China's consumers pick pork over iPhones - Victor Shih

Victor Shih

China's consumers are changing because of the trade war and food-driven inflation, says China expert Victor Shih at the Investor Place. They will pick pork over iPhones, he says, with a drastic impact on the stock markets.

The Investor Place:

In an email correspondence, Victor Shih, Ph.D., associate professor of political economy at the University of California, San Diego, wrote: 

"Both the trade war and food-driven inflation likely will crimp Chinese consumers’ discretionary spending.  While the trade war has slowed employment growth and wage growth, the African swine flu has driven up food prices substantially. For the average households, they are trapped between much higher food prices and uncertainties about future income. This will limit their spending on discretionary items." 

Put another way, AAPL stock may be on a winning path right now. But that’s not guaranteed to sustain. As known pressures tighten their stranglehold, the impact will invariably filter down... 

But at the present juncture, China is a major risk factor. As Professor Shih noted, the average Chinese consumer is feeling the heat. Given the choice of buying food to live or buying an iPhone 11, I don’t have to spell out the correct answer. Therefore, anybody who is not a day trader should probably avoid or cash out of AAPL stock.

More at the Investor Place.

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On the China market, the iPhone does not make a difference - Ben Cavender

Ben Cavender

Once Apple's iPhone was a much-wanted device for the picky Chinese consumers. But those glamorous days are over as domestic brands offer more than their US competitor, says branding analyst Ben Cavender to Patently Apple.

Patently Apple:

Ben Cavender, a senior analyst at Shanghai-based consultancy China Market Research Group, said the novelty of the iPhone attracted throngs of Chinese shoppers to Apple stores a decade ago, but many consumers in the country have since developed an affinity for local smartphone brands. 

Cavender added that "At that time, Apple was offering a product that was so much better and so different that it made sense for people to show up at the store to buy something. In 2018, it’s not clear what Apple is selling that’s dramatically different or better than anything else on the market."

More at Patently Apple.

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Brainpower: How China changes the world - Jeffrey Towson

Jeffrey Towson

Apple's Steve Jobs was the first American CEO to discover China's massive brainpower potential when he got the first iPhone produced in six weeks time, by 200,000 workers and 8,700 engineers. China's massive brainpower is a disrupting force for the world, says Beida business professor Jeffrey Towson, co-author of The One Hour China Book (2017 Edition) on his weblog.

Jeffrey Towson:

There are two important aspects to this story – which may have become somewhat embellished over time. The first is how incredibly fast, flexible, and smart the Chinese manufacturing ecosystem is. This situation was not about being cheap. It was about speed and flexibility. Figuring out how to redesign iPhone screens took lots of brainpower deployed quickly. In the US, the iPhone screens simply could not have been redesigned in such a short timeframe. 

The second is that Apple had 8,700 Chinese industrial engineers overseeing production. That is a lot of engineers. The New York Times reported that Apple had estimated it would take 9 months to find this many engineers in the US. In China, they found them in about 15 days. 

This is a story of Chinese brainpower as a game-changer in global business. The ability to mobilize so much talent, so many engineers, and so quickly, is something new in the world. 

But we have also heard this kind of story before. 

Twenty years ago, the scale of Chinese manufacturing began emerging as a similarly game-changing phenomenon. Suddenly, everything from shoes to bicycles began to become much cheaper than before. Low-cost Chinese manufacturing changed what was possible in industry after industry. “Made in China” became a household phrase. 

Businesses around the world have since incorporated the large-scale and low-cost of Chinese manufacturing into their operations. And it wasn’t really optional. Businesses either had to take advantage of the phenomenon or suffer as their competitors did. 

The large scale and low cost of Chinese brainpower is another game changer. Suddenly thousands of engineers can be ramped up in a matter of days. And this phenomenon is starting to ripple through industry after industry. What is the impact on the pharmaceutical industry if companies can now access tens of thousands of scientists cheaply? If your competitor is opening a research and development center in China with 10,000 technical specialists, how big of a problem is that for you? Chinese brainpower is starting to impact many industries – often in unexpected ways.”

More at Jeffrey Towson's weblog.

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Youngsters: more nationalistic - James Roy

James Roy

American companies and stores like KFC and Apple faced angry crowds after an international court ruled against China on its South China Sea policies, even smashing their iPhone's. A protest that went even too far to China´s government. It is mostly the younger who are more nationalistic and patriotic, says retail analyst James Roy to AP.

AP:

"This is not the right way to express patriotism," the state-run Xinhua news agency wrote on Wednesday. The slightly more independent China Daily called the device smashing "jingoism that does a disservice to the spirit of devotion to the nation." 

"The Chinese public, as optimistic and positive as they are, are deeply patriotic and nationalistic, especially people who are younger," said James Roy of the research firm China Market Research Group. Apple is one of the brands that is "just very closely associated with the United States, and you are seeing people picking the closest symbol they can think of to demonstrate against," according to Roy.

More in AP.

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Can the iPhone SE succeed in China? - James Roy

James Roy

Apple tries to take on domestic smartphone competitors in China by launching its cheaper iPhone SE. But the jury is still out on the question whether that is a smart move for the premium brand, says retail analyst James Roy to the VOA.

VOA:

Sales have stagnated at Apple. In January the company forecast a drop in sales for Apple products, which would be the first decline since 2003. To boost purchases the company is targeting new customers in China, its biggest market, and India, its fastest growing. 

James Roy, a Business Analyst at China Market Research Group, said Apple is now challenging Chinese smartphone brands in their home market. 

“At this point you have a number of Chinese smart phones that have gotten very good at offering good smartphones at the lower to middle end of the market,” he said.

More at the VOA.

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Going cheap not good for Apple´s China market - Shaun Rein

Shaun Rein

Apple has presented its iPhone SE, a cheaper model of earlier iPhones. For the China market, such a more might not be good, says business analyst Shaun Rein to Reuters. They might be copying earlier mistakes on this competitive market.

Reuters:

In China, analysts warned the iPhone SE could mirror the disappointing outcome of Apple's iPhone 5C, which was launched as an affordable gadget three years ago. It was also less technologically advanced than the top phone at the time. 

"The 5C was awful, no one wanted it. Everyone knew that if you bought it you had no money," said Shanghai-based Shaun Rein, founder of China Market Research Group. "Just going cheap doesn't mean it'll do well," he said.

More at Reuters.

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Trend: rich move from Apple to Huawei - Rupert Hoogewerf

Rupert Hoogewerf

While Apple´s iPhone 6S got an enthusiastic reception in Shanghai, some observers see some of the glory of the US giant is fading. Rupert Hoogewerf of the China Rich List sees even some of the rich moving to the domestic competitor Huawei, he tells the International Business Times.

International Business Times:

And there are signs that even Apple, which has stayed above the fray, trading on its reputation for innovative software, is facing tougher challenges. 

"I do get the impression that the Apple effect has faded a little,” said Rupert Hoogewerf, CEO of Hurun Report, which specializes in trends among China’s wealthy consumers and last year named Apple for the first time as the country’s most valued luxury brand for gifting.  

“I’ve seen lots of leading Chinese entrepreneurs carrying Huaweis recently -- I’d say between 10 and 20 percent have them now,” he added.

More in the International Business Times.  

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Why the Apple watch will be a hit in China - Shaun Rein

+Shaun Rein 

Apple´s latest iPhone has been a huge success in China, after the company had more problems entering the China market earlier. But the Apple Watch is going to be a success, expects business analyst Shaun Rein, according to Bloomberg.

Bloomberg:

Apple’s China sales rose 70 percent in the past quarter, helped by the introduction of the iPhone 6 and 6 Plus. By moving to a screen that’s bigger than a traditional smartphone’s but smaller than a tablet’s, the iPhones were popular in a market where consumers prefer to carry one device. 

The Apple Watch is “going to be a massive hit in China,” said Shaun Rein, managing director of China Market Research in Shanghai. “It’s a brand that’s aspirational, but it’s not so over the top in price.” 

Greater China contributed more than $16 billion to Apple’s sales in the past quarter, about 21 percent of the company’s total. The country still ranks behind the Americas and Europe in total revenue. Yet Chief Executive Officer Tim Cook has said China eventually could become the company’s biggest market.

More in Bloomberg.

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Apple leaves troublesome past behind - Shaun Rein

+Shaun Rein 

For a long time, Apple did not get it right in China. Business analyst Shaun Rein notes that now the American giant is doing things right and ships more smartphones to China, even more than Xiaomi. From Mercury News.

Mercury News:

One gusher of growth the company has yet to fully tap is the Chinese market. The company raked in $16.1 billion in revenue there during the quarter, up 70 percent year over year. For the first time, Apple shipped more smartphones in China than any other manufacturer during the fourth quarter of last year, according to research firm Canalys. But Apple still has ample room to grow in the country, with smartphone market share of about 12 percent, according to Counterpoint Research. 

Shaun Rein, managing director of China Market Research Group, said Apple has come a long way in China, where it previously had struggled to compete without larger phones. "Now with iPhone 6 Plus, they have become the must-have item," he said. "It's really quite remarkable how much people are adopting it." 

Apple CFO Luca Maestri said the company is on track to have 40 stores in greater China by mid-2016. 

But Apple will need to step up the pace of store openings to make the most of the opportunity and give as much attention to the Chinese market as it gives to the U.S., Rein said. 

"Apple is succeeding in spite of itself in China because they have bad distribution," he said. "It's bigger, and people are willing to pay more." 

Analysts will also be closely watching the sales for other Apple products such as the Apple Watch, the company's first brand-new product since the iPad.

More in Mercury News.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

What are the new trends for China in 2015? Here are our seven trends.  

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Apple treats Chinese as second-class citizens - Shaun Rein

+Shaun Rein 

Chinese customers have to wait to get an official official release on Apple´s new iPhone, while China is Apple´s second largest market. "Apple can not longer treat Chinese as second-hand citizens," says business analyst Shaun Rein in Nikkei.

Nikkei:

"It really doesn't make sense that Apple continues to treat the Chinese consumer as a second-class citizen," said Shaun Rein, founder of Shanghai-based China Market Research Group and author of the forthcoming book, "The End of Copycat China," about Chinese innovation. "Because of better Google Android platforms, and rising cheaper domestic brands such as Xiaomi, Huawei or Lenovo, Apple can't afford to treat Chinese consumers, I think, with what looks like disdain and contempt." 

The other disadvantage is that iPhones cannot accommodate dual subscriber identity module (SIM) cards, which can be a major handicap in markets such as India and China, where consumers are sensitive to pricing on data plans. Migrant workers, particularly in China, appreciate having two SIM cards in their phones -- one for incoming calls that they keep, and one for outgoing calls, which they change depending on where their jobs take them.

More in Nikkei.

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Buying a mobile phone in China - Bill Dodson

Bill Dodson

China veteran Bill Dodson got his mobile stolen and took to opportunity to investigate China's fast changing and competitive battle ground for mobile hardware. A report from the shopping mall in Suzhou on his weblog. Bill Dodson:

Instead of just going back to HTC I decided to check out other brands, including domestic labels. For those who have never been to a Chinese mobile phone market, it is very much like a bazaar. Sales clerks could be selling socks and knit caps for all they care; which isn’t to say they don’t care. Instead, in general, sales staff are young, energetic and talkative, for the most part. They go to great lengths to find you a phone that matches your requirments, instead of bending your requirements to one brand. Sales staff at mobile phone bazaars typically hawk several brands, and have no resistance to placing on high-gloss glass counters phones from several competing makers. 

I checked out Motorola and Samsung phones, and took a glimpse at Sony Ericsson’s offerings. The Nokia stands seemed rather lonely, if not well staffed. It was clear Nokia was putting a great deal of attention on the China market. However, the Microsoft squares didn’t seem to stimulate much interest in the shops I visited. Motorola, surprisingly, seems to have begun a resurrection, of sorts; however, I found the version of Android and accompanying apps loaded on its phones uninteresting. 

Samsung was very strong, especially with its Galaxy offering. Its cameras were amongst the clearest, and it had the fullest line of phones with cameras mounted on the face of phones, to take advantage of apps like Facetime, to ease video calling. 

The Chinese domestic brands had breeded like rabbits since I had last bought a phone at the end of last year. Now, in addition to ZTC, Huawei, Konka, Dopod, Amoi and Lenovo were phones from online service providers: Tencent (with its QQ phones); Baidu, the Google knock-off; Qihoo 360, Netease, Xiaomi and even Alibaba. Handling these smartphones, however, was a disappointment. 

At the price point of about 1500 rmb the resolution of the cameras on the phones was sorely lacking, while their implementations of Android expressed a sense of arrested development. Of course, they were not meant to go head-to-head with the Samsung Galaxy or Apple iPhone; but were instead meant to meet demand at the low-budget end where students and country folk find their finances more constrained than the middle class. 

However, Samsung, Motorola and Sony Ericson makes at the low end were still more rugged and feature-rich than domestic brands. 

At one mobile phone market in Suzhou I wandered to the HTC exhibition, which was the most crowded in the large room. I spotted the model I had bought for myself six months before. It was a staggering 30% less expensive than half a year before. 

Now, still less than the compact model I had previously bought, were newer models that were black, thin and sleek. The HTC One V was one of them. 5 megapixel (self-focusing) camera; half the thickness of an iPhone; 3.7 inch display; Android 4.0.3. Matte black. Very cool. No. Awesome. 

I wanted one. 

And at 2,300 rmb (just under US$400), it was a great value.

More at Bill Dodson's weblog.

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Apple could have done much better in China - Shaun Rein

Shaun Rein

Apple might celebrate a huge success in China, but the US company could have done much better if they had followed a 'China-first' strategy from the beginning, says Shaun Rein, author of the book The End of Cheap China: Economic and Cultural Trends that will Disrupt the World in SFgate and on Bloomberg.

 

More in SFgate

Shaun Rein is  the author of The End of Cheap China: Economic and Cultural Trends that will Disrupt the World. He is also a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Apple: A loser turns into a winner - Shaun Rein

Entrance Apple store Shanghai by randomwire via Flickr

A visit to Apple's store in Pudong, Shanghai leave no room for doubt: the company is doing very well. Shaun Rein analyzes in CNBC how the laggard from 2009 turned into a winner in 2011, where other retailers like BestBuy, Home Depot and Mattel's Barbie retreat.
When selling the iPhone, Apple was the victim of its own appeal. Shaun Rein:

Originally, Apple waited too long to get the iPhone into the market. By the time the iPhone officially sold there, early adopters had already bought around 2 million cracked versions smuggled in from the U.S. and Hong Kong.

So for the iPad, Apple used a different tack. Instead of waiting years as it did with the iPhone, Apple waited only months after it came out in the U.S. to launch the iPad in China. Consumers did not feel the need to travel abroad to shop when they knew products were coming to them soon.

When a brand does not release its new products on time in the Chinese market, the 50 million Chinese who travel abroad will pick up the products there, making a launch in China a guaranteed failure. Offering a high-standard store, not selling through dodgy retailers, did the trick for Apple's products:

Image by Fantake via Flickr

Shaun Rein

Like in other markets, Apple’s new stores are fun to shop in, have great service, and consumers trust that they are buying the real thing. Unlike with Best Buy, which sold too many of the same products at higher prices, Apple is differentiating both its service and its products from other retailers while keep a uniform pricing scheme in the country. There is a significantly wider gap in the quality of experience between shopping at an Apple Store and a reseller in a dingy electronics mall than between shopping at a Best Buy and a Gome, China's largest electronics superstore chain.

More at CNBC

Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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iPad a winner for Apple in China - Shaun Rein

Image via Wikipedia

Apple's iPad has arrived today in China and, says Shaun Rein in the Wall Street Journal, that is a smart move of the US company, as customers are waiting eagerly.

Shaun Rein, managing director of China Market Research Group, says the iPad could give Apple a boost. “I see the iPad as a major win for Apple in China,” he said. “There’s not much competition in the market” and consumers say “they can’t wait for it.”

Though there is significant interest in Apple products in China, the company’s release of the iPhone has been lackluster compared to its release in other markets, in part because it took so long to officially launch the device here. In the more than two years between the U.S. iPhone launch its official launch in China, the gray market for iPhones—including millions of iPhones that were hacked and packaged with pirated software—became well-established....

Apple launched the iPad in China “fairly quickly after launching it globally. It’s not like people have had years to go and jailbreak them,” Rein said.

Commercial
Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting o

Image by Fantake via Flickr

Shaun Rein

r conference, do get in touch.

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