Thursday, October 28, 2010

Apple Opens Chinese App Store

The Wall Street Journal

BEIJING—Apple Inc. announced Tuesday that it launched an online store and a simplified-Chinese version of its App Store for customers in China, the latest move in an aggressive expansion by the company after years of neglecting the market.

Chinese customers can now order Apple products, including the iPhone 4 and the iPad, online and have the products delivered. Prior to this move, iPhone buyers had to order the devices on Apple's Chinese website and pick them up at one of Apple's four mainland Chinese Apple Stores in Beijing and Shanghai.

According to the new Chinese online store, Apple is shipping iPhones in China in one to two weeks, and iPads in 24 hours as of Tuesday morning.

The company's expansion in China comes as competition in China's nascent but fast-growing smartphone market is heating up, with Taiwanese smartphone maker HTC Corp. also planning an expansion here.

Apple, which had only one Apple Store in China last year and relied largely on authorized resellers to reach other customers, has said it plans to open 25 Apple Stores in the country by 2011. It has also sped up the release of new products in China, the world's largest mobile market and second largest personal computer market after the U.S.

With e-commerce booming in China and consumers spending tens of billions of dollars in transactions each year online, the move could help boost the company's distribution in China. Apple had 7.1% of China's smartphone market as of the second quarter, ranking fifth after Nokia Corp., Samsung Electronics Co., Motorola Inc. and Sony Ericsson, according to research firm Analysys International.

According to research firm IDC, Apple has less than 1% share of unit shipments in the PC market.

Still, e-commerce is a more complicated business in China, where many customers prefer to pay cash on delivery for their purchases, and it can be more difficult to make deliveries to remote regions due to a lack of infrastructure development. And unlike in the U.S., where many brands have their own successful e-commerce websites, three-quarters of online shopping in China is done through, a retail website operated by Alibaba Group.

Apple's online store warns customers outside of large urban areas that their deliveries may take one to two extra business days. The store says it accepts credit and debit cards, as well as bank transfers and cash deposits.

Releasing a Chinese version of Apple's Chinese App Store, an online marketplace where customers can purchase software applications for their iPhones, iPads and iPods, also removes a barrier for Chinese users to access the store. But other hurdles remain, including the requirement for users to have dual-currency credit cards in order to make purchases within the store—a requirement that has led many users to either hack their iPhones in order to use applications from other sources, or make purchases in the App Store using false identities and fraudulent gift cards.

An Apple spokeswoman said payment requirements for the Chinese App Store remained unchanged as of Tuesday.