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China is the biggest driver of Apple's insane earnings growth

China is the biggest driver of Apple's insane earnings growth


The rest of Asia is also showing massive momentum

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Feng Li/Getty Images

Apple announced staggering quarterly earnings today, posting a record $18 billion in profit on the sale of 74.5 million iPhones. Those sales figures are global, but there is one part of the world that is far and away the biggest driver of Apple's growth: China. Revenue in Greater China was up 157 percent over last quarter and 70 percent year over year, more than double the acceleration seen anywhere else and more than three time the sales growth in Asia or the Americas.

apple revenue growth by geography

Apple has a strange identity in China. iPhones are seen as a status symbol by the rising middle class, who have been snapping up the devices faster than anyone else. The company is courting that market with high-end promotions, like an Apple watch spread on the cover of Vogue China.

A striking mix of excessive consumption and ethical concerns

At the same time, the biggest black mark on Apple's image continues to be ongoing reports of labor abuses in the Chinese factories that make its devices. The company fired back at the BBC after it released a one-hour documentary that suggested it wasn't doing enough to improve working conditions.

China's total revenue still lags behind Europe and the Americas, but analysts believe that Apple now sells more iPhones there than anywhere else in the world, and the earnings numbers released today back up that remarkable growth story. As tech investor Benedict Evans noted in this chart, the company's performance in China has defied all the critics.

apple china revenue growth

To match that demand, Apple CFO Luca Maestri said on today's earnings call that the company plans to expand to 40 stores in the greater China area by 2016, up from less than 20 today. "You can tell we are a big believer in China," CEO Tim Cook said on the earnings call. "It's an incredible market."

Many of Apple's American peers — companies like Google, Facebook, and Twitter — have struggled to find common ground with the Chinese government. For the time being Apple seems to have found a way to work with local authorities, and to reap the benefits of China's rising consumer class.