Apple Struggles to Win Fans in China

opened its first store in China on July 19. Business Week asks, “Can a beefed up retail strategy help the computer company boost its measly market share?”:

One obstacle for Apple’s China sales has been the company’s approach to retail. For years it sold iPods and Macs through an authorized distributor network in China’s IT malls, shopping centers where most consumers traditionally would buy their electronics equipment. Starting last year, Apple began revamping its retail strategy in China by signing deals to sell through nationwide home appliance chains such as Suning Appliance and GOME Electrical Appliance. Apple also hired senior executives from Motorola (MOT), who have leveraged their connections in industry to get cell-phone retailers to sell iPods.

Not everyone is sure Apple’s newest retail strategy will make much of an impact. “Apple opening its own store will help raise brand awareness, but it’s hard to say if that will translate to an increase in actual sales,” says Antonio Wang, research manager at IDC China.

The big problem for the American company is the price sensitivity of the market. While some Chinese like the Mac’s clean design and its reputation for being relatively free of viruses, that doesn’t necessarily mean they have bought the computers. Wang Yanmin, a 26-year-old from the northeastern city of Changchun, helps manage a Mac fan site, kenapple.com, even though he has never owned a Mac himself. Since the unemployed Wang cannot afford to buy one, he installed the Mac operating system on his PC instead. Earlier this year he opened his own store do the same for other PC owners, but closed it after two months because of lack of business. “The price of an Apple is not something most people in China can accept,” says Wang.

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