Never underestimate China, or prejudge the taste of the Chinese consumer.
Companies in the West are engrossed by China’s huge population. Their eagerness to sell into that gigantic market sometimes clouds judgment, leading them to believe they know China’s economy and what Chinese consumers want.
After Apple’s much anticipated global media event launching iPhone 5c and 5s, the immediate media reaction was more or less universal: The new iPhones will be too expensive in the Chinese market, where Apple needs to play.
According to Apple, iPhone 5c, the cheaper model, would start at 4,488 RMB, about $733, without subsides from mobile operators. The new iPhone 5s, on the other hand, will start at 5,288 RMB, or $864.
Right after Apple’s announcement, China Daily, quoting a survey conducted by Sina, the dominant news portal in China, reported Wednesday, September 11:
Only 2.6 percent of more than 35,000 respondents said they would consider buying an iPhone 5c and 89.4 percent or 31,000 respondents said it was “too expensive” as of 8 pm Eastern Standard Time.
I reached out to my trusted sources in China for responses. Indeed, they too think it’s too expensive.
But there’s also something you might not have considered.
Chinese consumers agree that this iPhone is too expensive, not because they can’t afford it. The sticking point is the device’s plastic shell, which is colorful and attractive, but… it’s just plastic. The widespread complaint: “For plastic shells, we need to pay this much?”
With its plastic shell, the iPhone 5c strikes some Chinese as too expensive.
Chinese consumers had also heard the hype about the upcoming “cheap 5c.” Relative to that expectation, consumers conditioned to expect a genuinely inexpensive iPhone -- by Apple -- felt the actual price came in disappointingly steep. Now, perceptions have yet to adjust.
Here’s another interesting observation. Many of us assumed iPhone 5c to be the perfect iPhone for Chinese consumers. It actually is relatively cheap compared with other iPhones, and cheaper (or, at least, cheaper) is what everyone knew Apple needs to become a player in China.
But it turns out that many Chinese people already interested in an iPhone prefer the iPhone 5s to the 5c. One Chinese industry source explained to me that it’s because the “iPhone 5s comes with 64-bit CPU, finger print, and camera.” Chinese consumers are just as savvy, curious, and intrigued by advanced features as consumers in the West.