Apple's Initial Foray into the Chinese Market

Key Insight

Apple's expansion into China was prompted by an unsolicited offer for a prime two-story location in Beijing's Sanlitun subdistrict, aiming for an opening coinciding with the 2008 Summer Olympics. At this time, Apple's brand recognition was minimal, exemplified by a security guard in 2004 asking an Apple employee to show 'what kind of apples' she carried, and its computer market share in China was less than 0.5 percent.

The existing market involved vibrant IT malls where customers haggled for Macs, often receiving them with pirated software and Windows installed, as online banking services didn't support Mac OS. Apple had not developed a Chinese iTunes or an online hardware store, and its total revenue in China was less than $300 million, indicating a conservative, 'third priority' market view.

To overcome legal hurdles, Ford ingeniously acquired a tiny (5-10 square meter) sewing machine repair shop for approximately $300000 to secure a business license, leveraging that 'sewing machines have chips in them' as electronics. He also made the crucial decision to brand the stores 'Apple' in English characters, rather than the Mandarin 'Pingguo,' after consulting IKEA's regional head, to preserve the global brand image, a decision that influenced a billion people's perception.