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Why Apple Inc (NASDAQ:AAPL) Is Keen On China?

Boston, MA 03/18/2014 (wallstreetpr) – Apple Inc (NASDAQ:AAPL)’s new expansion this year of international markets struts with significant steps. It has established an official presence in Serbia, Lebanon, with a new distribution deal with Canada and Russia. But its ambition does not stop here.

 Ambition of no ground

 As of the recent survey, China Mobile had a tremendous 772 million wireless customers — more than double the population of the United States. That number alone is a strong indication of Apple’s opportunity with the carrier. But more to follow: Apple CFO Peter Oppenheimer marked in Apple’s fiscal 2014 1Q earnings call that China Mobile has only 4G coverage in16 cities today, and they aggressively plan to achieve the rollout of above 500 thousand 4G base stations, which will occupy more than 340 cities by year-end.

 So in January, Apple Inc (NASDAQ:AAPL) finally inked an agreement with this world’s largest wireless carrier, China Mobile Ltd. (ADR) (NYSE:CHL).

 The expensive necessity

 Last year was a booming year for the Chinese smartphone market. At the end of the first quarter, there were 380 million smartphone device users in China, but by the end of the year, that number nearly doubled to more than 700 million active devices. When it comes to price, low-end and premium phones account for the largest segments of the market. Devices below $150 take up 35 percent, those priced between $150 and $329 account for 22 percent, and between $330 and $499, 16 percent, and those priced over $500, where Apple excels, account for 27 percent of the market.

And technology-wise, android phones still command considerable advantage in the Chinese market, with 57 percent of the devices under $330, but the advantage is fragmented between brands. Samsung Electronics Co., Ltd. (KRX:005930) is the leader of the Chinese Android market with 24 percent, but this is much lower than Samsung’s global share. Domestic brands Lenovo Group Limited (HKG:0992), Huawei, Xiaomi and HTC Corp (TPE:2498) round up the top five most popular Android companies in China.

To top it all off, analyst Benedict Evans estimates that China may now exceed the United States to own more iPhones users. So any noticeable growth in smartphone sales in China will likely be an incentive for forwarding approach on Apple Inc (NASDAQ:AAPL)’s bottom line.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.