Apple In China

Which of the foreign market entry mode(s) would work best for Apple in China?

In accordance with our background reading concerning entry modes, I would strongly suggest Apple use the Foreign Direct Investment mode for entering the markets of China. Just like the background reading stated, this will allow for greater knowledge of local market, better apply specialize skills for producing the Iphone and Ipads, be viewed as an insider and finally minimize knowledge spillover which is very important. Basically, Direct Investment is the only way to ensure the company’s patent security. Foreign Direct Investment is the most effective and cautious way to enter the Chinese market mainly due to China’s known issues with proliferation and production of counterfeit items. According to Yahoo Finance, consumer electronic items are the fourth most counterfeit item sent to America from China. Additionally, from my own personal experience as a buyer of parts for the Air Force, we had to establish policies that prevented the purchase and use of any parts that originated from China due to the high possibility of the parts being fake or cheaply produced. With this caution flag waving big and bright, I would advise Apple to place key personnel and executives into the county to oversee marketing, production, industrial security and quality assurance. This will reduce the chances of counterfeit and/or substandard items from being produced and shipped out to customers.

What would you advise, and why?

The company should go through the legal process of purchasing land to construct a new facility in the country or completely overall an existing facility to meet their production and in-country marketing needs. Whichever route the company takes for setting up the facility in China, security should be at the top of the list to help fight against counterfeit and proliferation of processes. Additionally, Apple should make sure to setup the company in a specific region of the China that mainly caters to electronics. According to B2B International, most of the electronic items are sold in Beijing, so Apple should focus their attention in that area of the country. The reason I think this is important is because Apple will be a new foreign company on Chinese soil and should not go into the country disrupting “business as usual”. Once again this is another step that I feel may reduce the possibility of counterfeit products...try to blend in and have the look and feel of other electronic companies in the area. Additionally, I would advise Apple to produce a cheaper version of the phone that has fewer features in order to expand sales. The average price of a cell phone in China is around $300 but the Apple Iphone starts off at $800. That is twice the amount and in my opinion will prevent many customers from purchasing the phone. However, if a cheaper version is made that sold around $400 more people may flock toward the product mainly

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