Published on 10 Sep 2013

Why Apple must crack China with its new phones

News that Apple is planning a cut-price iPhone to break into China says as much about post-communist consumers as it does about the tech giant.

Leaks from within Apple’s supply chain suggest the company will announce not just an updated iPhone 5, but also a cheaper model, the iPhone 5C.

It’s not without precedent – the iPod, iPad and Mac have all had their cheaper, smaller siblings. The iPhone has been the exception until now, and a switch in tactics would speak volumes about the country Apple’s investors insist it must crack: China. No wonder the launch is being simultaneously shown to select guests in Beijing.

Apple iPhone 5 Studio Shoots

Some have speculated that the iPhone has been too expensive to succeed in this vital market. Yet when I visited the Diageo drinks giant in Scotland, they were boxing up thousands of bottles of £300 whisky for export to China – this is not a country short of cash for high-status objects.

No, Apple’s failure to crack China is partly down to difficulty in signing up the nation’s mobile carriers (something Apple chief exec Tim Cook may have cracked after a rumoured meeting with bosses at China’s largest network). But more important is the mindset of Chinese shoppers.

In the west, competition has driven consumer choice to frenetic levels (check out Samsung’s bewildering range here). Apple shrewdly spotted that many consumers are tired of trying to pick a winner, and instead offered them only one model, assuring them it would satisfy their every need.

Chinese consumers think differently. British firms selling into China have told me the market is a couple of decades behind the west, and that for customers in Shanghai and Beijing, choice is still the essence of consumerism. Offering them only a single handset almost seems like communism – instead, the process of perusing and choosing is intimately tied up with self-expression (something western consumers increasingly attach more to brands than specific products).

China’s evolving consumerism also explains why Apple might release multiple models; a single phone offers consumers no chance for one-upmanship, a vital element in a society still highly stratified. Even a small number of handsets gives an opportunity for some iPhone owners to set themselves apart from the rest.

Will it all work? Who knows. China is so flooded with Samsung handsets that Apple has its work cut out. But perhaps Chinese consumers will see the new iPhones as an opportunity to differentiate themselves from the herd.

One thing’s for sure, if the next year doesn’t show big growth for Apple in China, there’ll be some tough questions for Cook.

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