Apple got schooled from China

China’s decision to keep Apple from its iTunes Movies and iBooks Store services, was rather a shock for the biggest company in the world.

In general, China is the second largest market in the world and inevitably makes it the second most important as well, when it comes to the future of a company.

To let the numbers speak for themselves, income from China, Hong Kong and Taiwan account for a quarter of Apple’s total income, an accurate indication of the impact that the specific market has on Apple and its net worth.

And truth be spoken, the American giant has put a lot of effort in establishing a friendly relationship the Chinese government. Tim Cook has personally travelled there 7 times since he took the wheel of the company in 2011.

Still, the Communist Party of China (CPC) does not seem to respond to Apple’s attempts.

For the CPC, digital books and movies offered by Tim Cook’s corp. is a potential threat against the party’s continuous efforts to block western ideas from penetrating the Chinese culture. In addition, it may not be that clear, but our guess is that Beijing’s shielding instinct may be offended by the idea of Apple prevailing in the Chinese digital market.

Despite growing concerns over its China business Cook has been optimistic. "I see China as may not have the wind at our backs that we once did but it's a lot more stable than what I think is the common view of it," he said during the company's earnings call last week. "We remain really optimistic on China."

In essence, China’s reaction to Apple, poses a warning to all Western (predominantly American) companies that hope to enter the Chinese market.

For instance, Facebook and Twitter are both forbidden network for the Chinese, despite the copious efforts that both of those companies have made to provide their services to the country.

Beijing is passionately striving to prevent any western organization of any nature to make a strong presence in the Chinese market, as this would threaten the CPC’s current monopoly.

Yet, the dilemma for the American companies is of high significance due to the intense competition by European and other Asian rivals. The Chinese market is too big to be ignored and strategically speaking, those who prevail in it, are much more likely to prevail in any other market or industry as well. That explains all the fuss.

For the record, Apple recently also lost a trial against a Chinese company, ‘Xintong Tiandi Technology’ concerning the selling of leather bags and other accessories with the name “IPHONE”. According to BBC, which cites the Chinese ‘Legal Daily’, that name had been copyrighted back in 2010.

As if such trouble is not enough for the American colossus, the Indian government has followed suit, by denying Apple permission to sell renewed iPhones in the country, a service that Apple offers to numerous countries including the States.

To sum things up, China and the Asian continent in general does not appear to be ready to embrace in total the Western culture and its ideas hence intensifying the competition between companies from different parts of the world at a global scale. The results of that can be seen both as advantages as well as drawbacks, depending on which side one finds one’s self.

In any case, American and European companies have no intention of withdrawing from the competition whatsoever.


By: Bill Thompson | General | Jan 1 1970
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