Store reach, public wealth key factors

Apple could potentially triple the revenue it takes in from China during the next two years, a new Morgan Stanley report suggests. Analysts Katy Huberty and Mathew Schneider argue that the company could reap over $9 billion from China in FY2012, as compared to $2.9 billion in FY2010. Growth in Asia is in fact expected to outdo other regions, compensating for any dips in the US and Europe.

Two factors are thought to be essential to extracting revenue from China. The first is continued growth of Apple's sales network in the country, which so far includes only four retail stores, but also iPhone distribution through China Unicom and the recently-launched Chinese online store. Morgan Stanley's view also assumes a continued growth in the number of affluent Chinese; while most people in the country are poor, the middle class has been on the rise in recent years.

"We continue to believe investors under-appreciate Apple's growth prospects in China," the analysts write. A "brand preference for Apple products among higher-income China consumers" is said to exist. The region has long been swamped with imitation Apple hardware however, often available for much less than the authentic products.

by MacNN Staff