Tuesday, January 17, 1995

Apple China Forum

Godd afternoon, ladies and gentleman. It is a pleasure to participate at this Apple China Forum and a honor indeed to be part of this distinguished body. Parenthetically, I should admit that I am glad that the 49'ers played yesterday.

As recently as 15 months ago, when I chaired a conference in Silicon Valley sponsored by the Asian American Manufacturers Association on fastest growing economies of Asia, it was still necessary to declare that China has become the world's hottest and fastest growing market for just about anything. Now that has become common knowledge. Those of us that have been active in China has seen the list of items that every household hungers for changed from the bicycle and sewing machine to color TV and refrigerator; now its VCR, camcorder, CD player and home karaoke sets. The family car and the personal computer are likely to be next on the desired list.

As you can see from this chart, courtesy of Dataquest, sale of personal computer, since 1992, is already beginning to take off in China. I believe, however, that so far virtually all of the sales are outside of the home market. But there is a lot of market left. One way of looking at China's market potential of China is to compare to that of the U.S. Even if we consider only the urban population which is roughly 25% of the total population, the per capita concentration of PCs in China is about 1/40th of the U.S.

So if you decide to enter this market, what do you need to know about China? Where are the potholes on this silk road to Cathay? In addition to the usual parameters in entering any new market, there are some that are peculiar to China. My fellow panelists will no doubt add others.

A big reason for the complexities of the China market is because China is still in transition from a state-controlled allocation system to a distribution that is unevenly determined by market forces. Some organizations can import directly; others still have go through state authorized trading corporations. Some dealers have powerful backers; others operate in briefcases that were here yesterday but gone today. Some specialize in soft currency transactions to organizations loaded with Rmbs but no dollars.

No comments: