A new report is saying that Apple (Nasdaq: AAPL) will formally launch its 4th store in Shanghai around the upcoming Oct 1 National Day holiday, in the latest sign that the tech giant is preparing a major drive to rekindle it flagging China growth. Regular readers will know that the weeklong Oct 1 holiday is one of China’s biggest shopping periods, and that recent reports have said the telecoms regulator may issue long-awaited 4G licenses on or around the holiday. (previous post) Those facts, combined with the recent visit to China by Apple CEO Tim Cook, all seem to point to the long-awaited announcement of an iPhone deal with domestic heavyweight China Mobile (HKEx: 941; NYSE: CHL) on or around the holiday.
Apple has a lot at stake in China, which once accounted for around a fifth of its global sales but has recently become a fickle market for the world’s biggest tech firm. Its sales in the Greater China market fell 14 percent in its most recent reporting quarter, as its iPhones and iPads rapidly lost share to lower cost rivals. Compounding its woes were negative reports in the domestic media about its after-sales service and lack of transparency about its pledge to donate money to victims of a major earthquake earlier this year.
Against those larger developments, the latest news that Apple plans to open its 4th Shanghai store doesn’t seem all that huge, especially since the report comes from the Shanghai-based China Business News. (English article) The store in a mall on the trendy Huaihai Road would be Apple’s 9th in mainland China, complimenting 3 existing stores in Shanghai, 3 in Beijing and one each in the cities of Chengdu and Shenzhen.
While a new store opening isn’t exactly major news these days for Apple, the timing does seem to be the latest signal that the company is planning to renew its China focus in a bid to regain its “cool” image that has faded considerably over the last year. I’ve said many times before that Apple needs to show its commitment to China by investing in the market. While opening a single store isn’t a huge investment, at least its something. Apple was also rumored to be in talks to set up a major R&D center during Cook’s last visit to China early this year, so perhaps we could even see an announcement on that matter if a new China push is really coming. (previous post)
Then of course there’s the long-awaited tie up that would see Apple finally offer its iPhones through China Mobile, the nation’s dominant mobile carrier with two-thirds of the market. Apple already has iPhone deals with the nation’s other 2 carriers, but a deal with China Mobile has been elusive partly for technology reasons. Those reasons have been mostly overcome now, leading many to speculate a new China Mobile partnership could soon be announced, perhaps as early as September when many expect Apple to launch its new iPhone. China Mobile’s launch of 4G service after it receives its new license on or around Oct 1 would also be the perfect opportunity for it to offer a new 4G iPhone to run on its system.
Returning to my original point, all this activity points to a major new push for Apple in China on and around the Oct 1 holiday, which looks like part of a major new publicity drive. But will it work? A China Mobile iPhone deal would obviously be a major breakthrough, and a commitment to speed up its store openings would also help.
I still think the company needs to show more commitment to China to boost its image, and that an R&D center announcement would be the most helpful move on that front. Whether or not that announcement comes, we can still look forward to a flurry of news from Apple in China very soon, including the China Mobile deal and the inclusion of China in the next global launch of Apple’s newest iPhone, the 5S.
Bottom line: The Oct 1 holiday is likely to see a flurry of new activity for Apple in China, as it tries to revive its sagging fortunes in the market.