan-like dominance in any industry (like electronics), if the country makes products that are just big fat turds.