#34 Wai? Wai?
Days after Apple’s official introduction of the iPhone in China, the media report of a rather lukewarm reception for the gadget that has been hugely successful in other countries. Where there were long lines in front of stores in the United States, employees at the Apple store in Beijing are yet waiting for the big rush in the world’s largest market for mobile phones. With a hefty price tag of between $730 to $1,020 many affluent Chinese are simply turning to cheaper grey market imports ranging between $440 to $840. In addition, the fact that the Chinese iPhone does not include WiFi capability because of Chinese government regulations certainly doesn’t help to create the buzz that Apple’s marketing builds on.
January 12, 2011 @ 9:33 pm
Apple is a well-known company that is famous for its great marketing-strategies for the iPod, the iPhone the iPad and other products.
In particular, the iPhone is one of the most used examples for a product with huge international success and a global marketing-strategie that works all around the globe.
How come that in China, a country that loves communication via mobile phones, the launch of the new iPhone could fail?
In my opinion the managers and marketers of apple did not do their homework very carefully. Obviously, they did not do enough research to recognize the problems about the WiFi. As China is the biggest market for mobile phones, they should have found a solution for the problem. If they had done so, they might have been able to offer a special iPhone for China, that includes other features. The additional features could have offset the WiFi problem and satisfied the Chinese customers.
Even high-standardized global products need adaption to local circumstances at a certain extend and that would have been a reason to adjust the iPhone to China.
The second mistake was the high price. Why should a Chinese customer pay the same price as a customer in the USA or in Europe for a mobile phone providing less features and services? There is no good reason to tell.
Due to the high power distance people in China might not protest against governmental decision, even if they do not agree with them. The government decided to prohibit the iPhone’s features and the inhabitants accept it.
January 16, 2011 @ 4:41 pm
After nearly 2 years of failed negotiations between Apple and China Mobile, the product introducation of the IPhone 3 in China was far from successful.
Two important reasons for that breakdown were already mentioned by Cornelia: the exorbitant prize, which is simply not to afford for ‘normal Chinese people’ and the lower configuration, which has to do with the strict government in China.
In my opionion there are two more reasons (which of course stick together with the mentioned ones):
Firstly, China, also known as ‘the world champion of copying and reproducing’, want to get a slice of the whole ‘IPhone’ cake and so they produced long ago their ‘own IPhone’, which is simply called ‘mini IPhone’ or ‘ifone’. It’s not a surprise, that this plagiarism is much more cheaper and so, not only interesting for Chinese consumers, also for the international market. As the rip-offs were launched, Ebay for example was truely flooded.
Secondly, in my opinion the ‘relationship’ between Chinese people and the big player Apple is not the best. The company of Apple is based in California, but the models are made all over the world, mostly in China. The average wage for an employee at such an producing plant, is just over 900 yuan (£90) per month. Furthermore, n recent years, there were many reports about suicides from Chinese factory workers. The deaths have thrown a spotlight on conditions for millions of Chinese factory workers which can involve long hours, low pay and high stressful. Many Chinese factory workers are migrants from poor and rural areas in the centre of China, living far away from their family and communities.
Everybody in the world, also the hard-working employees in those plants and more wealthy Chinese people, who even could afford an IPhone, knows that companies like Apple went to China to save personnel cost, but in the same breath to gain solid profits…
I cannot believe that Apple or other western companies do enjoy a high reputation among the Chinese folk. Of course, they got jobs because of them, but I’m sure they would like to work for an Chinese company if they got the choice.
By the way, the launch from IPhone 4 in the end of 2010 was much more succesful for Apple in China. During some hours the gadget was sold out.
For me, Apple and China are so-called ‘false friends’…
November 9, 2016 @ 8:03 pm
Apple´s product launch fail in China is quiet long ago and therefore, I would like to mention that they proved since then that it is possible to crack the Chinese market after all. Doing business in this country is still really difficult, due to the created obstacles from the government.
Later on Apple failed with marketing the lower-priced iPhone 5C as well, so they decided to adress the number of consumers who are willing to buy luxury goods and status symbols instead.
Another heplful step to enter the Chinese market was the time-consuming but final contracting with China Mobile, which has a huge network of approximately 760 million subscribers.
In a country where bigger is better, most people don’t have TVs in their homes and therefore use their smartphones for everything, the launch of the iPhone 6 Plus with it’s big screen became a success.
The iPhone is now known as a status symbol in China. Different from the WIFI adaptation in 2009, the product itself was introduced standardized and with the same features as in any other country. So Apple’s key objective was to allow Chinese consumers to connect with the broader, global economy and offer them a global product that looks the same everywhere.
Additionally, the missing demand from the customers at the Apple store in Beijing turned into a cheer during the Apple store opening in 2014 in Wuxi, China.
From my point of view, another crucial factor for the market success relates to China’s highly collectivist culture, where people act in the interests of the group and place importance on colleagues’ opinions. Early adopters and opinion leader might have been the reason for the general acceptance of the reinterpreted product.
A final aspect to consider – and propably the most determining – ist the explosive growth of China’s emerging middle class during the last few years. This development made it easier for Western companies to offer premium products to Chinese customers who are able and willing to pay a higher price.
April 12, 2018 @ 10:03 am
iPhone; a story of success no matter what the Androids (including me) say. But what about Apple’s near decade in China? I followed the Apple approach in China over the last almost ten years, for a reason: Apple’s data security politics made and still make the iPhone the prime choice for many businesses as a business phone.
Consider Apple’s hardline against the FBI in February 2016 concerning the user data of a potential terrorist. Back then Apple proclaimed to be the one company caring for Data security and Privacy of users. They stated and screamed out loud their privacy related USP for everyone, worldwide to hear. And I personally guess that this fact is the main reason (besides opinion leaders liking the luxury toy in a collectivist culture) why Apple’s iPhone grew from 0 to an average of around 20 percent share of the Chinese smartphone market from 2009 to 2017. A country’s people have a need for privacy when government itself gives not away information and on the other hand has access to every bit of (private) communication of every single citizen. I personally assume that Apple did a great effort in terms of market research considering the target market selection of China.
In the beginning of it’s China start Apple had to “take out” WIFI compatibility to meet official China’s politics concerning the Internet usage of their citizens. Thus, Apple applied an adaptation strategy in terms of adapting their “final product” to meet political standards of the new market which was not gladly accepted by potential customers. Furthermore, the prices for Apple products were, are and will remain high. Apple know that they have a luxury product line almost exclusively and that status, as well as data security around the world is still important to many.
However, Apple still offered the possibility to download Apps like the NY-Times and other international news feeds for their users. Enabling them to get unfiltered (by Chinese government) information concerning other countries f.i.. Furthermore, Apple seemed to realize that their approach of storing data on American servers exclusively provides a certain benefit for Chinese individuals who wanted to remain individual; thus, offering something that no other smartphone distributor offered. Their prices, however remained high and therefore they “only” gained 130 million customers (roughly ten percent of the total citizens) in China. Well that is something to built on and clearly shows to other companies that the potential customers of luxury goods in China has grown immensely during the last decade.
Since 2017, however Apple first took down news feed aps, that were international which correlates (not necessarily causal interdependence though) with a decline of their briefly grown (around 40%) market share in China below 20%; and now, covered from the Facebook scandal, they agreed to new regulations of China’s politic to install the servers for Chinese customers not only on Chinese soil but also under the governance of a governmental owned Big Data storage company.
Considering this I am first disappointed that a company who stood its ground against the FBI and, thus American government, just give in that easily and secondly I wonder if Apple will remain in the relatively high 20% range of market share or will drop and have to leave the Chinese market due to the, in my eyes data privacy related USP downfall they created for Chinese customers who could afford an iPhone.