When Vincent Tai, Apple’s general manager for China operations, retired recently, it attracted a little attention to a Mac market that is often ignored. But it’s a market with enormous potential.
Apple’s market share in the China region has fallen off in recent months. The company’s reaction has been to bring in new personnel, including former Dell and Intel managers, to turn things around. Mark Yang, formerly a Dell executive, was appointed in May as general manager for Greater China. The good news: Apple has forecast positive growth for its Chinese operations next year.
Apple’s market share has dropped to 0.2 percent compared to 2 percent a few years back, Forest Liu, a Mac user and advocate who works for one of Apple’s distributors in China, told MacCentral. However, just about all other personal computer vendors have grown their business and their unit sales in the country, he said.
“In a fast growing economy, Apple has only reached minimal growth,” Liu said. “China’s computer industry is withstanding much of the Asian economic slow down. China’s home PC sales are going to grow by over 60 percent, while business PC sales will grow about 25 percent.”
Currently, Apple dominates the Chinese desktop publishing market. But its grip in this area is declining rapidly, Liu said. Mac use in design and publishing firms has dropped to about 60 percent from over 80 percent in recent years. Apple has been fairly successful in selling to K-12 institutions in China, with around a 20 percent market share.
“Apple had a huge push in the educational field and it seems to be paying off, somewhat,” Liu said.
One of the more wealthy schools in Beijing, the 19th Middle School, bought 100 of the new iBooks earlier this year, but their functionality is hampered by the fact that the Chinese market for Mac educational software is still undernourished.
“Few people in China understand or know the Mac,” Liu said. “This will make a Mac upgrade hard to sell unless someone can come up with an idea. It seems the biggest problem to overcome in installing Macs in Chinese schools is that no one understands that the computer is a tool for learning, just like your pencil and scrapbook.”
Since 1989, China has become a huge capitalistic, moneymaking machine, Liu said. Foreign companies have been pouring in, starting joint ventures and funding Chinese startups.
“Today, China’s urban areas are a steep contrast with rural areas,” Liu said. “China’s main economic growth is concentrated around Beijing, Shanghai, and Guangzhou. Hong Kong, of course, is still fairly strong. These cities are just as modern or more modern than cities in the West. Anything you couldn’t live without is available in China. If it’s simply your morning Corn Flakes, bungee jumping, or satellite television and broadband Internet, it’s all here and much more.”
So, it’s no surprise that businesses run on computers, and computer systems are being installed in homes at rates that would have been unbelievable a few years ago. In the near future, China’s urban areas will be very similar to western cities, Liu said. The real difference is that there are more people everywhere. In China, you have cities with populations of 10 million “that no one has ever heard of,” Liu said.
“The biggest problem now is that in rural areas modernization is still a long way off,” he added. “But there is no other reason to think that China is any different from the west.”
Apple’s main barrier, but also its biggest opportunity and advantage, is turning out to be Mac OS X, Liu believs. Mac OS X is a truly global operating system. However, the Chinese version of Mac OS X was three months late and released without much fanfare, he said.
“The Mac OS X CD I buy in China or Germany or France or Japan is exactly the same,” he said. “There are no different language versions of Mac OS X. One version of Mac OS X includes all languages. You make your language choice just as you would choose your desktop picture. International language input is built in. Japanese, Hebrew, Chinese, Korean, you name it. This is great news for designers and publishers, for multi-cultural people and for our global society. Just imagine: when Cupertino updates the operating system, everyone in the whole world can update. No more waiting two or three months for the International English version, then German, French, Japanese, etc. versions — and, at the very end, the Chinese version.”
At least this is the ideal. Liu said that, in reality, things are a little different. The Mac OS X CD he can buy in China is different. It shipped directly as Mac OS X 10.0.3 and can’t be updated to Mac OS X 10.0.4, he explained.
“This makes it not so very global after all,” Liu stated. “I do have my hopes up high for Mac OS 10.1. I have put high hopes in seeing support for all currently missing languages with this first major update. After all, Mac OS X has made localization easier than ever. And third party developers can theoretically ship their software titles, just as Apple ships their OS, as one version including all languages. All the application does is check what the current user chose as the main language, and the application launches in the preferred language.
With these features in place Apple has shown the world that it as reached “architectural excellence” with Mac OS X, he said. Localization is made easy. Shopping for software in your preferred language is never a pain. Updates to the operating system and applications can be released simultaneously. But there are still some obstacles to making it a big success in China, Liu said. One is a lack of software, though that’s being rectified rapidly. Another obstacle is “a horrible service and support network that does not live up to Apple quality,” he added.
“Other problems that need to be seriously taken care of is that no one in China considers making Mac versions of their software or their hardware,” Liu explained. “China does not only need software and solutions found in the states and other countries, it also needs China specific software and solutions. These are never created for Macintosh.”
There’s also little brand recognition of Apple in China, he added. To most Chinese, Apple is a “dead” company, he said. His recommendation? Lots of advertising.
“What drives China today is capitalism,” Liu said. “More than anything else really. Chinese people are finally able to buy into all the luxuries foreign countries have enjoyed for decades. They are spending like crazy. Advertisement here drives sales like no where else.”
Still, without a strong infrastructure and a good base in software and hardware solutions, a huge advertising campaign could backfire. The iMac failed to catch on in the country because of a dearth of compelling software and hardware solutions, Liu said.
“Just about every market in China is growing rapidly,” he continued. “Fifty and 100 percent growth by Apple can be obtained with little effort. The company should be focusing on 1000 percent or 2000 percent and beyond growth in China. Even this can be easy if Apple can build a strong Chinese Mac infrastructure and good solution (software and hardware) base. The opportunity, and especially the importance, of China should not be ignored. Apple now has a chance to re-launch itself in China.”
China is an important market because one-fifth of the human population is Chinese. Liu believes that with the right dedication Apple can still turn around its situation here and create a stronger Mac following than anywhere else in the world.