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Teaching Note

Apple’s iPhone in China: Can Apple Cash in on the

World’s Biggest Mobile Market?

Prerequisite Conceptual Understanding

• To understand the effects of 2008 telecom restructuring on Chinese telecom enterprises – Gove
Jonathan and Lau Arnold, “China’s New Telecommunications Landscape: Who Will Win?”, http:/
/www.oliverwyman.com/ow/pdf_files/OW_EN_CMT_2008_ChinaTelecom.pdf, 2008
• To understand how late movers can create an advantage over incumbents – Gurumurthy
Kalyanaram and Ragu Gurumurthy, “Market Entry Strategies: Pioneers Versus Late Arrivals”,
http://www.wright.edu/~tdung/entry.pdf, 1998
• To have an understanding of Chinese consumer behaviour – McEwen William, et al.,
“Understanding the Chinese Consumer”, http://hbswk.hbs.edu/archive/5306.html, April 24th 2006.

Synopsis of the Case Study

Set in 2009, this case study primarily deals with Apple iPhone’s foray into Chinese mobile telecommunications
market and the opportunities and threats for the product in this market. The case study delves into the
Chinese mobile telecommunications industry – mobile operators, handset makers and subscriber growth –
and into issues like Chinese consumer preferences and mobile grey market. It also captures in brief about
Apple Inc. (Apple) and various other products of the company. Towards the end, the case study poses
following dilemmas – Can Apple as a late entrant into Chinese mobile market, make good sales of iPhone?
Will Apple’s pricing strategy in fiercely competitive Chinese mobile market fetch good market share for the
company? What will be the affect of grey market phones on Apple iPhone sales in China?

Pedagogical Objectives
• To critically analyse and understand the Chinese mobile industry (mobile services and handsets)
and its competitive landscape
• To understand the consumer preferences and the critical success factors in the Chinese mobile
market

This teaching note was written by Naga Sandhya Ramadugu, under the guidance of Syed Abdul Samad, IBSCDC. It is only an
illustrative orchestration of the case study ‘Apple’s iPhone in China: Can Apple Cash in on the World’s Biggest Mobile Market?’.
It is never meant to limit the learning outcomes.

© 2009, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever
without the permission of the copyright owner.
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Teaching Note Apple’s iPhone in China: Can Apple Cash in on the World’s Biggest ...

• To analyse the reasons behind Apple’s foray into the Chinese mobile market and evaluate the
possibility of success and failure for Apple’s iPhone in China.

Teaching Plan
Both the Teaching Note and the Structured Assignment follow a specific Teaching Plan [Annexure (TN)-I].

Assignment Questions
I. Discuss in brief about the evolution of mobile telecommunications industry in China and the
developments in this industry over a period of time. How is the competition (for both, mobile
phone brands and mobile services providers) within this industry?
II. What are the critical success factors of the Chinese mobile market?
III. Discuss briefly about Apple Inc. and its foray into the Chinese mobile handset market? Analyse
the opportunities and challenges for Apple’s iPhone in Chinese mobile handset market?

Case Analysis
The essence of the teaching note can be obtained from the following pictorial representation [Exhibit (TN)-I]:

Exhibit (TN)-I
Case Discussion Flow

Chinese Mobile Telecommunications Consumer Preferences

Industry  Consumer Preferences for mobile
operators and mobile handsets
Mobile Telecom  Consumer Preferences for smartphones
Handset Operators and Critical Success Factors in Chinese Mobile
Brands and Competition Market
Competition  Appropriate pricing
 Quality orientation and enhanced features
2008 Restructuring and its Benefits
 Customer-centric offerings
2008 Telecom restructuring and the  Effective distribution network
2008
opportunities created for telecom operators  Brand image
and mobile handset brands  Marketing strategies

Apple iPhone Opportunities and Challenges

Opportunities Challenges
Product design High Pricing
Quality Absence of Wi-Fi feature
Growth of smartphone market in China Lack of cultish image in China
Fierce competition
Late entry into Chinese mobile market
Grey market

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I. Nature and Competitive Landscape of Chinese Mobile Industry

The faculty can trigger the discussion with how changing consumer needs and desire for convenient
lifestyle are encouraging companies to invent new applications and gadgets, which make human life easy
and cushy. In the process of innovation, companies made mobility a key element and mobile phones
occupied an important place in convenience-driven lifestyle. The faculty can discuss about the growth of
mobile services globally and the difference in this growth across developed and developing countries.
Once students get an idea about mobile phones, mobile services and their growth across the globe, the
discussion can be directed towards China, which is a developing country offering huge opportunities in
mobile telecommunications.

Briefly discuss the origin of mobile telecommunications industry in China.Analyse

how Chinese mobile telecom industry developed in terms of technologies (for
both telecom operators and handset manufacturers) over a period of time.
For an overview of Chinese mobile telecommunications industry, the faculty needs to discuss the following:
• How Chinese telecommunications industry adopted improved technologies and developed over
a period of time?
• Who are the telecom operators offering mobile services in China? What were the technologies
used by them?
• Who are the major handset manufacturers in Chinese mobile telecommunications industry and
how was the competition among these players?
• Did the Chinese mobile telecommunications industry undergo any reforms and what has been the
outcome of these reforms?

Mobile Technologies
To understand how China adopted improved technologies, the following points can be discussed:
Exhibit I of the case study can be used to understand the development of mobile technologies in China)
• Mobile services were officially introduced in China in 1987, which were based on analogue
standards (page 2, para 1 of the case study)
• After 1994, Chinese mobile telecommunications industry adopted second generation (2G) digital
systems (page 3, para 1 of the case study)
• In 1998, Code Division Multiple Access (CDMA) services were launched commercially in Chinese
mobile telecommunications industry (page 3, para 2 of the case study)
• In 2008, third generation (3G) mobile technologies were adopted by the industry (page 7, para 1 of
the case study).

1
Hedley Don, “Convenience, convenience, convenience”, http://www.euromonitor.com/Convenience_convenience_convenience, April 4th 2007

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Telecom Operators
To get a brief picture of the companies which offered mobile services in China, the following points can be
discussed:
• In 1987, Ministry of Posts and Telecommunications (MPT) offered mobile services in China (page
2, para 1 of the case study) using analog technology
• From 1994, China Unicom also offered mobile services based on GSM technology (page 3, para 1
of the case study)
• Post-1994, the operating arm of MPT was separated to form China Telecom. Since then, China
Telecom offered GSM mobile services (page 3, para 2 of the case study). China Telecom and China
Unicom were the only two state-owned enterprises offering mobile services in China
• Post-1998, China Unicom offered both GSM and CDMA services (page 3, para 2 of the case study)
• Post-1998, China Telecom’s mobile service business was transferred to China Mobile. Since then,
China Mobile and China Unicom offered mobile services in China
• From 2008, Chinese telecommunications industry comprised three state-owned enterprises –
China Mobile, China Telecom and China Unicom – offering mobile services in Chinese mobile
market.
It should be evident for the students that Chinese telecommunications industry was transforming over a
period of time and mobile services were primarily concentrated in the hands of state-owned enterprises. The
competition is also amongst the three state-owned players.

Reforms in Chinese Telecommunications Industry

The reforms in the Chinese telecommunications market and their effects are listed in Exhibit (TN)-II:

Exhibit (TN)-II
Reforms in Chinese Telecommunications Industry
Year Changes Made Effects of Changes
1987 • Ministry of Post and Telecommunication (MPT) • Mobile services started in China
launched mobile communications in China using analog technologies
1994 • United Telecommunications Corporation • Steps towards resolving the
(China Unicom) was established to provide monopoly status in telecom
competition for MPT industry began
• MPT powers were curtailed by splitting the • The industry remained primarily
regulating and operating bodies state-owned.
• China Telecom, the operational arm of MPT, came
into existence as an entity with fixed-line, mobile,
paging and satellite services
1998 • Replacement of MPT with Ministry of Information • Efforts towards improving the
Industry (MII). competitiveness of state-owned
• Splitting of China Telecom based on the functional enterprises began
areas, which led to the formation of China Mobile
Communications Corporation.
Contd...

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2008 • Formation of three full-service state-owned telecom • Healthy competition was created
operators among all the players
• Issue of 3G licenses for all the three players, for • Investing in 3G mobile
enhancing their capabilities on mobile technologies. technologies

Prepared by the author

Mobile handset manufacturers: The next question discusses in detail about mobile handset manufacturers
and the competition.

Examine the competitive landscape of China’s mobile handset market. Give your
observations based on the assessment of the market dynamics.
In the initial years of the formation of the Chinese mobile industry, the mobile market was dominated by
foreign brands like Motorola, Ericsson and Nokia. This is evident from the market shares of these players.
Motorola held 80% of the share in Chinese mobile handset market (page 1, para 2 of the case study). Even
after a decade of introducing mobile services in China, foreign players – Motorola, Ericsson and Nokia
jointly held 80% of the market share (page 3, para 1 of the case study). From 1998, Chinese domestic players
also came into the picture. The firms like Ningbo Bird, Konka and TCL competed with foreign players (page
3, para 2 of the case study). Local brands could compete with foreign ones due to the following reasons:
• Encouragement from Chinese government (page 3, para 2 of the case study)
• Partnership with foreign companies to acquire technical knowledge (Exhibit IV of the case study)
• Copying the designs of foreign handsets and offering them at lower prices
• Focusing on sales and distribution channels
• Targeting the Chinese rural markets.
The data from Exhibit III of the case study makes evident how domestic players collectively, within a short
period, captured a respectable share in the Chinese mobile market.
As local brands began to dominate the Chinese mobile market, foreign players revised their strategies,
which are as follows:
• Foreign handset brands became more customer-centric (page 5, para 2 of the case study)
• They brought down the prices of mobile phones
• Enhanced mobile phone features
• Focused on selling and distribution aspects, which were earlier ignored (page 3, para 2 of the case
study)
• Focused on rural markets by strengthening the distribution channels in these areas (page 5, para
2 of the case study).
Because of the above strategies, foreign players once again dominated the Chinese mobile market (Exhibit
V of the case study). After 2003, domestic brands like Konka, TCL and Ningbo Bird started losing their
market shares. By 2007, foreign brands – Nokia, Motorola and Samsung – collectively held 61.4% of the
market share (page 6, para 1 of the case study).
From the above discussion, the following conclusions can be made about Chinese mobile handset market:

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• Chinese mobile handset market is dominated by foreign players

• Foreign players succeeded in this market by focusing on customer-centric innovations and R&D
• Focus on sales and distribution channels is one of the priorities for companies to succeed in this
market
• Appropriate pricing of mobile phones becomes vital for good sales.
However, there always is a tiff between the local and foreign players in the Chinese mobile phone market. By
now, students will have a brief idea of Chinese telecommunications industry and the competitive landscape
of this industry. The faculty can discuss about the customer preferences in this industry.

II. Customer Preferences and Critical Success Factors in Chinese Mobile Market

“…… Nokia designed mobile phones considering the price and design preferences
of Chinese consumers and catered to all the consumer segments with diverse
product portfolio.” (page 8, para 1 of the case study). Analyse in brief about the
Chinese consumer preferences for mobile handsets.
Exhibit VI of the case study and Annexure II (b) of the case study can be used to make students understand
Chinese consumer preferences for mobile handsets. The following points can be discussed in this regard:
• Chinese consumers are more inclined towards enhanced features and multimedia functions. This
is evident from Exhibit VI of the case study, wherein 38% of the respondents preferred music
mobile phone and 24.10% of them preferred 3G phones
• Chinese consumers are more price-conscious and at the same time prefer enhanced mobile
functionalities. From Exhibit VI of the case study, it is clear that 61.40% were ready to spend only
RMB 2000 on their mobile purchases
• When it comes to mobile purchases, the responses for frequency of mobile phone purchases are
varying. Considering those willing to purchase within 3 months and 6 months, majority are willing
to change their mobile phones within short period of time
• Brand image also plays an important role during mobile purchases. From Annexure II (b) of the
case study, the brand choices of consumers for the next purchases make this point clear.
The faculty can also discuss Chinese consumer preferences towards mobile service providers, with the help
of Annexure I of the case study.

6. “In terms of features, grey-market handsets often are comparable with official
phones. Nearly all grey-market phones have 2-megapixel VGA cameras and
Bluetooth connections.” (page 8, para 2 of the case study). Offering similar
features like legitimate phones, fake mobiles in China are threatening major
handset brands. What are the factors that contribute to the salability of lookalike
products? Which one, according to you is a potential market?
Chinese consumers, though interested in branded products, are price-conscious. When a mobile phone

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with enhanced features is offered at a much lower price, they are attracted towards it. One of the major
threats for foreign brands in Chinese mobile market is grey market, which is flooded with lookalike phones
or fake phones. Exhibit VII of the case study shows the cost advantage that the fake phone manufacturers
enjoy over legitimate mobile phones. Besides, grey market phones exhibit many similarities with legitimate
mobile phones – like shape, design, features, etc.
At this point, the following question can be posed:
Which one, according to you is a potential market – Grey phones market or legitimate handsets market?

What has been the response of Chinese consumers towards 3G mobile technology
and 3G mobile handsets?
3G technologies are supported by multimedia mobile phones, called as smartphones, which offer all the
advanced features. Smartphone offers all functionalities of a personal computer like emailing, web-surfing,
transfer of audio and video files and accommodate web-based applications.
As already discussed, Chinese consumers are inclined towards 3G mobile handsets. In case of mobile
technologies, Chinese consumers are looking forward to best 3G mobile services from telecom operators,
(Annexure I of the case study). The 2008 telecom restructuring gave opportunity for all the telecom operators
to enhance their 3G capabilities and provide 3G mobile services to Chinese consumers. To encash the
growth of 3G mobile services, handset brands came out with mobile phone models that supported 3G mobile
services.

Analyse the critical success factors of Chinese mobile market. What factors
attract foreign players into Chinese handset mobile market?
From the above discussed points, the critical success factors of Chinese mobile markets can be summarised
as follows:
• Customer-centric offering
• Quality orientation
• Innovation
• Focus on distribution channels
• Brand image
• Effective pricing strategy
• Appropriate marketing strategies.
Exhibit X of the case study gives an overview of Chinese smartphone market. The demand for smartphones
has grown in China over a period of time. As such, Chinese mobile market offers huge opportunity for
handset manufacturers to introduce smartphones in China. Nokia, Motorola, Samsung, Sony Ericsson,
China-based Coolpad and Dopod are the existing players in Chinese smartphone segment. Exhibit XI of the
case study can be referred to know the market shares of these players. Another foreign player that entered
into the Chinese smartphone market is Apple.

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III. Apple iPhone’s Foray into China: Opportunities and Challenges

Give a brief profile of theApple brand and its product range. How didApple build
a cultish image through its products across the globe?
The information presented in page 9, paras 2 and 3 of the case study can be used to carry on discussion, for
this question. There can be a brief discussion about Apple Inc. and how the company built its brand image
through its iconic products over a period of time. The discussion can be directed towards Apple iPhone,
which was created to personify this brand image.

Why did Apple enter into Chinese mobile market? What were the models
introduced byApple in the Chinese mobile handset market?
The following points can be discussed to understand the reasons behind Apple’s entry into Chinese mobile
market:
• Slow sales in US and parts of Europe because of 2008 global recession (page 11, para 1 of the case
study)
• Even its entry into Asian markets like India, which was offering huge potential for mobile
telecommunications, was a failure because of the high price of iPhone
• Growth opportunity offered by Chinese smartphone market (Exhibit XI of the case study) – the
world’s largest mobile phone market.
Because of the above reasons, Apple forayed into Chinese mobile market with its iPhone 3G and iPhone 3GS
models.

What are the challenges faced byApple iPhone in Chinese mobile market? Given
the Chinese consumer behaviour, existing market challenges, the existing product
features, pricing and other strategies, can Apple iPhone make good sales in
China? Can the grey market helpApple build upon the consumer base and convert
the challenge into an opportunity?
By the time Apple entered, into the Chinese smartphone market was dominated by players like Nokia,
Motorola and Samsung. Nokia was the biggest player in this market with 69.3% market share. Nokia is not
only a tough competitor in Chinese market, but also in other overseas markets (Exhibit IX of the case study).
While competition from established mobile phone brands is a major challenge for Apple, the challenges for
the brand in Chinese mobile market go beyond the competition. The following are the major threats for
Apple iPhone in China:
Pricing: Apple priced its iPhone very high. As observed from page 12, para 1 of the case study, Nokia’s
success in the smartphone segment came from its appropriate pricing strategy and wide range of product
offering for all customer segments. As such, to create demand for its product, Apple can revise its pricing
strategy. Moreover, the average amount spent on a smartphone in China is $350, while apple iPhone is
charging $1,024 (page 13, para 1 of the case study).
Besides, in India, Apple could not make expected sales because of its high price. India and China exhibit
many similarities in terms of market size, consumer preferences, etc. For instance, both Indian and Chinese
consumers are reluctant to make long-term contracts with mobile carriers. This is the prime reason for high
pricing of Apple iPhone in China and India.

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Competition: As already discussed, the competition for Apple iPhone in Chinese smartphone market is very
high and the smartphone market is dominated by a single player, Nokia (Exhibit XI of the case study). In
future, the competition for Apple iPhone would further increase as Motorola, Samsung and HTC, in
partnership with China Mobile, are ready to launch OPhones, to directly compete with Apple iPhone (page
14, para 4 of the case study).
Grey Market: The huge grey market presence is also challenging the sales of Apple iPhone in China. Before
the official foray of Apple into China, 1.5 million iPhones entered into the country and were being used.
While the above mentioned are the major challenges, some other challenges include:
• Apple iPhone’s partnership with China Unicom, which has a relatively lower mobile subscriber
base (page 14, para 4 of the case study)
• Regulatory environment in China, which imposed ban on Wi-Fi feature
• Lack of cultish image for the Apple products in China, which can also be implied for iPhone (page
14, para 3 of the case study)
• Apple is also a late entrant into Chinese smartphone market, officially though it is present in grey
market. But, given the brand value it has, Apple pitched a very high price for its product.

Name the companies that were successful in this market and the strategies
adopted by them. Evaluate the possibility of success for Apple iPhone – being a
late mover into this segment – in China. Can Apple’s iPhone compete with the
incumbents? What, do you think should Apple pitch on, to expand its market in
China – its image, pricing or any other strategy?
The faculty can pick up the example of Nokia that has been a successful player in the Chinese mobile as well
as smartphone market. The strategies adopted by Nokia to be successful in Chinese mobile market include:
• Customer-oriented product development
• Diverse product portfolio targeting all the consumer segments, evident from (Annexure II(a) of
the case study)
• Catering to the needs and preferences of Chinese consumers
• Focus on quality and innovation
• Effective sales and distribution.
Apple iPhone already became popular in China through grey market. But, the company has to revise many
of its strategies to succeed in Chinese smartphone market. Some of them include, effective pricing, customer-
centric approach and localisation of product i.e., catering to the tastes and preferences of Chinese consumers.
To overcome the late mover disadvantage, Apple can revise its marketing strategies. To understand this
further, the Marketing-Strategy Framework from the article, “Market Entry Strategies: Pioneers Versus Late
Arrivals” can be used [Exhibit (TN)-III].

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Exhibit (TN)-III
Marketing-Strategy Framework

Source: Gurumurthy Kalyanaram and Ragu Gurumurthy, “Market Entry Strategies: Pioneers Versus Late Arrivals”, http:/
/www.wright.edu/~tdung/entry.pdf, 1998

Nevertheless, Chinese smartphone segment is very optimistic, displaying huge potential for growth. The
smartphone users have consistently grown over a period of time. Hence, Apple iPhone, can clock good
sales in China.
On this note, the discussion can be coincided with the big picture of the case study

The Big Picture

• Can grey market be a blessing for official entry of a product/brand into a market?
• Can a late mover, already existing in grey market, compete with incumbents and seize a respectable
market share?

Final Thoughts
The future of Apple iPhone in China is bright in the light of growing Chinese smartphone market and
permission to add Wi-Fi feature for future iPhones in China. Since Apple’s deal with China Unicom is a non-
exclusive agreement, the company can enter into agreements with other mobile carriers, to further improve
its sales.

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Teaching Note
Case Structure
I. Introduction
II. Mobile Handset Market in
China
• Overview of Chinese Mobile
Industry
• Players (foreign and domestic)
and Competition
• Market Shares
• Consumer Preferences
III. Apple iPhone’s Foray into
Chinese Handset Market
• Product features
• Government Regulations
• Pricing
• Apple iPhone’s Global Presence
IV. Apple’s iPhone in China: Will
it Succeed?
• Opportunities and Challenges
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Apple’s iPhone in China: Can Apple Cash in on the World’s Biggest ...
Annexure (TN)-I
Teaching Plan
Teaching Note Flow
Prerequisite Conceptual
Understanding
• Gove Jonathan and Lau Arnold, •
“China's New
Telecommunications Landscape:
Who Will Win?”,
www.oliverwyman.com/.../
OW_EN_CMT_2008_,ChinaTelecom.pdf,
2008
• McEwen William, et al.,
“Understanding the Chinese
Consumer”, hbswk.hbs.edu/ -
archive/5306.html, April 24th
2006 - Network
• Gurumurthy Kalyanaram and
Ragu Gurumurthy, “Market
Entry Strategies: Pioneers Versus
Late Arrivals”, http:// •
w w w. w r i g h t . e d u / ~ t d u n g /
entry.pdf, 1998
The Big Picture
• Can grey market be a blessing for
official entry of a product/brand
into a market?
• Can a late mover, already existing
in grey market, compete with
incumbents and seize a
respectable market share?
Teaching Note Flow
Nature and Competitive Landscape
of Chinese Mobile Industry
• Origin of mobile market in China
• Players in mobile services and
handset segments
• Growth of the industry over a
period of time.
COM0241-1
What I Want to Analyse?
Nature and Competitive Landscape of
Chinese Mobile Industry
Discuss in brief about the
evolution of telecommunications
industry in China.
• Briefly discuss about the launch
of cellular services in China.
• Discuss in detail each of the
following terms in relation to the
Chinese mobile industry.
Mobile service providers
equipment
manufacturing
- Handsets manufacturing (mobile
phones)
Briefly analyse the growth of
mobile subscribers, since the
launch of mobile services in China.
• Did the Chinese mobile industry
undergo any changes since its
inception? How did the industry
respond to those changes?
• Who are the key players in
Chinese mobile handset industry?
Are there any foreign brands?
How is the competition between
domestic and foreign players?
• Briefly discuss about the 2008
restructuring of
telecommunications industry and
its effects on mobile segment.
Critical Success Factors in Chinese
Mobile Market
• Analyse the Chinese consumer
behaviour towards mobile phones.
• What can be the possible critical
success factors in Chinese mobile
market?
Contd...

Teaching Note Apple’s iPhone in China: Can Apple Cash in on the World’s Biggest ...
Critical Success Factors in
Chinese Mobile Market
• Mobile phone preferences
• Purchase frequency
• Urban and rural consumer
preferences
• Market for smartphones.
Apple iPhone's Foray into China: The
Opportunities and Challenges
• Reasons behind Apple iPhone’s
entry into China
• The presence and performance of
Apple iPhone in other world
markets
• Opportunities and challenges for
Apple iPhone in China.
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Apple iPhone’s Foray into China:
Opportunities and Challenges
• What are the reasons behind Apple’s
entry into China?
• Discuss in brief about the
performance of Apple’s iPhone in
other world markets?
• What are the reasons behind the late
entry of Apple’s iPhone into China?
• Is Apple iPhone present in any of
the Asian countries? If yes, how was
the product received there?
• What has been the performance of
Apple’s iPhone in China so far?
• What are the possible challenges for
Apple iPhone in China?
• Can the company make its product
a hit in China with the existing
pricing strategy and product
features?
• Is the unofficial entry of Apple
iPhone into Chinese market, through
grey market, a boon or bane?
• Given the consumer behaviour, can
Apple’s iPhone succeed in China?
• What factors can drive the
company’s success in China? In
other words, what strategies can be
adopted by Apple to make its
product success and thereby
generate revenues, despite being a
late mover?
Contd...

Teaching Note Apple’s iPhone in China: Can Apple Cash in on the World’s Biggest ...
Pedagogical Objective
To critically analyse and understand the Chinese
mobile industry (mobile services and handsets)
and its competitive landscape
To understand the consumer preferences and the
critical success factors in the Chinese mobile market • The frequency of mobile phone purchase
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Classroom Deliverables
The evolution of Chinese mobile market:
a. Government Regulations
• Launch of cellular services in China
• China’s accession to WTO in 2001and encouragement
for equipment manufacturers
• The reforms and restructuring of Chinese
telecommunications industry and their effects on mobile
service providers and handset vendors.
b. Telephone Operators
c. Mobile Handset Manufacturers
• Suppliers of mobile handsets during introduction of
mobile services
• Growth of mobile subscribers base
• The growth of local mobile handset manufacturers
• Competition between foreign and local handset brands
• Infrastructure platforms (GSM, Wi-Fi, CDMA)
• Growth of Chinese mobile market as the world’s biggest
industry with huge subscriber base
• Chinese mobile market post-2008 restructuring of
telecommunications industry
• Boost to mobile sector by increasing the capacity of
service providers (issue of 3G licenses)
• Increased competition among the service providers
• Rapid expansion of mobile subscriber base
• Increased mobile phone sales
• Markets shares of mobile phones brands.
a. Chinese Consumer Preferences
• Price consciousness
• Fashion consciousness
• Mobile phone preferences of young and adults
• Mobile phone preferences of rural and urban consumers
• Market for smartphone segment.
Contd...
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Teaching Note Apple’s iPhone in China: Can Apple Cash in on the World’s Biggest ...

To analyse the reasons behind Apple’s foray into
the Chinese mobile market and evaluate the
possibility of success and failure for Apple’s
iPhone in China.
a. Reasons behind Apple’s Entry into Chinese Mobile
Market
• Slow growth rate in mature markets
• Decreased sales due to global recession
• Growth opportunities provided by Chinese mobile
market.
b. Challenges for Apple iPhone in China
• Fierce competition
• Late entry into the Chinese market
• Premium pricing
• Huge presence of grey market in China
• Lack of cultish image for Apple brand in China
• Partnership with China Unicom, which lacks a substantial
subscriber base and efficiency in mobile services.
c. Opportunities
• Chinese is the biggest cellular market in the world
• The smartphone users are estimated to grow in China
• The premium and exclusive brand image of Apple
• Apple’s inclusion of Wi-Fi feature for future handsets
• Analyse whether China proves to be a lucrative market
for Apple’s iPhone.
• Analyse how Apple can achieve late mover advantage in
Chinese mobile market.

Prepared by the author

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