Apple China: The Love Affair That Could Pay Off Big

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Apple (NASDAQ:AAPL) has enjoyed a stellar year in China. This is partly due to a rising middle class and a brand power which transcends cultural barriers. In fact, Greater China, which includes Taiwan and Hong Kong generates 25% of Apple’s total revenue. Moreover, due to the fact that half of Chinese iPhone buyers are first-time purchasers, Apple enjoys an unprecedented appetite for their products. This said, there are certain ‘roadblocks’ to Apple dominating the Greater China market. On the other hand, there remain opportunities in China which could help skyrocket Apple’s stock price.

Apple China: The Opportunities

Apple CEO, Tim Cook, indicated that Greater China is fertile ground for growth during the Q3 earnings conference call. He stated that Apple remains “extremely bullish” with regard to the Chinese opportunity, and will “continue to invest,”.

To put into numerical perspective how well Apple has performed in China over the recent past, take a look at these figures.

1) Sales up 84% in the past fiscal year: It seems that Apple’s marketing message has reached the Chinese people loud and clear as consumers are literally scrambling for the handsets. In fact, take a visit to China, and the iPhone is the smartphone of choice for most business people. It has taken the productivity crown that RIM’s Blackberry previously enjoyed.

2) iPhone sales up by 112% Y-o-Y: This isn’t surprising as the iPhone is Apple’s greatest source of revenue. The middle class in China have more disposable income. As a result, they are looking for new ways to spend it. Generally speaking, the Chinese view the iPhone as a statement of having achieved success.

3) On average, consumers in China opt for iPhones with higher storage; as a result Apple is able to gain more profit as compared to selling their product in another region.

It is worth noting that Apple’s record beating quarter for iPhone sales is strongly connected with their performance in China. Greater China has a population of more than a billion people, and due to an increasingly entrepreneural population, Apple is betting big that as the economy improves, their sales improve too.