Apple_Enter_China

The Apple Inc is stepping up its efforts to expand its presence in China. Apple's largest store in Asia opened in Beijing's Wangfujing shopping district on October 20, 2012. The store is Apple's third in Beijing and its sixth on the Chinese mainland. John Browett, Apple's senior vice-president of retail, said that a store in the South China city of Shenzhen is also about to open and there will be more stores across China in the future. Why Apple very valued the Chinese market' I think there are three important organizational environment reasons. The Economic Environment China has become an essential market for multinationals, going beyond a mere supportive role for companies’ worldwide operations. In 2011, 66 percent of the companies report their revenue growth in China exceeded that of their operations worldwide. I think there are two points of economic environmental factors that attract Apple's investment in China: First, China is an emerging economy that offers lot of market opportunities for foreign investment. China is one of the biggest countries in production and consumption covering almost every industries and products. After more than a quarter century of reform and opening to the outside world, by 2005 China’s economy had become the second largest in the world after the United States. The country has a huge potential for economic growth offering access to a large market and considerable savings in labor costs. Second, the global recession affected the entire world economy since 2008. The economic side effects of the European sovereign debt crisis, accompanied with slowing economic growth of the U.S. continues to provide obstacles to world economic growth. This situation has forced Apple to turn its attention to emerging markets. Although the global economic recession has a great influence on China, China has maintained a strong momentum of economic growth. This is why Apple remains optimistic about the Chinese market in the case of global economic recession. The Political Environment A good political environment is essential to attract business investment. Market liberalization and incentive policies of the government often can give investors confidence. Thus, I believe that Apple’s investment has some political basis: The first attractive political environment is China’s entry into WTO has led to a significant opening of industies to foreign participation. Since entering WTO, China has been increasingly involved in the world economy and society. And to meet the commitments in WTO, China has speeded up reforms in a lots of fields such as finance and services. The second attractive political environment is that the government is doing everything in its power to continuously improve the business climate for foreign companies. Tim Cook, Apple CEO, met Vice-Premier Li Keqiang in Beijing on March 27, 2012. During their discussion, Li said China is trying to ensure that both Chinese and foreign companies are treated fairly under rules meant to protect intellectual property rights. He was optimistic about the prospects of the country's high-tech industry. This means that Apple has won a guarantee about intellectual property rights from the Chinese government. The Sociocultural Environment Customer preference is a very important element in sociocultural environment and a company’s success. Apple’s business in China is booming and is set to get even better over the next year. This is because Apple products has obtain a great many of customers’ preference in China. But why Apple products can attract customers’ attention' In my view, there are two main reasons: First, Apple products have good qualities, and Apple's highly brand recognition can prove it. Quality plays a huge role in customer preferences, leading to customers in choosing a brand. Branding has been generally recognized as the key to success in nowadays business, especially in rapidly developing fields. Because brands signal a level of quality to consumers and can be effectively used to gain a competitive advantage. Second, the consumptional level of Chinese customers has overalled upgrade compared to the past. Apple is taking advantage of the new emerging middle class in China, which is known as the consumer class. As the Chinese economy continues to grow, there will be an increasing number of people with disposable income who tend to show their status by owning Apple's products. In conclusion, I believe Apple must has done a great deal of organizational environment analysis before making the decision to enter the Chinese market. And Apple has take advantages of these organizational environment. Apple is now considered a symbol of dignity and trendiness in China and as the company has gained such great profits from its investments in China, this is really just the beginning of Apple in China. In the next few years, I believe Apple will continue to enjoy strong growth and expand its market share in China. I also think Apple's business in China will be one of the main drivers of its future earnings growth.