Apple held talks with China Mobile last year to roll out Apple TV+ in China, according to a report by The Information. Under the proposed deal, Apple would license its content to China Mobile, since Chinese law doesn't allow foreign companies to operate their streaming services in China. China Mobile would offer Apple TV+ for a monthly fee and feature Apple's content on Mobile HD, a set-top box included with China Mobile's broadband service. The companies would split revenue from Apple TV+ subscriptions, and Apple is likely to charge less for the streaming service in China than in the U.S. due to the weaker purchasing power of Chinese consumers.
What are the details of the proposed deal between Apple and China Mobile regarding the rollout of Apple TV+ in China?
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- What specific strategies is Apple employing to expand its presence in the Chinese market according to the recent news?
According to recent news, Apple is employing several strategies to expand its presence in the Chinese market. These strategies include:
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Ramping up expansion for its services in China: Apple is reportedly in talks with China Mobile, the world's largest wireless telephone company, to roll out Apple TV+ in China. If the deal is struck, Apple TV+ would be the first U.S. streaming service to be available in China.
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Offering rare promotions of key product lines: Apple has been lowering prices of its iPhone 15 series in China ahead of major holidays, such as the Chinese New Year. Additionally, Apple's official store at Alibaba Group's Tmall platform launched a limited-time discounting campaign, offering discounts up to RMB2,050 (US$318) on iPhone 15 Pro Max, iPhone 15 Pro, iPhone 15, and iPhone 15 Plus(1)(5).
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Increasing its number of China-based suppliers and manufacturing sites: In 2023, Apple increased its number of China-based suppliers and manufacturing sites, reducing its reliance on suppliers from Taiwan, the U.S., Japan, and South Korea.
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Deepening its involvement with China while expanding production in Southeast Asia and India: Apple is balancing political pressures and business needs by deepening its involvement with China while expanding production in other regions(5).
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Opening new stores and revamping existing ones: Apple is discussing opening 15 new stores across the Asia-Pacific region through 2027 and aiming for six revamped or relocated stores in the region(1). This shows Apple's commitment to building its brand in growth markets like China.
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- How have iPhone sales performed in China according to the latest data, and what impact have recent promotions had on these numbers?
According to the latest data from the China Academy of Information and Communications Technology, iPhone shipments in China surged by 52% year-over-year in April(1). This growth followed a 12% year-over-year increase in March, after a 37% plunge in the first two months of the year. These figures indicate a recovery in iPhone sales in China, which can be attributed to Apple's recent promotions in the world's largest smartphone market.
Apple has been offering various promotions in China, such as lowering the prices of the iPhone 15 series in January ahead of the Chinese New Year holiday in February. In May, Apple's official store at Alibaba Group's Tmall platform launched a limited-time discounting campaign, offering discounts up to RMB2,050 (US$318) for iPhone 15 shoppers who placed their orders from May 20 to 28.
These promotions seem to have had a positive impact on iPhone sales in China, as evidenced by the significant increase in shipments and the recovery in sales during the months of March and April.
- Why is Apple considering China Mobile as a partner for distributing Apple TV+ in China, as opposed to other potential partners?
Apple is considering China Mobile as a partner for distributing Apple TV+ in China for several reasons:
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Government-backed company: China Mobile is a government-backed company, which gives it an advantage when dealing with regulators in China. This could help smooth the process of launching Apple TV+ in the country.
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Largest mobile phone carrier: China Mobile is the largest mobile phone carrier in China, with nearly 1 billion customers. This presents a huge potential market for Apple TV+, as many of these customers already pay for traditional TV services through a digital set-top box.
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Existing partnership: Apple has previously partnered with China Mobile to sell iPhones in 2013, which helped Apple grow its sales in China. This existing relationship could lead to synergies and make it easier to launch Apple TV+ with China Mobile.
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Compliance with Chinese law: Chinese law generally prohibits foreign companies from offering their streaming services directly in the country(4). By partnering with China Mobile, Apple could potentially distribute its content through the China Mobile set-top boxes that are part of the broadband services, in compliance with Chinese regulations.
In summary, Apple's choice of partnering with China Mobile is based on the company's government backing, its large customer base, an existing partnership with Apple, and the ability to comply with Chinese law on streaming services.
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