Monday, October 1, 2012

Apple Inc. (NASDAQ:AAPL): Regulations in India prevents Thecompany from opening shop

Apple Inc.(NASDAQ:AAPL) wanted to open one of its characteristic Apple Retail stores in India, but cannot do so immediately, due to the road-block in the form of Indian Regulations, which states that in order to set up an actual store here, foreign companies have to source 30% of the value of their goods to Indian companies and firms. According to the WSJ reports, due to these regulations, the Apple Retail does not look like it will be setting up shop in India anytime soon. However, Apple is very keen on the idea, because it is lagging behind in India in terms of sales, as compared to other smartphone makers such as Samsung and Nokia.

The company is facing a road-block in terms of the regulation because Apple cannot source 30% of its value in sales, to Indian firms. The company mostly works through outsourcing, buts its components are mostly compiled in China, and they use Chinese suppliers. While the mobile phone industry in India is mostly dominated by Samsung, with a fifty one percent market share in India, Apple has a measly share of 1.2% of the handset market shares. A retail store would go a long way in making things right in that arena. Samsung is ruling the market because of cheaper prices. Android is in the lead for popularity, since it accommodates the low prices which are required in India, and also provides different prices, for the different budgets. The main reason for this may be the fact that OS is freely licensed, and it is an operating system which can be used on a variety of hardware.

Apple, however, would gain more popularity after the advent of an actual brand store in India. The company, through its stores itself, has generated a lot of income, with the Apple Retail and the Genius Bars allowing the company to form personal relationships with the customers. Apart from that, brand-boosting tactics such as launch day line-ups also helps increase sales drastically, and it would do the same in India, if the company was allowed to open a shop in the country. They may be able to source their other tertiary devices such as earphones and sound systems to India, but it is unlikely for these products to make for 30% sales value. 

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