Apple Ramping Up Its Far East Efforts

With more than 1.3 billion souls – Apple Computer Inc. (AAPL), has got to throw in more than a few pennies for the Chinese market. After all – China is the rising star. So, at long last, after years of remaining distant from one of the world’s fastest-growing technology markets and the world’s largest cellphone market, Apple Inc. is ramping up its retail strategy in China.

On July 19, Apple opened its first direct-run store, an all-glass building at Sanlitun Village in Beijing, about 4 miles northeast of Tiananmen Square, consisting of three floors, reported to be 995 square meters in size and with typical Apple store features such as a Genius Bar, where existing users can get technical support ; signaling this way, a milestone of the US company’s efforts to change its dealer-centric marketing model in the Chinese market. Twelve hours before the opening of its Beijing store, notes WSJ – close to 100 people showed up, even though the company didn’t advertise the store’s opening, aside from emails sent to some known users.

Sensing huge opportunities from customers in Mainland China, Apple is speeding up its China strategy, planning to open a second store in Beijing in 2009, and open more in Beijing, Shanghai, and Guangzhou. Apple’s stores, which are in only seven countries so far, generate 20% of the company’s world-wide revenue – Ron Johnson, senior vice president of Retail Operations at Apple, said in an interview on July 17.

However, iPhone mobile phones will not be sold at the first store tomorrow, the senior vice president noted. In order to bring iPhone mobile phones into the Chinese market, Apple has been in bristly negotiations with Chinese mobile carriers for months, including China Mobile Ltd (CHL) and China Unicom Ltd (CHU).

One interesting fact: even though the iPhone hasn’t officially been released in China, many tech-savvy youth have already bought and hacked the device, making it work in China.

According to research firm In-Stat, despite the device never being officially launched there – China Mobile, the biggest wireless carrier in China said, “there were about 400,000 cracked iPhones using its cellular network service at the end of 2007, representing one out of every 10 iPhone shipments announced officially by Apple”. In-Stat was surprised by the figure as it was fourfold of what the research firm had previously estimated.

Apple’s presence in China, has been labeled by many as almost ‘invisible’. Apple, whose computers are shipped with Chinese-language options and have more than doubled in sales on year-over-year basis, says its China entry has been aggressive.

“We didn’t wait long” to come to China, says Ron Johnson. “Every year, we’ve launched in a new country. You’re not going to find another retailer on the planet who has been that aggressive at rolling out stores”.

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