How Samsung is beating Apple in China

Apple Chief Executive Tim Cook believes that “over the arc of time” China is a huge opportunity for his pathbreaking company. But time looks to be on the side of rival Samsung Electronics Co Ltd, which has been around far longer and penetrated much deeper into the world’s most populous country.

Apple Inc this week said its revenue in Greater China, which also includes Hong Kong and Taiwan, slumped 43 percent to US $ 4.65 billion from the previous quarter. That was also 14 percent lower from the year-ago quarter. Sales were weighed down by a sharp drop in revenues from Hong Kong. “It’s not totally clear why that occurred,” Cook said on a conference call with analysts.

Neither is it totally clear what Apple’s strategy is to deal with Samsung - not to mention a host of smaller, nimbler Chinese challengers.

Today, in the war for what both sides acknowledge is the 21st century’s most important market, Samsung is whipping its American rival. The South Korean giant now has a 19 percent share of the US $ 80 billion smartphone market in China, a market expected to surge to US $ 117 billion by 2017, according to International Data Corp (IDC). That’s 10 percentage points ahead of Apple, which has fallen to fifth in terms of China market share.

Cook said Apple planned to double the number of its retail stores over the next two years - it currently has eight flagship stores in China and three in Hong Kong. But, he added, Apple will invest in distribution “very cautiously because we want to do it with great quality.”