Did Apple snub South Korea last week?
The Korean press has noted that Apple (AAPL) has received criticism for ‘disregarding Korea’ by announcing an additional $508m investment in two R&D centers in China, following the promise to build two other R&D centers in Beijing and Shenzhen. Apple has yet to open an Apple store in South Korea, although one is being developed in Seoul although no date for opening has been set. However they have 40 stores in China, with the R&D centers seen as a way to build what has been a declining share on the Chinese mainland.
Despite the country rhetoric, there are real reasons why Apple has not focused on South Korea, with the most obvious being it is the home of rivals Samsung Electronics and LG Electronics (066570.KS), who have a distinct home court advantage. But the country points to the fact that South Korea has the highest smartphone penetration rate (88%) of any country worldwide, while China is in the middle of the pack at 58.5%. That misses the point however that South Korea has a population of ~50.5m, while China has a population of 1.38b, so the simple math says South Korea has 44.4m individual smartphone users, while China has 808.5m smartphone users, or 18.2x as many, making the decision relatively simple from an economic standpoint.
Despite the country rhetoric, there are real reasons why Apple has not focused on South Korea, with the most obvious being it is the home of rivals Samsung Electronics and LG Electronics (066570.KS), who have a distinct home court advantage. But the country points to the fact that South Korea has the highest smartphone penetration rate (88%) of any country worldwide, while China is in the middle of the pack at 58.5%. That misses the point however that South Korea has a population of ~50.5m, while China has a population of 1.38b, so the simple math says South Korea has 44.4m individual smartphone users, while China has 808.5m smartphone users, or 18.2x as many, making the decision relatively simple from an economic standpoint.
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