Apple's ten years of courting China

Apple is trying to please China. In the new iPhone released in September 2018, Apple implemented the dual-SIM dual-standby function for the first time. Among them, iPhone XS Max and iPhone XR only support dual-SIM dual-standby physical card slots in China.

At 10 pm on October 30, just over a month after its last release, Apple once again released a new product, offering a variety of color schemes for domestic users to choose from on the newly released iPhone XR. Apple also unprecedentedly fully translated the iOS system text into Chinese, making it more suitable for Chinese users.

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Apple has been trying to please China. It first appeared in the eyes of the Chinese people in 2007, and its products were first sold in Hong Kong, Macau and Taiwan. By 2008, Apple stores opened in Beijing and Shanghai, and now they are all over the Chinese mainland.

After entering China for ten years, Apple now targets the Chinese mainland market first with every new product it launches, and the money-making prospects here are vast.

1. When Apple first entered China, it focused on innovation and cooperation

A long time ago, there was such a saying: iPhone was not popular before iPhone 4, it became popular because of its awesome performance.

In fact, before Apple entered China, the first two generations of iPhones were not even launched in the country. The third generation was launched in China five months later than in the United States, resulting in missing the market cycle. Therefore, the first three generations were not well known in China.

After entering the Chinese market, Apple vigorously promoted its new iPhone 4. The most impressive thing was the placement of its mobile phone ads in various TV dramas. At the same time, the domestic mobile phone environment at that time was also a big factor, because there were no real "smart phones" at that time. Apple's entry interpreted revolutionary development.

The revolutionary nature of the iPhone lies in its creative answer to the questions of "what is a touch phone" and "what is a smartphone". Many people believe that a touch screen phone is a smartphone, but this is not true. For example, in previous touch phones, there was a page turning function in the address book, so the designers at the time drew a "next page" button on the screen, and the page could only be turned by tapping it with a stylus. It may seem ridiculous now, but it was really like that at the time. So when Apple showed everyone the sliding operation that conforms to human intuition, everyone realized that no matter how beautifully you designed the "next page" button, it was always wrong. In other words, after Apple entered China, it immediately proposed and implemented a brand new interactive logic for touch screens to the public.

In 2009, Apple and China Unicom worked closely together. Unicom and Apple reached a three-year exclusive sales agreement on iPhone sales in China: Apple sold bare phones to Unicom at a price of RMB 3,000 per phone, and Unicom was responsible for underwriting 1 million to 2 million phones each year, guaranteeing sales of no less than RMB 5 billion; Apple did not participate in Unicom's business sharing, but the phone had a built-in App Store to sell software and services to consumers.

The cooperation between the two parties is undoubtedly a win-win situation. On the one hand, Apple's sales in China are guaranteed to a certain extent, and on the other hand, China Unicom has also added a lot of customers. In any case, Apple will not be the one who suffers the loss when it enters China for the first time.

2. Apple’s motives for currying favor with China

Although the cooperation with China Unicom increased sales, there was no shortage of competitors in China. At that time, the domestic market had already been divided by Nokia and Motorola, especially Nokia, which had a large share of the domestic market. It was not easy for Apple to completely seize the domestic market.

Apple wins because of its strategy. After entering the Chinese market, in order to attract more Chinese users and make the iPhone surpass its competitors in all aspects, Apple not only increased the standby time of the phone, but also shortened the release time in China and the United States, so that Chinese users can get the iPhone as soon as possible. It is said that the sales of iPhone 4 reached 1.7 million units within three days of its release in China. In Apple's direct stores in Beijing, scalpers even fought to grab a spot.

Apple's rapid development has also given domestic mobile phone manufacturers business opportunities. Since 2012, various Chinese mobile phone brands have sprung up like mushrooms after rain, especially mobile phone brands represented by OPPO, VIVO, Huawei, Xiaomi, etc., which have strongly impacted the domestic market. When Apple's models were at a low ebb, they released various new products one after another, as if they were "encircling and suppressing" Apple.

Apple has always been unwilling to be outdone and has been competing head-on with domestic companies. It is worth mentioning that Apple, which has never offered preferential measures in China, has launched an "education preferential" policy for the first time - as long as students and faculty members of Chinese universities can enjoy preferential purchase qualifications once a year. As soon as the activity was launched, it was warmly welcomed by many university teachers and students. Apple products instantly became the "social hard currency" of young people and became the mainstream among those born in the 1980s and 1990s.

Generally speaking, Apple's goal in entering China was to seize the Chinese market as quickly as possible. Apple is not only confident in its product advantages, but also has a firm grasp of the consumer psychology of young Chinese people and knows what kind of mobile phone positioning is suitable for them.

3. Strive to create “Apple consumption” for the Chinese population

After gradually gaining a foothold in the Chinese market, Apple was not satisfied with the development of its current product hardware and began to diversify its business. It is worth mentioning that Apple has opened the road to mobile payment.

Apple Pay, an NFC-based mobile payment function released by Apple, has been officially launched in China. When it was first launched, it attracted numerous doubts in China. Of course, these doubts are not without reason, because Alipay and WeChat Pay have already occupied more than 90% of the domestic mobile payment market share. In such a competition, can Apple Pay last long?

Of course, Apple has considered this point. The purpose of Apple's launch of Apple Pay is to quickly occupy the Chinese market. After all, the iPhone has a huge user base in China. If this group uses Apple Pay to pay, the profit can be imagined, not to mention that Apple has to charge a certain fee to the bank.

But the reality is very cruel. People who are used to scanning QR code to pay are obviously not very accepting of this payment method, so Apple has to use a "down-to-earth" way to please Chinese users again. Apple China's official website stated that from July 18 to 24, 2017, anyone who uses Apple Pay to pay in designated stores with UnionPay Cloud QuickPass logo can enjoy discounts as low as 50% and up to 50 times the bank credit card points reward.

Apple chose to subsidize the product in order to attract more users. Although the effect was achieved within 7 days, it is not a long-term solution. Many users even complained that the activity was over before they even heard the news.

Obviously, Apple's sincerity in making concessions needs to be improved. To put it bluntly, it is still reluctant to make more investments and is still thinking about its own profits and making money. However, educating and cultivating users is a long process. If it continues to be so stingy, the user's usage habits will not be cultivated at all, and the result is often a futile "flattery".

4. Some things are “thankless”

Apple began to release new products simultaneously in mainland China in 2013. Although it has long occupied the majority of the Chinese market share, according to the financial report released by Apple, the Chinese market has experienced "negative growth."

On August 2, 2018, Apple released its third quarter financial report for fiscal year 2017, with quarterly revenue of $45.4 billion, up 7.2% from $42.4 billion in the same period last year. However, a careful comparison with the 2016 financial report reveals that the revenue in 2016 was not high either. If it increased by 7%, perhaps this "growth" is likely to remain the same as that in 2016, showing a trend of "some increases and some decreases, just in line with the rules" in terms of revenue.

The so-called "growth while decline" refers to Apple's "loss" in the Chinese market: its revenue in China was $8.004 billion, down 10% from $8.848 billion in the same period last year, a negative growth of 10%. Perhaps it is related to the "encirclement and raid" of domestic mobile phones, because they targeted Apple's lack of innovation during its downturn; or Apple's successive price increases made the original "Apple fans" unable to cope, and then turned to the current domestic "Android fans".

On the other hand, Apple's arrogant attitude also made everyone very dissatisfied. The "Apple-WeChat quarrel" in 2017 dominated the topic for a while. The reason was simple: Apple wanted to get a piece of WeChat, but WeChat refused to let it. This incident exposed the "commissioning" model of Apple's App Store and also exposed Apple's anxious mentality of seeking quick success in China.

Domestic users have said that if Apple dares to remove WeChat, most people will stop using Apple products. Seeing that the situation is not good, Apple rarely responded to this, implying that WeChat did not abide by the spirit of the contract, which is very intriguing. In fact, the fundamental reason for this "fight" is that Apple looks at the problem from the perspective of its own interests and does not consider other factors. Because in Apple's cognition: no matter who it is, you must abide by my rules of the game.

But Apple forgot that Chinese users value the emotional factors of a company more. If Apple does not curb its "domineering" behavior, it may suffer even more losses.

How will Apple win hearts in the future?

On October 8, 2018, Apple CEO Tim Cook made a surprise visit to China, with Shanghai being his first stop. Although he has visited China more than a dozen times in the past few years, this visit coincided with the key juncture of Apple's ten-year entry into China, and also an important stage in the Sino-US trade game.

Cook's visit laid an important foundation for Apple's future layout in China. Cook made it clear that he would continue to increase investment in Shanghai and expand cooperation areas. When talking about the Chinese market, Cook said that he had "never been as optimistic as he is now", which shows that Cook is very optimistic about the future prospects and has a clear development orientation for the layout in China.

Apple officially announced that it will set up R&D centers in Beijing, Shanghai, Suzhou and Shenzhen, and that more Chinese developers will participate in the construction of Apple systems in the future, and Apple will also invest more development funds in China. Indeed, up to now, Apple has paid more than 100 billion yuan in development fees to Chinese developers.

In addition to the R&D center, Apple's investment projects in China continue to increase, including the familiar Didi Chuxing. According to analysis, the investment in Didi is likely to be based on its data, and it is not ruled out that it will serve Apple's future driverless car project. What is even more surprising is that Apple even put most of its final assembly factories in China, including 14 factories under Foxconn, Pegatron Technology, Quanta Computer, etc.

Over the past decade, Apple's popularity in China has continued to rise. Just like an idol with high traffic, it is still worth our expectations despite constant scandals.