So much for ‘The Great Wall of Worry’: Apple’s momentum in China is mind-blowing

Hard to believe that just 24 hours ago, there was some nervousness on Wall Street about how Apple was doing in China.

The country’s economy seemed unstable this summer. And despite reassuring words from CEO Tim Cook that all was well, there were still plenty of doubters leading up to Apple’s Q4 earnings release yesterday.

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Brian White, an analyst at Drexel Hamilton, called it “The Great Wall of Worry.”

Well, worry no more.

It turns out that the company is still growing faster in China than in the rest of the world. Yesterday, Apple reported that revenue for its Greater China segment grew to $12.5 billion, up 99 percent from the same period a year ago, when it reported $6.3 billion.

This increase was driven by iPhone sales that climbed a whopping 120 percent in China. App Store revenue grew 127 percent year-over-year.

The company said it now counts 1 million developers in China creating apps for its products. And Apple just opened its 25th store in the Greater China region, on its way toward its goal of having 40 stores by next summer.

Cook, who just returned from a trip to Hangzhou and Beijing to announce plans to bring renewable energy to its supply chain, could not have been more effusive about the company’s prospects there. During the call with analysts yesterday, Cook acknowledged some of the broader macroeconomic concerns, but said they didn’t jibe with what he saw on the ground.

“If I were to shut off my web and shut off the TV and just look how many customers are coming in our stores regardless to whether they’re buying, how many people are coming online, and in addition, looking at our sales trend, I wouldn’t know if there was any economic issue at all in China,” Cook said. “I also visited our retail stores in China, which were among the busiest in the world.”

Cook also pointed to the long-term opportunity in China, which he considers to be massive. He cited one study saying China’s middle class numbered 50 million just five years ago, but is expected to be 10 times that size by 2020.

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“We’re very bullish on it, and I would point out that we’re investing in China not for next or the quarter after, or the quarter after,” Cook said. “We’re investing for the decades ahead and as we look at it, our own view is that China will be Apple’s top market in the world. And that’s not just for sales, that’s also [because the] developer community is growing faster than any other country in the world.”

“And so,” Cook concluded, “the ecosystem there is very, very strong. I was very impressed with the number of developers I met last week, and, of course, the customers in stores are enthusiastically contagious.”

Even in the short-term, Apple is red-hot there.

Cook said that more than 50 percent of people in China who bought the iPhone 6 and 6s were buying their very first iPhone. For the 68 percent who bought an iPad in the quarter, it was their first tablet. And for 40 percent of those iPad buyers, it was their first Apple product.

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First-time buyers, and a massive developer community, are gradually pulling the center of gravity for Apple’s ecosystem toward China.

“I feel like we are reasonably well positioned in China,” Cook said. “I’m sure we can do better, but I think we are doing fairly well there.”

Crushing it, more like. But I guess you can’t say that on an earnings call.