APPLE Inc. IN CHINA

business

Description

Apple in China


China is an extremely important market for us and we will continue to look at how to grow it further.

Tim Cook, Apple CEO1


China is Apple’s fastest growing market but the road to success has not been smooth. Apple’s products are pre-

dominantly contract manufactured in China by Foxconn, a Taiwanese company that was the focus of considerable


criticism and negative publicity for poor working conditions and suicides among its young workers. Apple, an

aspirational brand in China, was named the top brand in the world in 2015 by Brand Finance—followed by their

global nemesis, Samsung. The growing consumer power of the Chinese middle class has accelerated demand for

Apple products. Apple’s popularity in China led to considerable counterfeiting or copying of their prototypes,

products, know-how, trade secrets, service model, and store concepts. The propensity of some Chinese to show

off high-status consumer goods further spurred the activities of Apple counterfeiters and imitators. After more

than a quarter century of economic growth, China’s high-growth economy was slowing. Despite these obstacles,

Apple CEO Tim Cook maintains that China is key to Apple’s bottom line now and in the future.

Apple Overview

In 2001, Apple turned 25 and the consumer electronics domain was experiencing significant changes. The use


of digital variants of lifestyle products, such as still and movie cameras, once considered exotic, became com-

monplace. Information previously accessed, or media consumed, using a personal computer (PC) was being


accessed using portable devices like digital music players; and early smartphones that combined personal digital

assistants with mobile phones were available. With the introduction of the iPod followed by the iPhone, Apple

underwent a substantial transformation. Apple shifted from their earlier and singular emphasis on the PC to an

integrated consumer electronics ecosystem.

That same year, Steve Jobs unleashed the Digital Hub strategy that positioned Apple PCs as an anchor and

value enhancer for emerging digital lifestyle devices. For example, a movie captured using a digital camcorder

with limited capabilities could be edited using Apple PC application software to create a professional look for

personal memories or for commercial purposes. Apple Computer formally renamed itself Apple Inc. in 2007. By

2009, a short two years later, nearly 60 percent of Apple’s sales were from the iPhone and iPod.2


By that time,

IBM had exited PCs and sold its PC business to the Chinese multinational, Lenovo. IBM, Apple, and Lenovo

were experiencing and responding to the maturation of the PC industry, each taking a different path.

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