Apple focuses more on brand quality, less on sales in China

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While initial iPhone sales have not had a blockbuster start in China, Apple executives said this week they don't mind — for them, it's all about building the Apple brand for the long haul.

Apple's chief operating officer, Tim Cook, was asked by analyst Benjamin Reitzes of Barclays Capital about iPhone sales in China during Monday's earnings report conference call. Cook said that while Apple typically does not reveal sales figures by country, he was willing to talk about China due to the publicity the iPhone's debut has garnered.

Cook revealed that Apple has activated more than 200,000 iPhones in China as of early January. The handset debuted in late October to a slow start, selling just 5,000 phones at launch.

"We are very, very focused on the quality of the point of sale and consumer experience," Cook said. "We would prefer to move slow because we are building the brand for the long-term and we are very much focused on the long-term in that market, because we think there is significant potential there."

Apple executives have long spoke of their desire to launch the iPhone in the nation of over one billion, well before a three-year deal was reached with carrier China Unicom last August. The company has also been in negotiations with competing carrier China Mobile to offer the iPhone, though Cook said Monday he wouldn't comment on other carriers or potential future sales figures.

"We are very happy working with China Unicom," he said. "They are an excellent partner for us, and I am thrilled we are underway and have got about 2.5 months experience under our belt."

Later in the call, Cook was asked again about the China market, and how Apple, as a premium brand, would overcome the nation's lower average income. Cook noted that while people there are not as rich as they are in the U.S. or Western Europe, there is a "significant size" middle class where Apple can make inroads.

"If you look at greater China last quarter — which is China, Hong Kong and Taiwan — our revenues tripled year-over-year in that geography, which I think is phenomenal by any measure," Cook said. "We had a tremendous focus on it."

The company also revealed Monday that Mac sales in China increased nearly 100 percent year over year in the first financial quarter of 2010. In all, 58 percent of Apple's revenue in the quarter came from international sales. Cook said for the Mac maker to continue its success, it must push hard into markets like China.

"It is clear as you look at our numbers our growth rates are much higher outside the U.S.," he said. "We realize we must do well in these markets to continue to grow."