Apple (Finally) Signs the Deal with China Mobile - 700 Million New Potential Customers!

It has been along time coming (a six year negotiation), but Apple has finally signed the deal that enables it to connect to hundreds of millions of increasingly affluent consumers in China.Apple has agreed a deal with China Mobile - the world's biggest network of mobile phone users - to sell iPhones to the network. China Mobile, which has about 760 million customers, will begin registering orders for iPhone from December 25 2013 in a deal that is likely to add many billions of dollars of annual revenues for Apple.

Apple is already trading in China. It has a market share of around 5%. In the last twelve months it sold approximately 16 million iPhones there. However, the deal with China Mobile is expected to at least double this volume in the first year.

China currently has around 1.2 billion mobile phone users and more than 60 per cent of them are subscribers to China Mobile.

The significance of the deal for Apple is clear in the statement by CEO Tim Cook that accompanied the news:

“Apple has enormous respect for China Mobile and we are excited to begin working together. China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world's largest network,”

China Mobile is rolling out the world’s largest 4G network. By the end of 2013, China Mobile’s 4G services will be available in 16 cities including Beijing, Shanghai, Guangzhou and Shenzhen.

However, building market share in China will not be a stroll in the park for Apple. The most popular smartphone models currently being sold in China are made by Samsung, Lenovo, Coolpad, ZTE and Huawei, in that order. China has also seen the rapid growth of startup smartphone manufacturers which have quickly grabbed market share - perhaps the best example is Xiomi which is often referred to as the "Apple of China".

Samsung alone has an 18.5% share of the market (although ‘other’ makes up 45%, which suggests the smartphone market is a lot more diverse than in the UK). And the iPhone will, according to analysts, be one of 20 new 4G phones being launched by China Mobile in the first six months of 2014.

The iPhone already faces intense competition in China. However, the distribution deal through China Mobile gives Apple a better chance!