Apple Opens Shanghai Store to Spur Sales in China
Apple Inc. opened its second China store today as the maker of iPhones and iMacs seeks to catch rivals including Nokia Oyj and Lenovo Group Ltd. in the fastest-growing major economy.Several hundred people lined up outside a 40-foot cylindrical glass wall that contains the Apple logo at the 1,500-square-meter (16,000-square-foot) store in the Pudong district of Shanghai, China’s financial hub, before it opened at 10 a.m. local time.
“Apple stands for a lifestyle,” said a 27-year-old salesman who called himself “Penguin,” from the northern Chinese province of Jilin, more than 2,000 kilometers (1,243 miles) from Shanghai. He waited as the first in the queues for almost 70 hours.
Apple is expanding its network to reach more customers in China, where its sales trail Nokia and Lenovo, and said this week it plans “many” more Apple stores for China. The company’s first China store opened in Beijing in July 2008.
The products are “quite special,” said Zhu Chenqi, a 23- year-old administrative secretary who has spent 30,000 yuan to 40,000 yuan ($4,429-$5,906) on Apple products. “In the first place you would be caught by its look and then you would be impressed by its easy applications.”
While the store attracts a variety of customers from teenagers to grandfathers, most visitors are well-dressed and in their 20s and 30s, like most of the 175 vendors at Shanghai Apple.
More than 80 percent of the vendors have university degrees and some of them were lawyers and teachers, local media reported.
Unlicensed Distributers
Unlicensed distributors sold more than 2 million iPhones on a so-called gray market, according to Sandy Shen, an analyst at Gartner Inc. in Shanghai. China Unicom (Hong Kong) Ltd., the only authorized Chinese carrier offering the smartphone, sold fewer than 1 million, she said.
“The conditions are not in place for Apple in China at the moment, as it doesn’t have the sales channels and distribution,” said Aloysius Choong, an analyst at research firm IDC in Singapore. “The reports of the gray market activities for Apple’s products in China shows there is good inherent demand for them.”
The iPhone 3G S, Apple’s top model, sells for 6,999 yuan in China Unicom’s stores, according to the carrier’s website. Chinese consumers can buy the smartphone for less from grey market vendors, Shen said. The same model costs $299 with an AT&T Inc. plan in Apple’s online store in the U.S.
Nokia, Lenovo
Nokia’s retail network in China comprises more than 100,000 outlets, said Cherry Gong, a China-based spokeswoman at the company. Lenovo, maker of Thinkpad laptops, has more than 10,000 retail outlets in the country, said spokesman Jay Chen.
Smartphone shipments may increase 50 percent to 26 million this year in China, where Nokia is the market leader, IDC’s Choong said. Lenovo is the biggest personal-computer maker in China, according to IDC data.
Cupertino, California-based Apple overtook Microsoft Corp. as the world’s most valuable technology company in May after gaining sales in the U.S. and European consumer electronic markets. The company’s shares have gained 23 percent this year, compared with a 3.3 percent decline by the benchmark Standard and Poor’s 500 Index.
--Mark Lee, Alfred Cang. Editors: Paul Tighe, Jim McDonald
To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net
To contact the editor responsible for this story: Mike Millard at mmillard2@bloomberg.net
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