Apple Inc is preparing to open its first store in Hong Kong this month as the maker of iPhones and iPads aims to capture the surge in demand from China and its neighboring regions.
The store, located inside the International Finance Center Mall (IFC) in Hong Kong’s Central shopping and business district, will debut this quarter, said Carolyn Wu, a Beijing-based Apple spokesperson, declining to specify a date. The Ming Pao daily reported two days ago, without citing anyone, that it will open the two-story store on Sept. 24, spanning 1,850m2.
For Apple, which said it is only “scratching the surface” in Taiwan, China and Hong Kong after sales in the region surged sixfold last quarter, the IFC store might help the company reduce its reliance on resellers to sell products in the city.
The shop will be Apple’s fifth store in the Greater China region, which has generated about US$8.8 billion in revenues in the past three quarters, or 11 percent of Apple’s total.
“The iPhone is one of the leading smartphones in the Hong Kong market,” said Sandy Shen, an analyst at Gartner Inc in Shanghai. “The sales momentum for the iPhone is still very strong and we see the growth being maintained for the next few quarters.”
Apple might also open two more stores in Hong Kong, one in the Lee Gardens at Causeway Bay and one in Tsim Sha Tsui’s Canton Road, according to the Ming Pao report, which did not cite anyone or specify when. The Cupertino, California-based company is in negotiations with Hysan Development Co Ltd (希慎興業有限公司) to open a store in Causeway Bay’s Hysan Place, a person with knowledge of the matter said in May.
The price of Apple products, including taxes, are cheaper in Hong Kong. The cheapest iPad 2 in Apple’s China store costs 3,688 yuan (US$575), or 16 percent more than the price in Hong Kong’s online store.
Apple’s store opening “exemplifies the fact that foreign brands have bullish prospects on the retail market here,” said Mariana Kou, a retail analyst with CLSA in Hong Kong.
“All the top brands are” at the IFC, she added.
Resellers of Apple products such as DG Lifestyle might not be as bullish. The retailer, which has 11 outlets in Hong Kong, closed its shop in the IFC a few days ago after seven years in operation, said a spokeswoman for DG, who asked that she only be identified by her surname Ko.
She declined to comment further on Apple’s store opening and the business impact.
Still, the apple store opening should not have much of a “dilution effect” on resellers, said Gabriel Chan, a retail analyst with Credit Suisse Group AG in Hong Kong.
In China, consumers need to pay value-added tax, import duties and consumption tax, so luxury products in Hong Kong are both cheaper for buyers and more profitable for sellers, Chan said.
Apple, which did not open its first store in China until 2008, now has two stores each in Beijing and Shanghai. Those four stores generate, on average, the company’s highest traffic and highest revenues, chief financial officer Peter Oppenheimer said in January. The company had 327 stores worldwide at the end of last quarter.
Apple’s sales in the China region were “key” to Apple’s third-quarter results after they surged sixfold to US$3.8 billion, CEO Tim Cook said in July, before he was promoted from chief operating officer.
The company plans to open 40 stores, including 28 new stores outside the US, during this fiscal year, he said at the time.
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