On May 18, Apple opened an online store in Vietnam, another sign that shows the growing significance of emerging countries for the iPhone manufacturer.
With the opening of Apple's very first online store in Vietnam on May 18, which came after the well-publicized debut of its first physical stores in India, customers in the rapidly expanding Southeast Asian economy will now be able to purchase any Apple product directly.
Because Apple's growth in major markets, especially China, is reducing, the company is turning its attention to regions like Vietnam, India, and Indonesia, which are historically less developed than Apple's core markets.
China served as the foundation for Apple's manufacturing and consumption for a number of years, playing a crucial role in the amazing rise of Apple to become the most valuable corporation on Earth. Apple is currently hedging its bets, even though the nation is still crucial to its operations.
In Mexico, Indonesia, the Philippines, Saudi Arabia, Turkey, and the United Arab Emirates, Apple "achieved all-time records. The tech giant, however, also revealed its second-quarter revenue decline, raising worries about a larger slowdown in demand within the context of economic unpredictability.
Wedbush Securities managing director Daniel Ives stated that "clearly, growth has slowed globally and thus put more pressure on Apple to aggressively go after emerging markets."
A mega and potential market
Apple is the most recent multinational corporation to express optimism about Southeast Asia, where more money is being invested in the manufacturing sector.
The consumer base of the region is also promising, with the Boston Consulting Group predicting that the proportion of middle-class and wealthy households will increase by about 5% per year through 2030 in countries like Vietnam, Indonesia, and the Philippines.
Tim Cook, the CEO of Apple (AAPL), has highlighted the company's once-in-a-lifetime opportunities in emerging economies as areas of potential development. Cook expressed being "notably pleased" with the results in these areas. “This is a golden opportunity for Apple,” he said.
Given its efforts in these nations, Ives believes that "over the coming years, Indonesia, Malaysia, and India will comprise a bigger piece of the pie for Apple."
According to him, Apple often opens its first brick-and-mortar stores after its online sales. This was true, for instance, of India, which last month received its first physical stores and a commitment from Cook to increase investment there.
In recent months, he claimed, this California-based technology company had been "actively expanding" its presence in the area by broadening its supply chain and network of licensed resellers, particularly in Malaysia. In these developing markets, Apple has plenty of room to grow. According to Canalys, the corporation currently exclusively runs its own stores in regional economies that are more cultivated, including Thailand and Singapore.
Because of the high cost of their products, high-end technological devices like Apple have struggled for years to be competitive in developing economies, opting instead to rely on regional distributors.
According to Chiew, consumers in less prosperous Southeast Asian economies, where the majority of smartphone shipments cost under $200, find iPhones, which range in price from $470 to $1,100, to be pricey.
He claimed that with the release of a new iPhone, consumers from countries like Cambodia or Vietnam would frequently fly to Singapore or Malaysia to get smartphones and bring them back for resale.
This might change in the upcoming years, especially as Apple keeps boosting its investment and presence in the area.
Apple may "further stretch its ecosystem and tentacles to new markets seeking to reach consumers via "different pricing tactics and building out from there," according to Ives' prediction.
China has been a key part of Apple's growth, and now its outstanding success can also be duplicated in India, Indonesia, and Vietnam, among others. said Ives. Once tech-savvy customers have switched to Apple's operating system, iOS, they tend to stay and eventually become devoted customers.
But according to Chiew, Apple may have difficulties in Southeast Asia, where a number of nations have strict national regulations for foreign companies.
For instance, Apple has had to work with partners to meet the requirement that at least 35% of the elements of electronic items sold in Indonesia must be produced locally. Until the requirements were loosened in 2019, similar rules barred Apple from opening a store in India.
Additionally, the iPhone maker's growth will be turbulent, Ives pointed out that despite consumers becoming more affluent, the company's price tags are still seen as expensive in many developing regions.