Apple to Open First Hong Kong Store
The move to open new retail locations will have two consequences. The first is that the market may indeed be worth billions of dollars in revenue. The second is that, as Microsoft (MSFT) has found, the Chinese market can confound consumer electronics and software companies. Microsoft CEO Steve Ballmer recently pointed out that PC sales in the U.S. and China are about the same. However, China revenues from Windows are only one-twentieth of those in America. A recent slowdown in Microsoft's Windows 7 sales would almost certainly be buoyed by an improvement in sales in China. Ballmer admits that will not happen.
Several fake Apple stores were closed by China authorities in July. But, in a nation as geographically large as the People's Republic and with over 1.3 billion people, government officials will find it impossible to shutter all similar locations. Documents recently released by WikiLeaks show that Apple started anti-piracy efforts in China when it "hired away employees from the drug company Pfizer who led a crackdown on pirate Viagra to head its anti-counterfeiting efforts," according to SkyNews.
Apple will have to live with the fact that the China market is a drain on the sales of U.S. intellectual property, from software to movies, and that the local government has done little to combat it, either because it does not have the resources or doesn't care.