Apple’s slow pace of expansion in China has been causing major headaches for the company. Apple’s stores in China are usually very crowded and customers often have to wait in long lines for repairs for their iPhones.
Apple has recently agreed to settle a lawsuit over the iPad trademark by paying Proview Technology $60 million, freeing it to sell its latest tablet computer throughout mainland China. Apple earns a nearly 20% of its revenue in China.
With six stores in China, Apple has more retail stores opened in Pennsylvania than it has in the entire country of China. Apple has three retail stores in Shanghai, two in Beijing, and one in Hong Kong.
In Pennsylvania, Apple has eight stores, including three in the city of Pittsburgh. Pennsylvania has a population of 12.7 million. The population of China is 1.3 billion.
The popularity of Apple’s products has created a lively gray market where smuggled goods are peddled by unauthorized resellers. The lack of retail stores and authorized resellers in China leaves room for unlicensed resellers to move in on Apple’s business. Scalpers often camp out for days in front of the authorized Apple stores to be first in line for new products so they can resell them for a nice profit.
In smaller mainland Chinese cities, copycat Apple stores have already popped up. Bad consumer experiences at unauthorized shops happen frequently and these incidents run the risk of eroding confidence in Apple’s products.
The company has said it is taking its time on its expansion in China to ensure that it secures the right locations, but its retail expansion has fallen short of the company’s goals. In 2010, Ron Johnson, then Apple’s retail head, forecast that by this year, the company would have 25 stores in China.
Torsten Stocker, a partner at business strategy firm Monitor Group, said, “There’s certainly more demand than Apple can serve with their store footprint currently.” Chinese government officials recently announced that Apple is looking to open two more in the major cities of Chengdu and Shenzhen soon.