Apple Expansion in China Falls Short of Goals
Apple Inc.’s two newest retail stores in the Greater China region—a long-awaited Hong Kong outlet and a third Shanghai store, the region’s biggest—are drawing much fanfare even as the company has shifted to a more measured expansion strategy. Analysts say the company’s distribution network in Greater China—which includes just six stores in the region so far, despite originally planning to open 25 stores by the end of the year—still lags behind competitors, but the company is in the midst of an aggressive expansion.
Apple relies on a network of resellers as well as its mobile operator partner, China Unicom (Hong Kong) Ltd., to distribute products throughout China. But the pace of Apple’s retail expansion in the region still lags behind the likes of Lenovo Group Ltd., Hewlett Packard Co. and Acer Inc. which have wide-reaching distribution networks in the country. The Hong Kong flagship store—which has been the center of rumors among online Apple forums for months and opens officially Saturday—will span 16,000 square feet over two floors in IFC Mall in the city’s Central district and requires a staff of 300. The new Shanghai store is Apple’s largest in mainland China. It occupies four floors and has more than 300 staff providing service to customers.
New stores alone won’t expand Apple’s relatively small market share in China, said Sandy Shen, research director at technology consulting firm Gartner. According to Gartner, Apple’s market share is relatively small at just 13% of the smartphone market in China and only 2% of the overall mobile phone market, trailing Nokia Corp. and Samsung Electronics Co., the world’s two biggest makers of handsets. “These stores are more important from the marketing perspective than sales,” Mr. Shen said. “It will help Apple increase brand awareness and consumer mind share, which will then drive demand for its products.”