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Right Time to Explore the Land of Promise

Participants dressed as Foxconn workers take part in a protest against Taiwanese technology giant Foxconn, which manufactures Apple products in mainland China, outside an Apple retail outlet in Hong Kong on May 7, 2011.  Taiwanese technology giant Foxconn treats its workers like "machines" a Hong Kong based labour group said on May 3, after a survey based on interviews with the firm's workers in mainland China. At least 13 Foxconn employees died in apparent suicides last year, which rights activists blamed on tough working conditions in a case that highlighted the challenges faced by millions of Chinese factory workers.   AFP PHOTO / Antony DICKSON (Photo credit should read ANTONY DICKSON/AFP/Getty Images)

China has emerged as the ultimate land of promise for entrepreneurs in the past decade. Therefore, it did not surprise me to hear that Apple launched Apple music, iTunes Movies, and iBooks in China today. Tim Cook has expressed his interest or rather love for the Chinese market multiple times in the past, bigger screens and golden themes of iPhone 6 and iPhone 6 plus being just a few of many examples of his pursuit for Chinese market.

Without doubt, Cook’s interest in China makes sense. China’s appeal is surreal with China already being Apple’s largest market for app downloads and the country offering nearly 1.5 billion potential customers. But there are some serious traps all over this land of promise, namely piracy and depressing outlook of Chinese stock market. Now with these traps in mind, is this the best time for Apple to launch its signature apps in China?

For one thing, piracy hinders the radical approach that Apple is taking in China. In China Apple is distributing its apps first, and then plans on increasing its market share on iPhones instead of the other way around. In order for this system to work, the apps need to be beyond appealing so that the users are lured into purchasing Apple products after using the apps. However, the uncontrollable piracy takes away much of the appeal of Apple music, iTunes Movies, and even iBooks. Why bother paying to purchase a song or a movie on Apple music if one can download the songs for free? It was not by chance that Google Music Search shut down in 2009, after its three years of dreadful battle with piracy in China. The fact that China is dominated by Android that holds a 70 percent market share also suggests that perhaps Apple should increase its market share first before distributing the apps.

The recent crash of current Chinese stock market and the devaluation of yuan are also problems that cannot be lightly treated. Despite its unpredictable future of the stock market, the country is still one of the biggest markets for luxury goods, and if Apple aims to promote their apps and products only to the rich top 1 percent of the nation, I see no hardships in its way. However, if Apple wants to distribute its apps to the rest of 99 percent of the country and ultimately expand its market size to compete with Android, it must find a way to deliver its products with either cheaper prices especially in this downward economy or apps sensational enough to convince users into buying Apple products, preferably apps much more competitive than Apple music, iTunes Movies, and iBooks.

I admire Apple’s attempt to venture into this now seemingly dangerous land of promise. Having seen its success globally, I am sure Apple has a thoughtful Plan B in case it falls into one of those traps. But Apple may be depending too much on China. As appealing as it may seem, China does have some serious traps and perhaps this is not the best time to explore the land of promise. Timing may or may not determine the success of Apple in China.