Apple has recently opened an online store in Vietnam, another sign of the growing significance of emerging markets for the iPhone manufacturer, according to CNN.
The opening of the online store in Vietnam by Apple, as well as the launch of the company’s first physical store in India, means that consumers in Southeast Asia can now directly purchase any Apple product.
CNN states that markets such as Vietnam, India, and Indonesia are becoming increasingly important to Apple as growth in developed markets like China slows down, forcing the company to focus on previously less active regions.
China has been at the center of Apple’s rise over the past decade, serving as the backbone for both production and consumption. However, CEO Tim Cook is now looking at other regions. He refers to developing countries as “bright spots” in the company’s business report. Recently, he expressed his “particular satisfaction” with the results in these markets during the first three months of the year.
According to analyst Dan Ives, the global slowdown has put pressure on Apple to pursue new emerging markets. He predicts that in the coming years, Indonesia, Malaysia, and India will account for a larger share of Apple’s business.
Responding to CNN, Ives explains that launching online sales in a country often precedes the establishment of physical stores. This has been true for India as well. Meanwhile, analyst Chiew Le Xuan believes that the opening of the Apple Store Online in Vietnam on May 16 reinforces the company’s presence in emerging markets. He reveals that the tech giant has been actively expanding in the region in recent months, enhancing its distribution and authorized dealer network.
Apple still has significant room for growth, and CEO Cook sees this region as a “great opportunity” for the company.
The iPhone manufacturer is joining the list of optimistic global businesses investing in Southeast Asia, where money is being poured into manufacturing. The user base also holds promise as the number of middle-class and affluent households in Vietnam, Indonesia, Philippines, etc., is expected to increase by about 5% annually until 2030, according to Boston Consulting. They refer to this group of people as the “next supermartket.”
Expert Ives believes that the appeal of the middle class in Southeast Asia is a “golden opportunity for Apple.”
However, there are still many challenges ahead. Premium brands like Apple struggle in emerging markets due to the pricing of their products. With iPhones ranging from $470 to $1,100, they are considered expensive for users in developing Southeast Asian countries, where the majority of smartphone consumption is focused on devices under $200.
According to Chiew, the absence of Apple is most noticeable whenever a new iPhone is released. Buyers from Vietnam and Cambodia often fly to Singapore and Malaysia to purchase devices and resell them. This may change in the coming years, especially as Apple continues to strengthen its efforts in these markets.
Ives predicts that Apple will continue to expand its ecosystem in emerging markets through different pricing strategies. Once users switch to iOS, they tend to stick with it and become loyal customers. This has been a core part of Apple’s success in China and can potentially be replicated in India, Indonesia, and Vietnam.
However, Apple will face obstacles in Southeast Asia, where some countries have stringent requirements for foreign businesses. For example, in Indonesia, at least 35% of electronic components in products sold domestically must be locally produced. Similar regulations prevented Apple from opening stores in India until the policy was relaxed in 2019.
Although users are becoming wealthier, Apple’s products still have high prices in many emerging markets. Ives believes that achieving growth in these markets will be challenging.