Did Google’s China BLUNDERS Help Apple?
Apple (NASDAQ:AAPL) launched a full-fledged China wooing strategy at its Worldwide Developers Conference on Monday, announcing several new features for its operating systems tailored to Chinese users, including integration with Chinese Internet services like microblogging site Sina Weibo (NASDAQ:SINA), search engine Baidu (NASDAQ:BIDU), and video sites Youku (NYSE:YOKU) and Tudou (NASDAQ:TUDO), as well as Mandarin support for Siri.
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Apple’s revenue has also seen a steady increase in what is now its fastest growing market. China accounted for 20 percent of Apple’s sales in the first quarter of this year and is now the company’s second-biggest market after the U.S. But why has the much earlier entrant into the country, Apple competitor Google (NASDAQ:GOOG), not had as good luck? According to Bloomberg, in its rush to get into China fast, Google made mistakes.
It had to go through a lengthy legal route to hire Microsoft (NASDAQ:MSFT) executive Kai-fu Lee for its entry into the country, but couldn’t overturn the dominance of Baidu. It only has 16.6 percent of the Chinese search market, with Baidu holding a massive 78.5 percent. Google also struggled with China’s censorship rules, eventually deciding to relocate its search service outside the mainland. That move, Bloomberg points out, won plaudits from free-speech advocates but embarrassed the Communist Party leadership, jeopardizing Google’s other China plans.
Apple took the slow and steady approach instead, only opening its first Apple Store in Beijing in 2008. Apple, known in the country as Pingguo, the Mandarin word for apple, also negotiated non-exclusive deals to find wireless partners for the iPhone. After failing to make a deal with market leader China Mobile (NYSE:CHL), it moved on to China Unicom (NYSE:CHU) and found success, and has now added on China Telecom (NYSE:CHA).
Not everyone is persuaded that Apple’s approach has worked. “If they had really come up with a China-first strategy, [Apple] would have done much better, far earlier,” Shaun Rein, managing director of China Market Research Group, told Bloomberg. But clearly, the strategy seems to have worked better than Google’s.