What the iPad means for China
By George Chen
The opinions expressed are the author’s own.
Let me offer you a choice before you read this column – do you want the good news first, or the bad news?
In fact, it’s the same story. For those who recently bought a first-generation iPad, here is the bad news – Foxconn Electronics, manufacturer of Apple Inc products, plans to begin shipping a new version of the iPad tablet, known as iPad 2, by as early as the end of February, according to a Dec. 7 news report by DigiTimes.
The report, citing unnamed sources from the Taiwan-based components maker, said the iPad 2 would mainly be supplied by plants in Shenzhen belonging to Foxconn, parent of Hon Hai Precision Industry. An initial shipment of 400,000 to 600,000 units is expected.
And the good news? Hon Hai investors and those who want an iPad but have yet to buy one should be happy.
For Apple fans in China, the next big question is of course when the new iPad 2 will arrive in the world’s No.2 economy. Consumers there have already complained about long back orders for the iPad and iPhone 4 since the two products were launched earlier this year. As such, specialist “Apple smugglers” from Hong Kong to mainland China should be happy to see new arbitrage opportunities!
Chinese gadget makers may soon catch up with this opportunity to add whatever new functions the iPad 2 may have to their own “iPad killers”. Hong Kong- and Shenzhen-listed ZTE Corp launched a tablet PC in October that sells for a far lower price than its Apple counterpart, and we should expect more Chinese competition for Apple in 2011. Or should I say innovation?
Despite fast-rising inflation, Chinese consumers have yet to stop buying new gadgets, as higher salaries means more disposable income.
Products such as the iPad also fit the show-off culture of the so-called “new money” class in China — those who are much richer than the middle-class and who become rich within just a few years for various reasons, such as successful property speculation — so Apple should not be worried that Chinese consumers will tighten their budgets for non-necessities and high-tech devices next year.
During a recent visit to my hometown Shanghai, I was told by a senior Shanghai government official that the iPad was a very popular Christmas and New Year gift within government and business circles. Hardly a surprise.
To those who have already bought an iPad, don’t be too disheartened – pass it on to your son or even grandson. Like a Qianlong dynasty vase is now worth tens of millions of dollars, first-generation iPads may someday be a national treasure too!
George Chen is a Reuters editor and columnist based in Hong Kong.
Photo: A customer buys an iPad at an electronic products store in Hefei, Anhui province April 22, 2010. REUTERS/Stringer