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China Roundup: Apple China is Hot-Again

April 30, 2015

This week, Walmart bravely announced a massive expansion plan; Apple China bounced back; and Alibaba gave the YunOS a renewed push.

Walmart to Accelerate Expansion in China

There are currently 411 Walmart stores in China (more than you thought?), and the retail giant wants to increase that number by 115 in two years. Walmart CEO Doug McMillon told the press in Beijing “China is a top priority” for the company, although its net sales in China declined 0.7% for the first fiscal quarter ended January 31.

Previously, Walmart faced skepticism over its accounting practices in China; and it has violated food safety rules at least twice since 2011, resulting in fines of millions of dollars.

So can Walmart turn its fortunes around in China? Only time will tell.

China to Become Apple’s No.1 Market Soon

It’s amazing what magic bigger screens can pull off—Apple has reversed its market share slump in China and is now selling more iPhones in the Greater China area (including Taiwan and Hong Kong) than in the US, according to the company’s latest quarterly result. Revenue from the region jumped 71% year-on-year to $16.8 million, surpassing the $12.2 billion out of the entire Europe, and only trailing the $21.3 billion in the US.

And as Apple’s latest gadget, the Apple Watch, kicks off in China, the Middle Kingdom is expected to become the top market for the Cupertino-based company as early as September 2016, tech analysts say.

Alibaba Promotes its OS through Cheap Phones

While other internet companies have joined the mad race to become the next Xiaomi, Alibaba has a different mobile strategy—promoting its services through its own operating system—the YunOS.

Since its 2011 debut, YunOS hasn’t been able to wow either smartphone makers or consumers; but Alibaba hopes to give the system another try by pre-installing it on ultra-low priced phones.

China Telecom, the third-largest mobile carrier with more than 180 million users, has recently announced that it will start selling 14 smartphone models made by various brands (mostly small local phone makers) that run on the YunOS. The cheapest model sells at RMB 299 ($48), making people wonder if buyers would have the purchasing power the e-commerce company ever wants.

(By the way, Tencent also announced an Android-based mobile system called TOS+ this week.)

There’s Still Plenty of Money for Chinese Start-ups

Venture capitalists poured in a record sum of money into Chinese start-ups last year, and it seems that the trend is continuing.

According to Dow Jones VentureSource, investors have put down $6.53 billion in the first three months in 2015, or about 40% of the entire amount invested last year. Compared with the same quarter in 2014, total investment jumped 173%, while the number of deals increased by 56% to 215.

Last year’s fund-raising frenzy has caused concerns of a startup bubble; but as Chinese tech stocks surge and money becomes cheaper, 2015 is proving to be an even bigger year.

Lenovo to Advance Further in Smartphones

We probably shouldn’t call Lenovo a PC maker anymore, as the company is already selling more handsets than computers (76 million vs 60 million last fiscal year).

For the new fiscal year, Lenovo is aiming to ship more than 100 million phones, 40 million of which will be sold in China, the group’s CEO Yang Yuanqing said during an employee gathering in Beijing this week. Lenovo is currently the third-largest smartphone seller globally, taking up about 6.5% of the market share; but it is still far behind Samsung and Apple, both with about 20% of the market worldwide.

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