Apple champions China

20 October 2011

BEIJING: Apple, the electronics group, has suggested the "sky is the limit" in China, where rising affluence and changing consumer preferences have fuelled a rapid surge in revenues.

Just 2% of Apple's sales came from China in the 2009 fiscal year, reaching 12% in the corresponding period for 2010, and 16%, or $4.5bn, during the last quarter, a 270% improvement on an annual basis.

Overall, the world's most populous nation has yielded $13bn for Apple in the latest 12 months, measured against only $3bn a year earlier.

"Certainly in my lifetime, I've never seen a country with as many people rising into the middle class that aspire to buy products that Apple makes," Tim Cook, Apple's CEO, said on a conference call. "The sky is the limit there."

"So I think it's an area of enormous opportunity, and it has quickly become number two on our list of top revenue countries very, very quickly and we're obviously placing additional investment."

The US multinational recently unveiled its first branded retail branch in Hong Kong, and one in Shanghai, which have joined its existing stores in the Greater China region in supplying the highest traffic and revenues per outlet worldwide.

It also has over 200 Apple Premium Resellers (APRs), or chains solely selling the company's goods, some 7,000 individual points of sale, and an official ecommerce platform which went live at the end of 2010.

"We're building more stores there as well as doing quite a few other things to continue to deliver our great products to the people of China," said Cook.

"The China progress has been amazing," said Cook. "It's our fastest growing major region by far ... It is growing at a feverish pace."

When appraising Apple's Chinese strategy so far, Cook suggested it has primarily followed an approach that leveraged its unique capabilities and expertise.

"In China, we picked everything that we knew to do. We are building retail. We went in with an online store. We're building an APR channel. We're building a third-party channel. We're doing significant advertising," he said.

More broadly, the organisation has pursued a similar model, the one deployed in its home market. "Everything basically that we're doing in the United States, we're doing in China," said Cook.

Data sourced from Seeking Alpha; additional content by Warc staff