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Apple finds room to grow in China

Posted: 28 Jul 2014  Print Version  Bookmark and Share

Keywords:China  Apple  iPhone 

Apple's latest quarterly results were fair, although reflecting a slow-moving growth. Taking a closer look, the iPhone maker's surprisingly strong showing in China emerges as a big reveal.

As the Financial Times (subscription required) put it, "Apple has become a China story."

Tim Cook, Apple's CEO, during the earnings' call described the company's latest quarter "a stellar quarter in greater China overall."

In the latest quarter ended June 28, 2014, Apple's net sales in Greater China, which includes Hong Kong and Taiwan, expanded to $5.94 billion, up by 28 per cent compared to the same period a year ago. In its 10-K filing, Apple characterized its year-over-year increase in Greater China as "significantly higher than those experienced by the company overall."

Apple pointed out that growth in net sales and unit sales of the iPhone was "especially strong" in the greater China region, thanks to the successful launch of new iPhones in Greater China at the end of 2013, increased demand for Apple's entry-priced iPhones, and the addition of China Mobile in the second quarter of 2014.

Chinese iPhone sales were up 48 per cent, Mac sales were up 39 per cent, and iPad sales were up a whopping 51 per cent. The iPad growth in China is noteworthy, especially when compared to the industry's overall tablet market in China, which is said to be growing at 21 per cent, according to IDC.

According to Cook, Apple grew its overall revenues in China, including its retail stories, at 31 per cent.

Apple vs Samsung in China

Cook, during the call, described Apple's business prospect in China in coming months—especially through its partnership with China mobile—as "a watershed moment."

Now compare that statement to Samsung, which disclosed earlier this month that its second-quarter operating profit dropped to a two-year low.

While blaming its fourth straight quarter of profit decline on the South Korean currency's appreciation against the US dollar and the euro, Samsung also acknowledged that sales of its midrange and low-end smartphones were weak in China and some European countries, due to stiff competition and slow demand.

Make no mistake. Samsung continues to lead the Chinese smartphone market with 18 per cent market share in the first quarter of 2014, according to Counterpoint, a market research firm.

In contrast, Apple, with a 10 per cent market share, is still trailing behind Lenovo, Xiaomi, and Coolpad, all of which are China's strong, local smartphone brands.

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Source: Counterpoint


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