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Shanzai- China “fleecing” Apple and Google… ha ha ha

By: vi

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Covering the China consumer electronics, phone and PC industry is a load of fun but its rarely a barrel of laughs. That is until I read VentureBeat’s “Apple and its iPhone get fleeced in China, but will Google fare any better?” An article that attempts to point out that the deals Chinese telecoms are striking with Apple and Google aren’t very good for either company… excuse me while I pick myself off the floor to continue writing this article.

So the general gist of the article is that with or without the support of local government foreign companies get screwed when doing deals in China. More specifically in Apple’s case:

“For two years now, Apple has sought a carrier partner in China to distribute the iPhone, but it has failed. At first, it was in talks with China’s largest carrier, China Mobile, but the two couldn’t agree on revenue share terms. Now Apple looks to be on the verge of signing a pretty depressing deal with China’s second carrier, China Unicom.”

And Google thanks to its recent dealings with China Mobile is about to suffer the same fate as China Mobile will use a fork of Android and run its own appstore (China Mobile Market) cutting Google effectively out of the revenue loop on the apps for the 10+ new Android enabled phones (Dell, HTC, etc).

So on the face of it yes Apple is not getting the same great deal it screwed negotiated with ATT. Although even ATT have been claiming they are hip with a new customer base, they haven't been exactly laughing themselves all the way to the bank on the back of the millions of iPhones they’ve shipped and contracted customers to.

But Apple will make good money on the hardware from the per unit cost China Unicom will pay, they will make AppStore revenue and they will be in China opening up a new market growth opportunity. On top of that the AppStore will also get a whole new developer base as well. Do the clowns who wrote this article really think Apple would be stupid enough to put pen to paper on a deal that wouldn’t benefit them in some way? And since when does driving a hard bargain constitute “fleecing”?

Google’s deal might look even worse at first glance but when you consider they are not the dominant search engine in China and they are in need of the market data Android will feed back to the mother server, as well as the ability to shove their advertising in front a huge new audience (which in turn gives them a whole new advertising cliental also). Google’s going to fare pretty well.

Another laughable main feature of this article is the idea that the sizable shanzhai iFauxne clone market in China will negatively affect iPhone sales.

This all comes after a flood of other, cheaper iPhone clones have already hit the market — none of them working as well as the iPhone, and thus creating confusion and dangerous brand dilution (the Chinese will get turned off by phones that don’t work, and they may not buy the real thing when if does hit the market).

I think Matt Marshall and Matthaus Krzykowski sadly underestimate the savvy of the Chinese consumers willing to stump up the cash for iPhones and their clones. Considering the estimated 1 million jail broken real iPhones already in China and the cache value of having the real phone and the real apps will have there is little doubt the real iPhone (a cost down model likely) will do extremely well.

While the writers of this article do occasionally concede their own points in the story, an article with a title claiming China has fleeced Apple is a millimeter away from being flamebait. China is the new market growth opportunity for many western businesses. If those businesses don’t realize there is going to be a price to pay to penetrate those markets they’d better stay home and find a new revenue model that doesn’t include Asia.

Article Source: http://depositarticles.com/

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