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A Tip for Apple in China: Your Hunger for Revenue May Cost You (wsj.com)
Li Yuan, writing for the WSJ: Apple's latest predicament centers on its App Store. Last month, Apple told several Chinese social-networking apps, including the wildly popular messaging platform WeChat, to disable their "tip" functions to comply with App Store rules (Editor's note: the link could be paywalled; alternative source), according to executives at WeChat and other companies. That function allows users to send authors and other content creators tips, from a few yuan to hundreds, via transfers from mobile-wallet accounts. Those transfers are offered by the social-networking apps free of charge, as a way to inspire user engagement. Now, those tips will be considered in-app purchases, just like buying games, music and videos, entitling Apple to a 30% cut. For Apple, which has been observing slowing growth in mature markets, China is increasingly becoming important. But the company's my way or high-way approach might hurt the company's image in China. And that image as well as fortunes of local companies, is what the Chinese authorities deeply care about. As Yuan adds, "while it's understandable that Apple wants to tap the App Store for more money, its pressure on the app platforms risks alienating powerful Chinese companies, turning off Chinese iPhone users and drawing unnecessary attention from the regulators." Executives of these IM messaging apps tell WSJ that Apple has threatened that it would kick their apps out of the App Store if they don't comply. The problem is, WeChat is way more popular in China than Apple -- or its iPhones or its services or both combined, analysts say. WeChat is insanely popular in China, and people love to use the app to pay for things they purchase and send money to friends. Apple's greed could end up resulting in millions of new Android users, analysts said.
The number of companies that bow to pressure to enter the Chinese and Indian markets because of volume, is precisely the same as the number of companies who have declining margins and increasing obsolescence and who get their asses kicked by companies local to (mostly) China. Yes, there are many persons in those country, but they are not rich and they are not good for high margin, premium products. At the same time, I do not know of any company who can simultaneously feed the premium product and the value product efficiently: they either sacrifice one for the other creating mediocrity, or else function as two companies in both technology and business (marketing, sales).
These markets should be avoided at all costs, once you let them in the door they will bleed you dry. If Apple wants to enter China as a value product line, they need to bifurcate and create a lower end product line with a unique brand. Wealthy Chinese will continue to prefer Apple because they know better, whereas the masses, whom Wall St. interests want to cater to, want it but will by the fake Apple brand (Fapple?) if it can deliver superior value to evil bastards like Huawei.
Under no circumstances should any concessions be made for Huawei or products like what they offer. Like Microsoft they are a company that needs to stop existing, be chopped into many pieces and buried at equidistant locations on the earth, no less than 1 mile below the surface with eternally vigilant hell hounds guarding all exits, lest they break free and condemn us all to an eternity of hellfire.
Hey, WSJ has been doing some exceptional reporting (I'm only talking about tech) lately. We still try to avoid paywalled sources -- WSJ, NYTimes, FT, AFR -- and sites that have policy against ad-blocking -- Wired, for one. But when these websites have exclusive coverage of something (or best reportage/analysis), we can't ignore them. Think of NYTimes' exclusive on Uber's greyballing, WSJ's Theranos coverage. In such cases, we see if any syndicated partner has the same story, but more often than not, they don't post thing for two-three days (and they don't post all the stories). We still scan through other outlets that have rewrote the story and see which one makes the best case. Should we do something differently? We're always listening.
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We suffer more in our imagination than in reality. - Seneca