It's Apple Style

Hundreds of people lined up Saturday to be among the first to enter Apple Inc.'s newest store in China.

The 16,000-square-foot (1,500-square-meter) underground space in Shanghai, China's wealthiest city, marks the start of a major retail expansion in a country where the company so far has had a relatively meager presence.

Apple—which has one other Chinese store, in Beijing—has said it plans to open 25 stores in China by the end of next year, including a second store in Shanghai.

Apple's flagship stores, which like the Shanghai outlet often sport eye-catching architecture, are a key part of the Cupertino, Calif.-company's branding strategy.





Research firm IDC said Apple PCs made up less than 1% of total PCs shipped in China as of the first quarter. In the U.S., Apple claimed 6.4% of PC shipments, IDC said.

"Apple is definitely a laggard when it comes to focusing on China," said Shaun Rein, managing director of Shanghai-based consulting firm China Market Research Group. He said that "Apple needs to make China a priority market," or risk seeing an impact on its sales growth.

Apple's plan to open more stores in China shows "they recognize the importance of these markets outside of the Western world that they're used to," said Bryan Ma, analyst for IDC in Singapore.

He added that the company's plan to start international sales of the iPhone 4, the latest version of its popular smartphone, more quickly than with previous models is also a sign of greater focus outside its home market.

At the Shanghai store opening, one Apple fan, holding a homemade poster of Chief Executive Steve Jobs, said he flew to Shanghai from Jilin province, nearly 1,000 miles (more than 1,000 kilometers) to the north, to attend the opening, and lined up for five days.

By Friday night, the crowd at the Shanghai store had grown to about 150 people, some wearing iPhone 4 T-shirts. Several people there said they hoped to be able to buy the iPhone 4 or iPad, which also hasn't started selling yet in China. But neither of those products was in showrooms, though the earlier version of the iPhone was in stock.

Apple declined to say when the iPhone 4 and the iPad will be available in China, though Apple's current Chinese partner for the iPhone, state-owned carrier China Unicom (Hong Kong) Ltd., has said it is in talks to sell the new model.

IDC estimates 760,000 Unicom iPhones were sold in the first two quarters of its official release in China, accounting for 2% of China's smartphone market as of the first quarter, and less than 1% of China's overall handset market.

Apple sold 8.4 million iPhones world-wide in the first quarter alone, according to research firm Gartner.

Consulting firm BDA China Ltd. estimates about 2 million to 3 million iPhones have been purchased in China via the gray market. But even that is a relatively small share of the total. China has more than 780 million mobile accounts.

- WSJ Inputs.