Here’s why Apple needs more physical retail stores in China. According to a recent survey conducted for the China market by ABI Research, more than 50% of respondents report purchasing a mobile phone online. This is significantly higher than the roughly 36% of U.S. consumers doing the same.
"The Chinese mobile telecommunications market is largely prepaid, which means that Chinese consumers may not feel as chained to mobile service providers as do U.S. consumers," says Marina Lu, senior analyst at ABI Research. "The same principle applies for contract subscriptions, as they involve SIM-only contract deals in China with no attachment to mobile phones.”
Also, many mobile operators in the region are reducing subsidies to smartphones and passing handset taxes, charged by the government, onto their subscribers. This further weakens subscribers' ties to mobile carriers and encourages consumers to purchase mobile phones online, according to Gartner.
Additionally, there are far less physical stores for big mobile device brands, like Apple, Samsung, and Huawei in China when compared to U.S. Apple, for instance, recently reached a new total of 32 stores in China, compared to the 268 stores it currently operates in the U.S. This may be helping to steer more of the region's consumers to online outlets.
In fact, some Chinese local brands, including Huawei and Xiaomi, are capitalizing on this trend by selling some of their flagship devices primarily via online stores. Huawei Honor and Xiaomi's MI series are good examples of this.
"Brick-and-mortar stores can be very useful, as they allow consumers to try out the latest products as they shop and, therefore, help increase sales," concludes Lu. "As physical stores in China are limited, though, consumers may be discouraged by this process, due to large crowds and long lines during check out.”