On the morning of August 18, Apple CEO Tim Cook commemorated Apple's 30th anniversary in the Chinese market with an update on his Weibo account. "We deeply appreciate all our colleagues, customers, and partners," he remarked.
From any perspective, this marks a notable moment. Apple made significant efforts to penetrate the Chinese market, and in return, the market offered substantial rewards. Numerous tales of mutual growth have emerged over the years.
Apple's Largest Single Market
In 1993, Apple established its first office in China, focusing on collaborations with Chinese businesses rather than consumer sales.
The company's significant presence in China began in 2008, just before the Beijing Olympics. Apple opened its first retail store in Beijing's Sanlitun area, with a team of 52 members kicking off its retail journey in the country.
The subsequent story is well-known. In October 2009, the iPhone 3G was launched in China. The following year, the groundbreaking iPhone 4 swept the globe and was in high demand in China.
This was also the year Apple solidified its reputation in China. Following the launch pattern of the iPhone 4, Apple opened three stores in Beijing Joy City, Shanghai Lujiazui, and Hong Kong Square. To date, Apple has opened 55 retail stores in China, with Shanghai, Hong Kong, and Beijing being home to the most Apple stores.
China has evolved over the past fifteen years to become one of Apple's largest international markets. A report from Counterpoint revealed that China surpassed the US for the first time this year, becoming the largest single market for iPhone shipments. Furthermore, in the third quarter of this year, the Greater China region was Apple's only growing sales market outside Europe, contributing $15.76 billion, or 19.26% of total revenues.
Beyond sales, suppliers and developers have been equally important collaborators for Apple in China.
According to Apple's supplier list for the fiscal year 2022, 94 out of 186 companies in the supply chain are Chinese firms. Many of these suppliers have been working with Apple for over a decade, giving rise to the term "Apple Chain." Being part of this chain has positive implications for a company's revenue, profits, stock price, and market value.
In terms of developers, Apple currently boasts a developer base in China that numbers in the millions, playing a crucial role in its App Store ecosystem.
A study by Analysis Group economists revealed that in 2022, the App Store's total revenue and sales in China reached $570 billion, doubling its size from 2019 to 2022. The revenue for small developers grew by 59% from 2020 to 2022. In 2022, 23% of new entrants to the App Store, whether developers or entrepreneurs, were from China.
Educational and Innovative Commitments Behind the Products
More than its products and services, Apple's educational and innovative development efforts in China possess a local flavor. It's something the company values as much as product sales and market share - a key to maintaining its influence over the years.
On the eve of a competition, Wang Zhenyang and two teammates were making final touches to their project in their small 10-square-meter workspace.
The room housed three people but only had two beds. "We ensure that at least one team member is working around the clock. If all three of us sleep, the project won't progress," said Zhenyang, half-jokingly, half-seriously.
Ultimately, this hardworking team from Zhejiang University's Computer Science department clinched both the first prize and the innovation award in Apple's Mobile Application Innovation Contest that year. "This win was a huge motivation for us," Zhenyang said, emphasizing that it gave them a kickstart to their entrepreneurial journey.
Their award-winning creation, an electronic pet app named "Where," uses gaming mechanisms to help users overcome laziness and develop good habits.
Having secured venture capital, they now have a budding team of around 20 members. Their app, "Where," is set to launch within the year, transitioning from a student project to a bona fide iOS application poised to enter the broader consumer market.
Wu Wenqi, who is pursuing a doctoral degree in design at Zhejiang University, has also embarked on a journey that aligns with Apple's guidelines. He turned a small dream into reality.
Seal carving, a niche art in China's traditional culture, requires not only carving skills but also knowledge in Chinese literature and calligraphy. Wu, a deep enthusiast of this art form, created "Seal Create" - a cloud-based app gift for everyone interested in seal carving. The app offers a seal dictionary and simulates real carving techniques through Apple Pencil. Users can engage in virtual carving on an iPad and see the seal imprint via AR.
Wu's tech company has undertaken major exhibition projects for Zhejiang province and has launched a smart app for the Hangzhou Asian Games, amassing over 200,000 users. Next month, their product will be showcased in the Athletes' Village.
Apple has set up multiple innovation centers, scholarship projects, and design studios in China, hosting events and collaborations that nurture young talents like Zhenyang and Wenqi.
A Balancing Act: Managing Geopolitics and Business Expansion
Navigating geopolitics while expanding business in China has been an act of balance for Apple. It has faced controversies over data security, censorship, and geopolitical tensions.
However, Apple's adherence to local regulations and its significant contributions to the Chinese economy have allowed it to maintain its status and grow in the market.
The company has consistently highlighted its commitment to privacy, data security, and corporate social responsibility. While these have sometimes come into conflict with certain policies, Apple has found a middle path that keeps its interests aligned with both its global brand values and local compliance requirements.
Conclusion
Apple's three-decade journey in China serves as a testament to the interconnectedness of global business ecosystems. It underscores the deep ties, shared growth, and mutual benefits that can be achieved when multinational companies build meaningful relationships with local communities, suppliers, and consumers.
As Apple moves forward, it faces numerous challenges and uncertainties, both within China and in the global arena. Yet, its commitment to innovation, education, and local engagement will likely continue to drive its success and influence in China for years to come.
