An Apple Inc store in Beijing. China accounted for 13 percent of Apple's total sales compared with 8.8 percent a year earlier. [Photo/China Daily]

But competition from domestic firms could intensify, experts say

Apple Inc said its sales in China surged 67 percent year-on-year during the quarter ending Dec 29, but analysts warned the company of more intensified competition in the Chinese smartphone market.

Apple announced on Thursday that its quarterly revenue in China reached $6.83 billion, from $4.08 billion a year earlier. It marked the first time that Apple formally broke out China data in its earnings release.

The company posted overall revenue of $54.5 billion, with a net profit of $13.1 billion, in the quarter.

China accounted for 13 percent of Apple's total sales compared with 8.8 percent a year earlier. It is the third-largest market for Apple after the Americas and Europe, Apple CEO Tim Cook said on a conference call.

Outlets in China selling iPhone handsets rose to 17,000 from 7,000 a year earlier, Cook said. Apple expanded its own China retail stores to 11 from six over the past year, while the number of premium resellers doubled to more than 400 shops, he added.

"This isn't nearly what we need, and it's not the final by any means," Bloomberg quoted Cook as saying about the company's China retail expansion.

"We're not even close to that. I feel that we're making great progress."

Sales of the iPhone, Apple's biggest source of revenue and profit, were more than double last quarter in the Chinese market, Cook said.

The company sold a record 47.8 million iPhones globally in the quarter, compared to 37 million a year ago.

"We have established a new operating segment of China given the very significant contribution of that region to our overall business," said Peter Oppenheimer, Apple's chief financial officer.

China surpassed the United States to become the world's largest smartphone market last year.

However, Apple's market position slipped to sixth place in China in the third quarter of 2012, from fourth, according to market researcher IDC.

"Apple faced strong challenges from domestic rivals such as Lenovo and Huawei. Mobile phone manufacturers' competition for Chinese smartphone buyers could be even more heated this year," said Li Yanyan, an analyst at Beijing-based research firm Analysys International.

Compared with Apple, Chinese rivals have made a much swifter response to the growing market.

"They introduce new models in short periods, offer competitive prices and usually add rich local services to their mobile devices," Li said.

Samsung had the most buyers in China's smartphone market during the third quarter, followed by Lenovo Group Ltd in second spot, IDC said. Shenzhen-based ZTE Corp and Huawei Technologies held the fourth and fifth place.

Cook visited China this month and he met high-level management from three Chinese telecom carriers.

China Mobile Ltd, the world's biggest telecom operator by subscriber, is the only Chinese carrier that does not have a cooperation agreement with Apple.

shenjingting@chinadaily.com.cn