"High-end customers don't care about price. They care about brand." Besides, "Apple's software platform and quality deserves the price," she added.
If this statement is true, Apple's iPhone5c stratgy is more confusing, because People in China will definitely go for iPhone5s instead of iPhone5c. Personally I think Apple's time in China is gone due to no innovation in recent products. Let's look at some numbers. Apple has 9% share in Chinese smartphone market in 2012, but this number dropped to 5% in 2013. In the meanwhile Samsung has 17.6% and Lenovo has 12.3%. Even a startup company Xiaomi (Hugo Barra joined recently) has already took 5% of the market this year. There's nothing wrong with "High-end customers" strategy, but Apple does need some change/innovations.
Today, China operators announced very attractive subsidy policy for iPhone 5c, especially China Mobile will join in soon for the first time, whom has the biggest customers base. So, it's hard to say whether the market of 5c in China will be good or bad.
By the way, Chinese people can buy cheaper iPhone from HK, it happens often, but the volume wasn't calculated into apple's harvest in China market. And, don't underestimate this part.
IMO Apple is just testing the waters about its brand leverage. If they find less people buying the 5c, they will probably drop the price. Atleast they have done it when the original iPhone was released . First at 599, then to 399 and later to 199.
Another assumption that everyone is making here is that the subsdized price of iPhone 5C in the west will remain same as in China and other markets. People in Asia dont want some cheap products. They want the same high quality products the west use, but at a cheaper price. My hunch is that Apple priced the 5C much higher , that when given a huge subsidy via the carriers, people will find it more attractive to pick one up compared to other products. Ofcourse we need to wait for subsidized pricing of china mobile to verify this hypothesis.
Personally I think Apple's time in China is gone due to no innovation in recent products
Having covered the mobile market for a while, I can only predict that nothing is constant in this industry. Things could change at the drop of a hat. I don't even have to point out where Nokia and Blackberry are now today.
So, in that regards, I don't particularly agree with your statement that "Apple's time in China is gone." However, I do agree with you that the lack of innovation in Apple's recent products is hurting Apple in the [high-end] segment where Apple has been traditionally strong. 5s could help but 5c doesn't count as "an innovative product."