Tim Cook believes China will be Apple’s biggest market – and it’s not hard to see why

One of the most remarkable numbers revealed yesterday by Apple was that revenue in Greater China – the term used to describe mainland China plus Hong Kong, Macau and Taiwan – more than doubled in the past year. Year-on-year revenue in the region more than doubled, compared to Apple’s already impressive worldwide growth of 33% … 

I’m a words kind of guy; numbers don’t always grab me in the same way. But visuals, like that created by Six Colors, makes the true scale of this number very easy to grasp. While Apple’s revenue continues to grow in both Europe and the Americas, that growth is completely dwarfed by China.

Of course, it’s not just about growth – you also need to look at the absolute numbers. But there too the story is quite remarkable: Greater China is now a bigger market for Apple than the whole of Europe, at $13.2B versus $10.3B.

The Americas so far remain significantly larger at $20.2B. But the company believes there is much more to come in China, as Tim Cook made clear during the earnings call.

I think China is a fantastic geography with an incredible, unprecedented level of opportunity.

Cook has in the past predicted that China would become a larger market for Apple than the Americas, and it’s not hard to see why. Apple achieved its growth to date at a time when the Chinese economy has been performing poorly, and the percentage of the population with access to LTE networks – one of the biggest drivers of premium smartphone demand – is just 12%. Given a better economy and better infrastructure, the demand for the iPhone will clearly increase.

But the bigger factor is that, for all China’s success as a major economic power, it is still in some ways an emerging economy. Cook said (per VentureBeat) that a recent McKinsey study showed just how much more there was yet to come.

The rise of the middle class [in China] is continuing and it is transforming China. I saw a recent study from McKenzie that’s projecting the upper middle class to grow from 14 percent to 54 percent of households over the ten year period from 2012 to 2022. So we’re within that period at this moment.

The upper middle class is the demographic currently buying Apple products. If that demographic expands in line with predictions – or gets anywhere close to it – you see can why Cook is so confident that China will at some stage overtake the Americas. It’s already 65% of the way there, and it’s early days yet.

The flip side is that the Chinese Government could turn on Apple as it has other Western Companies, at any point. This is one reason the stock market isn’t as excited about Apple’s earnings as you’d think.