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Apple Making Inroads in China: Analyst

Apple CEO Tim Cook speaks during an Apple product launch event at Yerba Buena Center for the Arts.
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Apple CEO Tim Cook speaks during an Apple product launch event at Yerba Buena Center for the Arts.

As Apple CEO Tim Cook continues on his closely watched first official visit to China, analysts say the real opportunity for the iconic brand lies not only in fostering closer ties with the government, but landing the big fish: China Mobile.

Brian Blair, principal and senior research analyst at equity firm Wedge Partners, told CNBC Tuesday that China is not only Apple’s biggest manufacturing base, but is also set to be its next growth engine.

“[China Mobile] has 660 million subscribers nationwide and 15 million iPhones in their network — but they’re unlocked, meaning they’re not coming from a direct relationship with Apple ,” said Blair, who thinks an alliance might happen later in the year. “[The Chinese] really look favorably on any company that’s willing to set up operations there.”

Blair brushed off concerns over Apple’s ongoing patent war with Proview Technology, offering a reminder that the name “iPhone” was similarly contested — and settled. “It’s just a question of how big that check needs to be,” he said.

Cook is also expected to meet with government officials to discuss ongoing labor issues with Apple’s supplier Foxconn.

“I think they’re already doing the right things. Instead of trying to hide what’s going on in the factories, [they're trying] to put it out there and raise the status of the workers,” Blair said, referring to Apple’s announcement last month that a fair labor association will be reviewing their assembly line.

With only five stores and little more than 100 resellers nationwide, Apple has merely “scratched the surface” when it comes to its second-largest market, Cook has said. His trip comes as Apple’s stock hit another all-time high — having nearly doubled in the past year alone — sending investors scrambling yet again to respond to the unexpected announcement.

China made up 10 percent of the company’s revenues last year, and analysts expect steady growth in the years to come.

“It’s not just the iPhones and iPads they’re trying to sell there, they also have the Mac line — maybe we’ll even see TVs in a year,” said Blair.

Cook was greeted by hordes of star-struck fans as he visited Apple stores in Beijing, even though the iPad isn’t officially available in China yet.

“His very presence there sends a message that’s good politically and marketing-wise,” CNBC’s Jon Fortt reported from Silicon Valley. “Tim Cook seems to be sharpening the focus on how it’s perceived as a company.”

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Disclosures:

Disclosure information was unavailable for Brian Blair or his company.

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