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How Apple Became the Top Smartphone Player in China


Jul. 6 2015, Updated 9:07 a.m. ET

Apple has now overtaken Xiaomi in the Chinese smartphone market

In the previous part of this series, we learned that Apple (AAPL) is looking to double its retail reach in India by signing new deals with distributors. Apple’s presence in the Indian smartphone market is indeed low. However, this isn’t the case in China (MCHI).

According to a report from IDC (International Data Corporation), and as the chart below shows, Apple has now overtaken Xiaomi to become the top smartphone player in China. Huawei, Samsung, and Lenovo are some of the other players in this market, and they’re based on Google’s (GOOG) Android operating system.

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Larger-sized iPhones appeal to Chinese consumers

Within the emerging markets (EEM), China continues to be by far the most important growth market for Apple. In fiscal 2Q15, revenues from Greater China (China, Hong Kong, Macao, and Taiwan) grew at a YoY (year-over-year) rate of 71%.

Apple continues to benefit from its partnership with China Mobile (CHL). China Mobile is the world’s largest telecom provider and serves more than 800 million subscribers.

The huge response to Apple iPhone in China is mainly because of its brand image and the larger-sized iPhone 6 and iPhone 6 Plus. Apple’s 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus are much bigger than the company’s previous model, the 4-inch iPhone 5S.

Apple’s strategy of introducing bigger-sized iPhones is clearly aimed at leveraging current consumer preference for larger devices. Consumers find bigger screens more engaging and vivid—better for viewing photos and videos. Plus, carrying a larger smartphone eliminates the need for tablets, especially smaller tablets.

If you’re bullish about Apple, you could invest in the PowerShares QQQ Trust, Series 1 (QQQ). QQQ invests about 14.6% of its holdings in Apple.


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