Apple Halts iPhone 4S Sales in Its China Shops

Kathrin Hille, FT, January 13, 2012

Apple’s strategy of fanning Chinese consumers’ desire for its products backfired as a riot at its flagship store in Beijing prompted police action.

The company stopped sales of the iPhone 4S in its shops in China on Friday and the Apple store in the Sanlitun district in central Beijing stayed closed after a crowd waiting to buy the model on its launch in the country pelted the shop with eggs and started fighting with security guards.

Many people had been queueing all night in freezing temperatures outside the shop in an upscale shopping mall. But at sunrise, a guard told them sales would not start after all.

“Stores in China have already sold out,” said Apple spokeswoman Carolyn Wu. “Unfortunately, we were unable to open our store at Sanlitun [in Beijing] due to the large crowd, and to ensure the safety of our customers and employees, [iPhone 4Ss] will not be available in our retail stores in Beijing and Shanghai for the time being.”

Customers can still order the devices from Apple’s online store and through China Unicom, the country’s second-largest mobile operator and the only official channel through which Chinese consumers can buy the iPhone 4S apart from Apple itself.

Chinese consumers have proved as eager for Apple’s gadgets as their counterparts in most Western markets. Apple accounted for 10.4 per cent of China’s rapidly growing smartphone market with 5.6m iPhones sold in the first nine months of 2011, according to Gartner, the research firm.

But sentiment against foreign brands can turn sour very quickly in China. Hundreds of protesters besieged a Porsche store in Shenzhen earlier this month after a customer said the foreign company had insulted him. Some internet users criticised Apple on Friday for making its Chinese customers “freeze and hunger”.

Apple has moved much more slowly than other multinational brands to build a distribution and retail network in this market and launches most of its products in China several months after they go to market in the US. It has lost control over much of how iPhones, iPads and other popular gadgets are marketed here.

Through a vast grey market, fed by parallel imports, the products are normally available in China immediately after their US launch. Upon the official China launch, most iPhones and iPads are snapped up by black marketeers, who resell them with a hefty mark-up.

It was such people who turned violent on Friday morning, said witnesses. A middle-aged woman was still arguing with the guards at noon, saying she needed to “deliver the merchandise”.

The launch of Apple’s iPad 2 tablet computer triggered similar violence in May last year. Back then, the same Sanlitun store saw a fight between queueing customers and security staff, which left four people injured and a glass pane smashed.

Apple’s sales in China have grown at a rapid rate during the past few years, jumping more than fourfold to $12.5bn, including Hong Kong, in the year ended September 24.

Despite the surge, China accounts for just 12 per cent of the company’s total sales, with the US making up 39 per cent.

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  • The Chinese ought to love the iCabal smartphones.  After all, some 400,000 of them work in the meat grinder slash suicide mill that Foxconn (the mfgr. of the motherboards for the iWhatevers) calls a factory.

    Get a Droid.

    • Anonymous

      Google owned Android is the very last phone anyone should own no matter how good it is.  Just what everyone needs, a smartphone with an OS owned by a company with deep ties to Obama, that is setting the standard for data mining and tracking. 

      • Al Gore sits on the AAPL Board of Directors.

        If that’s your concern, AAPL vs GOOG on data mining, it’s a wash, at least for out of the box functionality.

        However, there’s CyanogenMod for many Android devices.

        • Anonymous

          Al Gore doesn’t control the military and all the lettered agencies and Apple isn’t in bed with the government.  I am ambivalent on Apple but decidedly negative on Google.  You don’t like Apple, fine.  But don’t recommend Android/Google because Apple is “evil.”

          • Didn’t say AAPL was evil, not any more or less than GOOG or any other vendor.  I’m saying they’re closed source/walled garden.

  • WR the elder

     I don’t own a smart phone because I don’t want to incur the high fees monthly charges that are a part of the smart phone life.  So I guess an awful lot of Chinese are richer than me.

  • iFanboy

    Hey “WR the elder,” I use an iPhone 4 with AT&T goPhone plan and pay $25 a month. I don’t need data because at home and work I have wifi. You really can’t beat the iPhone for ease of use and reliability. Smartphones are amazing for organization and I use mine as an iPod as well. “iCabal” or not, I won’t buy anything but Apple due to high quality and secure Op systems. I am an artist and graphic designer so I may be biased. Yes, racial realists can be Apple enthusiasts too. 

    • I just love how many of these these fanbois of the iCabal trot out the “graphic designer” or “artist” canard, as if that’s supposed to impress me.  Fine, you’re a graphic designer.  I’m an accountant.  Does that impress you at all?  Do you take that as an imperative to join the Android ecosystem?

      “Racial realists can be” iCabal fanbois, too.  Not germane to the conversation.  Of course they can, and of course Droidheads like me can be RR/WN. 

      “You really can’t beat the…” iWhatevers “for ease of use…amazing for organization…I use mine as an iPod as well.”  Let me take a census of my own digital life.  Oh, yeah, exactly ZERO AAPL products.  My music player, smartphone, tablets, laptop, desktop — Not an bitten apple logo to be seen.  And I don’t exactly think I’m disheveled.  I’m functional.

      Product recommendation, for you workout warriors:

      http://www.amazon.com/Sony-NWZW263BLK-Walkman-MP3-player/dp/B005EQSAAW/

      You can thank me later, just for the sound quality alone, another attribute that AAPL has yet to grok, even though it’s supposed to be the unquestioned leader in digital music hardware, software and distribution.

      • Ysy4w64tatsywsygssd

        That is android supremacy right there.

        “iWhatevers” unite!

        • I suppose my previous remarks deserve both clarity and a short apologia.    I didn’t mean to state directly or imply that the Android platform was superior to the iCabal’s, because I shouldn’t have to.  It’s self-evident.

          • iFanboy

            Boy, you really “schooled” me. I’m selling all my Apple stuff tonight and buying a Windoze PC and this weeks top of the line Fandroid phone! 

          • iFanboy:

            Seriously, I haven’t held back the wrath of my tongue like I usually do.

            I’m happy that you’re happy in the AAPL ecosystem.  But I hope you realize that you’re living in a walled garden.  Now, some people need the walled garden.  As for me, I could never give up that level of power or control to someone else when the choice not to do so was so easy. 

            AAPL has constructed a really appealing walled garden, but realize that it’s still a walled garden.

  • Ageofknowledge

    Many of the stores in China are unauthorized fakes (including Chinese Apple stores) that resell the manufacturer products outside of licensing agreements with those manufacturers. The trend is to begin simply manufacturing the products too, slapping on the brand, and reselling them in the fake stores. That way they keep all the profit and completely cut out U.S. manufacturers entirely literally stealing the business away from them.

    This would bother me if U.S. manufacturers hadn’t moved their operations over there to begin with literally handing foreigners their innovation and market (along with the jobs and capital investment). Karma… it’s all karma.

  • Anonymous

    Many of the Chinese students are behaving well because they are spying for the Chinese government. And whether they return home after graduation or simply obtain a green card to displace an American worker here that is not going to change.

    Read this unclassified 2011 CIA report on the subject: http://www.fas.org/irp/world/china/docs/cia-sis.pdf

    The crazy thing is that American taxpayers are being taxed to subsidize this. Let’s revisit that point. We are being taxed to subsidize the educations of Chinese spies that are displacing us in the workplace. Get your mind around that one.