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.