Apple Enters Chinese Markets. Wayne Mulligan is back to give us an overview of China’s exponential growing market and what that means for wireless investors.

The global wireless industry has been exploding — over 250 million subscribers in the U.S., over 500 million in China, there are more people on this planet that own a mobile phone than those that own a computer — bottom line, this is the place to be for the long haul.

But we can’t talk about wireless without addressing the hottest company in the sector right now: Apple (AAPL: NASDAQ) and its headline-making iPhone…and we can’t talk about the hottest company without discussing the hottest market: China!

So a TickerHound member asked:

Why isn’t the iPhone in China?

Good question! But I think the better question is, why isn’t the iPhone in China YET?

After months of failed negotiations between Apple and China Mobile (CHL: NYSE) — the largest mobile service provider in the world in terms of subscribers — the companies were unable to reach an agreement.

But after Apple’s announcement on Monday, I think it’s clear that while negotiations between the two companies may be at a standstill, they won’t stay that way for long…

The Chinese wireless market is by far, one of the most desired mobile markets on the planet. This is a country with roughly 1.4 billion citizens and not even half of them have a mobile phone…yet…

There’s a tremendous opportunity for growth in China and Apple knows it.

Although a deal hasn’t been reached to bring the (genuine) iPhone to China yet, Apple is definitely gearing up for it.

Apple just recently presented the world with the “iPhone 2.0”.

Aside from the widely covered feature additions like 3G wireless technology, GPS, reduced price point, etc., Apple unveiled a feature that I personally jumped out of my seat for…and it’s geared directly for the Chinese market.

Texting and E-mailing in China

Having lived in China for a period of time, I can attest to the difficulty in sending Chinese text messages and e-mails from a mobile phone. Typically you’ll have to type the message using a spelling system known as pin-yin.

Pin-yin is the transliteration of Chinese words into westernized spelling. So if I wanted to type “hello” in a text message, I’d have to type “ni hao” using a western keyboard and that would then be translated into the appropriate Chinese characters.

Obviously the use of a stylus would make things much easier. In fact, that’s exactly what Motorola (MOT: NYSE) had in mind when they launched the Motorola Ming in China two years ago.

That’s precisely what Apple had in mind when they launched their Chinese character recognition software on Monday.

With the latest version of the iPhone, you can use your finger to write out Chinese characters directly on the screen. This will make writing text messages and e-mails much faster and easier.

So the real question becomes, what would it mean for Apple’s business if it secured a significant share of the Chinese handset market?

Well, let’s look to the Motorola Ming for an indication of what may be in store for Apple…

The Ming and Market Share

Motorola Ming had roughly 1% of the entire Chinese handset market at the beginning of 2007. Given that China has a mobile subscriber base of 583.5 million people now, that would mean 5.8 million phones by today’s numbers.

It would be easy to make the argument that the iPhone has much more hype, demand, functionality, etc. built around it and therefore could reasonably capture more of the market than the Ming. But let’s be conservative here. Let’s assume Apple is able to sell 5.8 million iPhones in China…

If Apple sticks to their $200 price point for the 8 GB model — which is certainly realistic considering the Ming’s price point was in the upper $400’s — that would be roughly $1.16 billion in additional top-line revenue for Apple.

Also, if you consider the “halo” effect Apple’s products tend to have (sell one product, you sell more of the others), then it’s easy to see how substantial adoption of the iPhone could turn China into an increasingly important source of revenue for Apple overall.

Regards,
Wayne Mulligan

P.S.: As hot as China’s market is, there’s another market out there that’s a lot more profitable, a lot more secret, and a lot less risk. We’ll give you a sneak peak to find out how to make easy millions. To find out what his hot market it… Click here…

Source: A is for Apple, B is for Billions, C is for China