Life
Many reasons why getting an iPad in China is difficult
Updated: 2011-02-04 13:59
By Tuo Yannan (China Daily USA)
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When I told my friend that I would visit the United States last December, her first reaction was to grab me by my arms and shout, "Bring me an iPad! Oh wait, two!!"
I wasn't surprised by her reaction. After my brother changed his preference from viewing Playboy magazines to playing on his iPad, I won't be surprised by anything related to Apple Inc and its products.
If you are an American, you may be thinking: "Why don't Chinese people just go to their local Apple store and buy the iPad for themselves?" The answer is quite simple: There is such an intense shortage of iPads in China that consumers are forced to turn to alternative sources, such as the gray market or even traveling abroad to purchase their iPad.
While Apple may not admit it, the company purposely creates a supply shortage to stimulate demand, but the consequences of this marketing strategy will hurt the company in the long term, according to some analysts.
In the Chinese mainland, there are only three ways you can buy an iPad. The first method is through official Apple stores in China where iPads may be purchased, but with the long waiting list, good luck trying to get one in less than two weeks. Second, the gray market and scalpers provide an ample supply of iPads, but not getting cheated by the vendors is just as much of a hassle as a two-week wait. The third option is to find someone bring it to you from abroad.
Let's talk about ease of access to Apple stores first. Please guess, how many Apple stores are there in the Chinese mainland?
Four.
With 34 provinces, municipalities and regions in China and a population of 1.3 billion, four times more than the US, there are only four Apple stores in the entire Chinese mainland, while the United States has 236 Apple stores. The ease of access to an Apple store in the mainland is equivalent to having one store service the entire population of the US. Back in 2008, I attended an Apple news briefing held in its first store in the Chinese mainland. In its cool air-conditioned Sanlitun flagship shop on a very hot summer day in Beijing, Apple's global marketing executives flew from the US and told everyone that "China is a very important market" to the company. Two years after that news briefing, they had built only one more store in their "important market".
With such huge sales potential in China, it is incredible to think that there are only four Apple stores available. It sounds like a joke, but it seems Steve Jobs believes it to be a good marketing strategy. No wonder Liu Chuanzhi, chairman of Lenovo Group, China's biggest PC maker, commented: "We're lucky that Steve Jobs doesn't seem to care about China; otherwise our company would be in trouble."
According to an analyst from International Data Corp, by the end of 2010, Chinese consumers purchased at least 800,000 iPads in 2010 and, due to the difficulty of purchasing one directly from Apple, most of them were not bought from official stores. In 2011, the sales number of all tablet PCs, including iPads, will hit 4.5 million units in China.
After the iPad was released in China after a nine-month delay (the iPhone 4 was delayed for three months), the company launched two additional stores in the country in September 2010. It makes one wonder if Apple knows China has a population of 1.3 billion. Although the company said it plans to eventually open 25 stores, according to their previous rate of two stores each year, I might have to wait for more than a decade to see it fulfill its goal.
Thanks to the shortage, a few months ago, if you took out an iPad from your bag in the subway, people would surround you and watch as if you were a monkey in a zoo. If you wanted to hit on a pretty girl, instead of a puppy you should have taken out an iPad.
While customers feel disappointed about being unable to get an iPad through official channels, gray market vendors and scalpers see an opportunity and are more than happy to fill the gap. In China, going to a gray market dealer is usually the only way to buy an iPad.
According to supply and demand, some might think the gray market is great because prices are always cheaper than official stores. However, this rule doesn't apply to Apple products. Of course, Apple sells the same amount of products regardless of which country it sold them in, but in the long run, I think it will ruin the company's business in China completely.
Unfortunately, because the company plays the market-shortage game on purpose, I have to admit that I was tempted to purchase my iPad on the gray market. In the end, I did not get my iPad there, not because of shortage, but because the gray market has become a nightmare from unscrupulous dealers hoping to take advantage of the demand for Apple products.
Due to the shortage, lots of customer-focused companies are willing to offer much better service for their customers. According to a survey, more than 70 tablet PC makers are going to launch their tablet PC products in the Chinese market, including big companies such as Lenovo, Dell, HP and Samsung.
A Chinese tablet PC maker, ErenEben (pronounced e-ren-e-ben), provides better customer service compared with Apple. Upon requesting a demo from ErenEben, it will send a trained employee to hand-deliver its product to your door and show you how to use it. If you do not want to purchase the tablet PC, the representatives will thank you for showing interest in their product with a smile! In terms of providing better sales service, many companies are now ahead of Apple.
A top executive of UK-based semiconductor research company ARM, which designs the chips used in iPads, bragged that instead of buying an iPad, he bought two Chinese tablet PCs, each costing less than 1,000 yuan ($154). "The Chinese tablet PCs have more functions than an iPad! You should buy one," he said.
Stubbornly refusing to try alternatives, I insisted on getting an iPad, because I wanted to be "cool". In search of an iPad, I went to Zhongguancun, the largest trading market for electronics in Beijing.
Once I entered the market, I was shocked by the number of Apple products hanging everywhere. Most of the booths in the building are just a few square meters, but dozens upon dozens of iPads from all over the world were put on display in tiny glass counters. Looking around, it seemed unimaginable that China would be facing a shortage of iPads.
After wandering around the sea of Apple products, I went to one of the biggest booths there, and asked for a 3G 16-gigabyte iPad from Hong Kong. In addition to the fact that the 3G version is still unavailable in the Chinese mainland, another reason why I was asking for the Hong Kong version was because iPads from the mainland and Hong Kong are the only ones eligible for warranties in the Chinese mainland.
Since the Hong Kong version is priced slightly higher than other versions, the owner gave me his "lowest price" of 4,700 yuan. The average price of iPads was about $100 higher than official price. "The price has already dropped a lot, in the beginning we would sell it for 6,000 yuan and above," said the owner, regretting the price he quoted earlier after much bargaining.
In retrospect, perhaps I should have accepted his first offer without bargaining, because just a few minutes later, my nightmare began. According to how the owner treated me, he must have been hoping to play me for a fool or deterring me from completing the transaction.
After agreeing on the price and version, the owner asked me to wait for 15 minutes, so I went to other booths to browse their white iPhone 4s.
When he came back, the owner held a box in his hand, but upon closer examination, I found that it was already unsealed. The box showed it was a US version and the iPad inside already had been used. I remained calm, because I knew a booth owner in the gray market will not give you exactly what was agreed upon for the first device he or she brings to you.
"Don't try to mess with me; bring me a sealed Hong Kong version," I said calmly. He didn't say anything when he took the box back, and then told me to wait for another 30 minutes. I started to look at iPad screen protectors in his shop.
About 30 minutes later, someone dropped off another iPad at his shop. I examined the new iPad and found it was the US version again, except this time they sealed it to try to pass it off as brand new. "Here it is, your iPad," he said.
Feeling impatient, I said, "Are you joking? Do you need me to train you and your staff that the iPad code LL/A means USA and ZP/A means Hong Kong?!"
He looked at me without any emotion and said, "I will bring another one for you. Wait 30 minutes." I started to look at iPad cases in his shop.
Another 30 minutes passed, and he handed me another sealed iPad. According to the box, it was a Hong Kong version. "Good, two tries are not so bad," I said to myself silently. When I opened the box and took the iPad out, everything seemed very smooth until I turned on the iPad and saw the country code on its main menu - New Zealand.
I could not help from shouting out, "A sealed Hong Kong box with a New Zealand iPad inside?! This is fraud!"
The owner seemed amused by my reaction and shrugged his shoulders. "They never come together because iPads need to be opened at China's customs. I think it is already a hard job for my employees to find a Hong Kong box."
I was so upset that I left the shop, making the decision to buy my tablet PC from a company that cares enough about the Chinese market to give it the customer support it deserves. Behind me, I heard a whisper when I stepped out of the booth, "It will take us some time to wrap the transparency plastic cover back."
The author is an IT reporter of China Daily. She can be reached at tuoyannan@chinadaily.com.cn
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