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Why Apple Inc. (AAPL) Is the Only Domestic Tech Giant That Can Succeed In China

Facebook Inc (NASDAQ:FB): Great Firewall
China’s Great Firewall also blocks access to the largest social network on the planet, Facebook Inc (NASDAQ:FB) . The company has cited “substantial legal and regulatory complexities” that have prevented it from entering China so far. Third-party estimates pegged Facebook users in China at 63.5 million, using a VPN service to scale the Great Firewall. However, those figures seem a little optimistic.

China is among several authoritarian governments that block access to Facebook in whole or in part, with others being Iran, North Korea, and Syria. Much like Google, that’s been an opening for local companies like Renren Inc (NYSE:RENN), which is now up to 48 million monthly active users.

Apple Inc. (NASDAQ:AAPL): Think Different
Since Apple Inc. (NASDAQ:AAPL) primarily sells hardware with integrated software at premium prices, it has become a luxury status symbol that can’t be easily replicated. There are counterfeit iPhone ripoffs, but when it comes to hardware, nothing can beat the real thing. Its gadgets are among other popular luxury brands in the country, like Coach, Inc. (NYSE:COH).

On the other hand, since Chinese consumers don’t buy as much content for the aforementioned reasons, that also reduces switching costs should consumer trends ever change. That makes Apple more vulnerable since its platform is less sticky in China than it is in developed markets where users load up on content.

For now, Apple Inc. (NASDAQ:AAPL) will enjoy its role as the one and only domestic tech giant that can succeed in China.

The article Why Apple Is the Only Domestic Tech Giant That Can Succeed In China originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple and Baidu. The Motley Fool recommends Apple, Baidu, Coach, Facebook, and Google. The Motley Fool owns shares of Apple, Baidu, Coach, Facebook, Google, and Microsoft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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