China's Cold Shoulder for the Thesis

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Furthermore, the Chinese version of the iPhone cost as much as $1,025, compared with $299 in the United States. "Apple picked a weak partner, irked the customer with its pricing, and ignored the competing channel. Essentially, it continues to cultivate competition by marketing the touch-screen smart-phone segment and weak-playing the largest market in the world" (Yaw 2009).

According to Chinese consumers, "the iPhone in China costs more than 1000 dollars without a service contract. The per capita GDP of China is 6000-7000. The grey market vendors are successful because their prices are reasonable" and the Chinese consumer is still more value-conscious than his or her American counterpart (Kharif 2009). Joked one Chinese consulting firm: China Unicom's iPhone plan "will be an interesting exercise in how to sell an inferior product at a higher price" (Apple's iPhone sales debut, 2009, Bloomberg).

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However, according to Apple, the prices of the phones "will drop over time, helping China's iPhone shipments reach 1 million to 2 million in Apple's fiscal year… We believe that eventually China will emerge as a major market for iPhone sales, but it could take a year or two to gain meaningful unit traction as it did in the U.S." (Apple's iPhone sales debut, 2009, Bloomberg). Apple is currently taking a wait-and-see approach, but it may have missed a critical marketing opportunity, if China's gray market remains strong......

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