Is Apple fighting a losing battle in China?

Is Apple fighting a losing battle in China?

Summary: In the smartphone market, Apple is playing catch up with Samsung in China, the world’s biggest mobile phone market.


HONG KONG –The long overnight queue outside Apple’s Central flagship store in Hong Kong disappears almost as quickly as it was built up. Now you can easily buy new iPads in a mall -- if you are willing to pay US$100 for a bunch of Apple accessories and a pad that looks the same, but only hotter, heavier, and with shorter battery life.

Since it was first launched in early March, the new iPad hasn’t been doing a good job in persuading the customer to pay US$500 to upgrade their old models. All kinds of critiques started to kick in: few apps and games optimized for the A5X CPU and quad-core graphics, the body’s heating issue, charging problems, so on and so forth.

Bigger resolution on a same-size Retina screen and a 5-megapixels build-in camera don’t seem to be this generation’s selling point, nor does the “Ultrafast” 4G LTE connection, since China, Apple’s second biggest market, is still working on its 4G infrastructure. Fans in Hong Kong are also disappointed, as the new iPad there doesn’t support the local 4G network.

But thanks to the sluggish Windows 8 and chaotic Android, iPad’s share is expected to rise to 60%, according to a report issued by iSuppli and Deutsche Bank in March.

After Tim Cook took over Apple from the legendary Steve Jobs last August, the challenge for Apple has been how to maintain the momentum and keep on redefining people’s digital life. But it seems that the successors of first generation iPhone and iPad are anything but revolutionary.

In the smartphone market, Apple is playing catch up with Samsung in China, the world’s biggest mobile phone market. Samsung’s share is three times bigger than Apple’s and growing, according to a recent Gartner report. Apple’s marriage with China’s second- and third-largest carriers, China Unicom and China Telecom, can’t give it an edge in competing with Samsung’s partnership-with-all-carriers strategy.

“Having access to more subscribers gives vendors like Samsung an advantage,” said Beijing-based analyst Teck Zhung Wong in a talk with Bloomberg, “If Apple is going to continue to grow in the Chinese market, it has to consider very seriously a handset with China Mobile.”

China Mobile has over 655 million subscribers, an equivalent to the population of the US and Canada combined.

These are not the only monkeys that are on Apple’s back. Fair Labor Association recently released a report urging Foxconn Electronics, Apple’s biggest supplier, to improve the working conditions, employee welfare, and its labor union system. The ongoing trademark dispute between Apple and Proview, a Shenzhen-based company which originally registered the ‘IPAD’ trademark, largely hinders the iPad sale in China.

All of these cast doubts upon the future of Apple in China. Whether it can emerge on top of the war with other big players like Samsung, or with small but annoying ones like Proview, or fight against itself, trying to carry the legend of Jobs as one of the most innovative companies in the world. Only time can tell.

Topics: Mobility, Apple, Hardware, iPad, Processors, Samsung, China, Wi-Fi

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  • Hmm

    Most people surveyed over there say the Apple products are too expensive so I can honestly see them never catching up to Samsung.
  • Sluggish Windows 8 and chaotic Android?

    I do not understand what the author is attempting to say.
    Tim Cook
    • Agreed

      I was thinking how can a product that has not been released be sluggish.
      • I thought the same thing

    • Me neither

      655 million equals US and Canada combined? REALLY?
      • Ya, Ha! Lets do the math.

        Total=652Mill (approx)

        I hate to make a big deal but seriously, 655 million people dont even exist in all of North Am. Even if one includes Mexico. To get there we do have to include Brazil, the 5th most populous country in the world, and even then we might have fallen a couple million short. But its close enough.

        I even question the 655Mill number of subscribers attributed to China Mobile. I'm just thinking out loud here, its half the population of the country, a country that has two other major providers. China, as a country as a whole, has money, large segments of the population, not so much. Not saying 655Million subscribers through the largest provider isnt possible, but its a pile in a country where so many people who do work for regular pay dont get much regular pay, and Im advised that there are still many who dont work for regular pay. As a guess I would have thought about a third of the population might be cell phone subscribers, say about 450Mill, still a whopping huge number, still larger than the entire population of Canada and the U.S., but well short of practically half the population through one provider alone.

        And of course, when one reads 655Mill is anything close to the U.S.+Canada popultion combined, it will tend to raise questions about other less commonly known numbers. That???s why its so important to not be so radically off on such a figure.
  • iPad sales are built on and around hype...

    China for all it's flaws isn't killing capitalism with oppressive IP laws like we are; so other tablets have a fighting chance in China and Apple isn't so special (or able to sue other tablets just because they have screens and icons)...the price makes it less cool in China because at their salaries having one is more like painting a giant target on your back for getting robbed. So there just isn't the "use Apple if you want to be cool" vibe we have here. Honestly, I think that attitude and blind loyalty is even fading in the US; it's just taking a little longer.
    • Genius this is about the iPhone not the iPad.

      The remainder of you very opinionated and fact less rant is equally as pertinent to the discussion... BRAVO:)

      Pagan jim
      James Quinn
      • Pay attention pal.

        iPhone or iPad same difference in regard to this post.
        It cost more to buy one thus android is bigger over there.
        And the Apple hype is fading.
    • Do you really believe what your saying....

      I hope you really don't believe your hypothesis....
    • Remind me again...

      Yes, please remind us what other OEMs are selling a 10 inch tablet anywhere with 2048-by-1536-pixel resolution for $499?
      And how many "fake" Samsung stores are there in China?
      And how many Chinese have stood in line for the latest Samsung smartphones--which, BTW, cost as much as an iPhone?
      And why has the iPad outsold the Mac in less than a year--because all the PC- fanboys are buying them.
      And why the only "successful" tablets are:
      1. Being sold at firesale prices so the OEMs can cut their loses (HP & RIM)
      2. Being sold at cost (and half the size of the iPad) with a vain hope of recouping profits by selling loss leader services and razor-thin margin merchandise.
      3. And then there's Samsung, the poster boy for non-Apple products who admits that their tablet market, in a word, "sucks."
      • Rage more pls

        Calm down people, it wont kill Apple for sure...
      • Reverse logic=FAIL

        "Yes, please remind us what other OEMs are selling a 10 inch tablet anywhere with 2048-by-1536-pixel resolution for $499?"

        None that I know of, and how is it that, that fact I guess is supposed to eliminate the idea that other companies are in competition with Apple and iPads?

        "And how many "fake" Samsung stores are there in China?"

        Good question. Do you know? Better yet, how many stores in China sell fake Samsung products?

        Better yet, how does that play into anything? Is someone saying fake Apple stores are a good thing and fake Samsung stores are a no no? I didn see that.

        "And why has the iPad outsold the Mac in less than a year--because all the PC- fanboys are buying them"

        Ha! Well, dont tell us in the future with one breath how stupid PC owners are because they went PC, and in the next breath tell us how smart they were to purchase an iPad. The fact is that most people who have REALLY put their mind to the question of why so many iPads have sold cant come up with a rational answer so I dont know how well your point fits at all.

        And ya, chill out. Apple isnt likely to go down the tubes any time soon. I think we all can accept that. How many days would a room full of Apple employees have to stand with wheel barrel loads of Apples $100 bills flushing them down the toilet non stop for that to happen?

        Lots and lots.
    • iPad sales are built on and around hype...


    admit it, folks; it's been way too long since we've seen one of these articles.
    • It's ZD-freaking-net

      Home of the clueless windoze fanboys. What did you all expect??
  • Didn't a kid sell a Kidney to get an iDevice?

    Has anyone in China sold a Kidney to get a Samsung? Still as I've always said volume counts for little... Profit counts for much, much more. So even "IF" Samsung wins the volume race what does it matter if Apple wins the profter per unit sold race? There will always be others nipping at Samsung's heals to sell inexpensive products to win the volume race. So who knows how long Samsung can or will hold onto the volume lead and if they slip what do they have to fall back upon? Once you loose the volume race and have already given up profit to win said race what do you have?

    Pagan jim
    James Quinn
    • Then there's the other view...

      Maybe Chinese kids are smarter than American ones and realise a kidney is more valuable than a phone?

      Just saying.
  • A trend that has been established...

    This is a typical ZDNet FUD opinion.... I've noticed how they are now pumping Windows 8 (anything Microsoft). The market will decide all these issues in the due course of time.... these type of predictions are just bulls**t/propaganda/filler/payback for advertising support.... take it all with a grain of salt..... who in there right mind can predict what's going to happen in China.... a much easier trend to guestimate is Baidu search displacing Google, now thats a trend that has been established.
    • The conspiracy theory...LOOK OUT!

      Chill out with the whole ZDNet conspiring to "pump" Windows 8. The only talk I have seen about Windows 8 on ZDNet is a strong critical analysis of the OS. Just about everyone has questioned its over all potential for success in one way or another. What has been pumped is its apparent capability on tablets and smartphones. I imagine largely based on the highly positive reports on Windows 7 phone.

      And I would suggest that there have been plenty of positive reports on Apple products, plenty right here on ZDNet, and wow, if anyone ever so much as implied that ZDNet was simply conspiring to be pro Apple its guys just like you who would have chewed their head off saying ZDNet is just calling it as it sees it.