Why Is China Getting This Apple Store Barrage?
Apple (NASDAQ:AAPL) has its eye set on China. It will take a lot of work to keep the company’s growth at a substantial rate in that region as its economic growth begins to slow down.
In Apple’s fourth quarter, the company showed just what China meant to it, as it saw its operations increase 67 percent in that region. Apple continued to see growth in the second quarter, with revenue from China reaching a record $8.8 billion. However, the rate of growth was much lower than before, coming in at just 11 percent of the company’s total.
The slowdown of Apple’s growth in China makes sense; until recently, the Chinese economy had been growing very quickly. Naturally, Apple had to expect its growth rate in China would be intimately paired with the economy’s growth rate.
Apple, of course, doesn’t want its growth in China to slow down too much, and it does have a means to maintain high growth rates. In the company’s earnings call Tuesday, Chief Executive Officer Tim Cook said the company would look into doubling the number of Apple Stores in China. Currently, there are 11 such stores. Interestingly enough, 22 stores would still be too little too late in the eyes of Ron Johnson, who once was the head of retail operations at Apple and had called for 25 Apple Stores in China by February 2012. Apple expects to double the 11 stores within 2 years…
China has a massive population and it’s the biggest market for electronics like smartphones, but it doesn’t have the highest average incomes, which could be trouble for Apple’s high-priced devices. While increased Apple Stores and boosted availability at mobile carriers might help Apple sell to wealthy consumers, there are still a lot of potential customers who could be turned off by high prices.
The idea of Apple releasing a low-cost smartphone has been floating around for a little while now, and such a smartphone could be the key to the continuation of its high-paced growth in China. However, even without the cheap device, Apple is seeing great sales increases — iPad sales rose 138 percent year-on-year.
Don’t Miss: Can Apple Make a Bigger iPhone?