Smartphones: Apple Recycles, TCL Sales Soar

Apple polishes image with recycling program

We’ll end the week with a couple of smartphone news bits, including reports that Apple (Nasdaq: AAPL) is in talks to start a China-based recycling program and new data that show TCL’s (HKEx: 2618; Shenzhen: 000100) smartphone sales nearly tripled in the first 4 months of the year. Of the 2 news bits, Apple’s is most interesting not only because of its big name, but also because it shows the company is finally taking steps to boost its image as a good corporate citizen in China. TCL’s story looks interesting because it’s one of the few Chinese handset makers that derives the bulk of its smartphone revenue from overseas, which looks like a safer strategy due to the current state of overheated competition in the domestic market.

Let’s start with a look at Apple, which has lost a bit of its shine over the last year in China due to negative publicity and delays in launching its latest iPhones in the market. The company came under attack last year due to shortcomings in its after-sales service, and issued a rare apology to Chinese consumers after being criticized by Chinese media for its arrogance. Delays in bringing its newest iPhones to China also undermined its image, though it finally solved that problem by including China in a global launch for the first time last year.

During all of the company’s setbacks, I said that Apple needed to change its usual policy of total secrecy and become more open in China to show that it was a good corporate citizen. That kind of tack is especially important in China, where foreign companies are sometimes seen as exploiting the huge market while making minimal contributions to the nation’s economic development.

Apple was rumored to be negotiating the establishment of a product development center in Shanghai at one point last year, which would have been a positive piece of news to improve its image. But no deal was ever announced. This latest news that Apple wants to establish a China recycling program looks like it could generate similar positive publicity, since Chinese consumers are famous for frequently buying new phones and throwing out old ones.

Media reports say Apple is talking with potential partners about a potential plan, which would apply to recycling of iPhones. (Chinese article) There’s not much more detail, which isn’t surprising due to Apple’s secretive nature. But if the plan comes to fruition, it could provide some rare positive publicity and could signal the start of a new, more open approach that could help the company regain some of its shine in China.

Finally let’s look quickly at TCL, whose big smartphone gains are included in its larger monthly sales report. According to that report, the company sold nearly 9 million smartphones in the first 4 months of the year, up 288 percent from a year earlier, putting it on track to sell nearly 30 million for the year. (Chinese article) That isn’t enough to put the company in the top 5 global names, but would probably put it in the top 10.

Unlike many of its Chinese rivals like Huawei, ZTE (HKEx: 763; Shenzhen: 000763) and Xiaomi, TCL gets the big majority of its smartphone sales from overseas markets. Much of that positioning comes from its longtime tie-up with Alcatel-Lucent (Paris: ALUA), following TCL’s purchase of the French company’s cellphone business a decade ago. TCL’s cellphone business has been notoriously boom-bust in the last decade, but this latest uptick indicates we’re now in a new boom cycle as the company finds a global audience for its fast-growing smartphone business.

Bottom line: Apple’s potential new China recycling program looks like a good move to win positive publicity, while TCL’s healthy smartphone gains show it is in the middle of a boom cycle.

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