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Apple is top banana in China

Consumers there can't get their hands on iPads and iPhones fast enough.

October 20, 2011|By Barbara Demick, Los Angeles Times

Reporting from Beijing — If you are a young man in Beijing and you can't afford a car or an apartment, the next best thing is an iPhone, or better yet an iPad.

The cult of Apple reigns supreme in China, to the extent that people like Alex Xing, who works in his family's medical supply business, call it "the era of Apple."

"Only the old guys, like 20 years older than me, still use Nokias," said Xing, a 26-year-old hipster who wears self-consciously nerdy black eyeglasses, jeans and sneakers. He cradled his own prized telephone close to his heart as he spoke. "Even the girls I meet in the nightclubs have iPhones.''

The extremes to which people will go to get their hands on the Apple brand are legendary. A 17-year-old high school student from rural China made headlines in June when he reportedly sold a kidney to buy an iPad 2. State news media reported in September that a 16-year-old girl in the southern city of Guangzhou was killed in a fight with her mother over whether she could get money for an Apple computer.

Cupertino, Calif.-based Apple reported this week that sales in China rose to $13 billion from $3 billion for the fiscal year ended Sept. 24.

"I've never seen a country with as many people rising into the middle class that aspire to buy products that Apple makes," Chief Executive Tim Cook said Tuesday in a conference call with analysts. "China — the sky's the limit there."

The Oct. 5 death of Apple co-founder Steve Jobs elicited a rare outpouring of grief among Chinese fans. An online tribute page on China's equivalent of Twitter had 93 million postings as of Wednesday — the most on any one subject since the Sina Weibo service started two years ago.

"How come China can produce a Mao Tse-tung but not a Steve Jobs?" grumbled one fan on the Sina tribute board.

"When God wanted to listen to music, he took away Michael Jackson; when God wanted to use iPhone 5, he took away Steve Jobs," wrote another.

Apple's first store in Beijing, a big glass cube in a modernist shopping mall, is believed to be the highest-grossing Apple store in the world. Security guards with earpieces now patrol the front door after a stampede ensued in May as people tried to get their hands on the iPad 2, which had just gone on sale.

Demand for the iPhone 4 was so keen that Apple stores required would-be buyers to show identification cards to prevent scalpers from buying up the phones and selling them at a premium. A new Apple store that opened in Shanghai in September drew 100,000 visitors the first weekend, some waiting in line for days to get in.

"The [sales] numbers reflect the Apple fever that you see on the ground in China. If you're at a coffee shop or the airport lounge … everybody is using their iPad or iPhone," said Josh Ong, China correspondent for AppleInsider.

If imitation is the sincerest form of flattery, Apple has it in droves. The relatively slow pace of opening stores — only four so far in China — has led to knockoff Apple outlets, complete with stark white walls and the logo of an apple with a bite out of it. In the southwestern city of Kunming, Chinese authorities found and closed 22 such stores.

Although the stores were fake, most of the products were real, sold through unauthorized dealers or brought in illegally through the United States. A scarcity of supply in China and steep taxes on electronics make prices here higher than elsewhere. New products also arrive later in China. For example, the iPhone 4S was released Oct. 14 in the U.S. but is not expected officially for months in China. It was selling last weekend at a Beijing electronics market for as much as $2,000.

Apple's devices are mostly manufactured in China at huge electronics suppliers along the southeastern coast. Foxconn, a Taiwanese firm that assembles iPads and iPhones, has at least 250,000 people working on Apple products on the mainland, according to the group Students and Scholars Against Corporate Misbehavior, a Hong Kong-based nongovernmental organization that has been sharply critical of conditions for Apple workers. Their take-home pay is $150 a month — meaning it would take four months' wages to buy the cheapest model iPad.

In a report released last month titled "iSlave behind the iPhone," the group said the extraordinary demand for Apple products was putting great pressure on workers, who often are on their feet for 10-hour shifts, live in military-style barracks and are penalized if they don't work overtime. Turnover is high, at least 19 workers have committed or tried to commit suicide, and three workers died in a May 20 explosion in a workshop operated by Foxconn in Sichuan province, the group said.

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