Apple may change China distribution after fraud case
Staff Reporter
2015-01-06
An Apple store in Nanchang, Jiangxi province, Oct. 17, 2014. (File photo/Xinhua)
An Apple distributor in Beijing recently ran off with 60 million yuan (US$11.74 million) of down payments and term payments from many downstream distributors, reports the IT Times.
The case, apparently one of simple financial fraud, stands to have quite a big effect on Apple. The company may subsequently dump all of its intermediate agents in three years after adjusting its distribution network.
Citing a business insider surnamed Xiong, the IT Times said it is
not surprising that the distributor ran off. Thanks to his special links with Apple's general agents in China, the distributor had no problem acquiring iPhone 6 stocks when other distributors were short of the handset, Xiong said, adding that this is why many distributors made down payments to obtain the iPhone 6.
The situation reflects why Apple has already made changes to its distribution network in China. Two years ago, the original Apple agents in China–Founder Century, ECS Technology, Highly and Changhong Jiahua–began dropping out of the distribution network, voluntarily or involuntarily. Apple began instead to foster its own authorized distributors and directly operated retail stores. With the rapid growth in Apple's own sales channels, major intermediate agents that enjoyed abundant supplies and brisk sales in the past have been feeling the pinch.
It is obvious that Apple is seeking to get rid of its intermediate
agents in China, the IT Times said. It said retail stores now have a bigger say in Apple product distribution. For instance, hot items like the iPhone 6 (64G, 128G) are now delivered first to Apple's own stores, app stores or below-the-line retail stores rather to agents, IT said.
Agents and intermediate distributors are something of the past, one unnamed
source said, adding that Apple very likely will not need such distribution channels in China in three years time.
