Apple Botches Launch of iPhone 4S in China

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Apple (NASDAQ:AAPL) disappointed would-be customers in China today who lined up outside the company’s main store in Beijing overnight for a chance to buy the latest iPhones.

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Apple advertised that its store in Beijing’s Sanlitun district would open at 7 a.m. on Friday, but when at 7:15 a.m. it was announced the iPhone 4S wouldn’t go on sale today as planned, customers who had been waiting all night began to react in fury, scuffling with security and pelting the store with eggs.

The iPhone 4S launch proceeded as planned at Apple’s other Beijing store, with customers snatching all of its 2,000-phone supply within two hours. A similar launch in Shanghai also saw thousands lining up to buy the smartphone, and opened its doors an hour early and sold out almost immediately. Apple later halted sales of all iPhones at its five retail outlets in China “for the time being,” said spokesman Carolyn Wu.

But the main store in Beijing never opened for what Wu called “safety reasons.” While the crush of crowds causing chaos at Apple stores in China is a sign of the brand’s popularity, it is also a reflection of the company’s decision to slow the opening of outlets in China.

In February 2010, Apple announce a plan to open 25 stores in China over the next two years, but as of today, only six outlets exist in all of China, including the Hong Kong shop, which started selling the iPhone 4S on November 11.

“There isn’t enough product in enough retail points,” said Shaun Rein, managing director of China Market Research Group, a Shanghai-based retail advising company. “If they had more points of sale, it would disperse the crowds.”

Police had to use metal barricades to keep order when hundreds of people lined up outside the store in Hong Kong’s IFC mall for several nights when the iPhone went on sale.

Apple’s stores in China generate, on average, the highest traffic and revenue of any of the company’s stores around the world. Apple sold 5.6 million iPhones in China in the first nine months of 2011. Its revenue in China rose to $13 billion in the year ended September 24, up from $3 billion a year earlier. China accounted for 16 percent of Apple’s revenue in the fiscal fourth quarter, the country Apple’s biggest national market outside the U.S.

Loyal Chinese customers remained at Beijing’s Sunlitun store for hours after the police lifted the cordon and doors remained closed, hoping for a chance to buy the phone, which includes voice recognition software that doesn’t recognize Mandarin. Ultimately, they gave up and went home when it became clear the store would not open at all.

“We were unable to open our store at Sanlitun due to the large crowd and to ensure the safety of our customers and employees,” Wu said, much to the disappointment of hundreds of potential customers prepared to pay the equivalent of nearly $1,000 for the latest iPhone model.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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