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Sieren's China

Frank Sieren / actSeptember 20, 2015

With its new generation of iPhones, Apple is targeting China in particular. However, Chinese manufacturers Xiaomi and Huawei still lead the market there, and competition is getting tight, writes columnist Frank Sieren.

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Image: picture-alliance/dpa

The most valuable company in the world is fighting for its place in the smartphone market. It's enjoyed about 20 percent of the market share in the past few years, making it to second place behind Samsung, which has almost 30 percent. In difficult competitive conditions, Apple could already be glad to hold 20 percent of the market.

With China's two market leaders upping the pressure, this could all change. Next week, Apple CEO Tim Cook, Microsoft founder Bill Gates and other US company CEOs will join Chinese President Xi Jinping in Seattle for a meeting that will be the most important of the year for Cook.

He hopes to convince Xi that in the long term tough competition is better for the Chinese market than state protectionism. Since this year's military parade on September 3, the VPNs that users use to bypass Internet censorship in China have not worked on Apple's products.

This has not been the case for Android devices made by Samsung or Huawei, which have not had problems. In times such as these, during which the total market has shrunk by 4 percent, it makes particular sense to Xi to come to the Chinese industry's aid.

Frank Sieren Kolumnist Handelsblatt Bestseller Autor China
DW columnist Frank SierenImage: Frank Sieren

The Chinese competition is catching up

For Cook, on the other hand, a lot is riding on the newest generation of Apple iPhones. He does not want to see Apple out of the top three in the world.

This already happened on the Chinese market in this year's second quarter. The two Chinese manufacturers Xiaomi and Huawei are in places one and two. That's why Apple's CEO decided that this time round Chinese customers would not be served months after Western users. The new iPhone 6S will be launched this coming Friday in Germany, the US and China alike. That was a clever decision.

A week ago on Saturday, when the new iPhone 6S became available for pre-order, it had sold out within 12 hours. Now, the waiting list for deliveries to China is six weeks long. The sales of iPhones have increased by 75 percent compared to last year and this development has been twice as fast as on other Apple markets.

Other manufacturers are far from sleeping, however, and they have a home advantage on the Chinese market. The technology giant Huawei started the second quarter with record sales growth of over 46 percent worldwide - an increase Cook can only dream of.

The competition has never been so tough

Every morning, he can see the sales figures from China at breakfast, encouraging himself: "I am still of the opinion that China represents a unique opportunity for us."

Xi will surely be glad about this but this will not stop him from supporting Chinese industry over US industry, especially in these weak economic times. At the same time, Chinese companies are making their mark on the rest of the world. Huawei is taking hold in Europe and the US. With its affordable models, Xiaomi is concentrating on Brazil, Russia and Turkey.

Never in the history of smartphones has the competition been as tough as it is today: the West is fighting against Asia and within Asia the fight is between China and South Korea. On his trip to the US, Xi will not be taking selfies with Tim Cook at all, let alone with an iPhone.

DW's Frank Sieren has lived in Beijing for 20 years.