Apple sees global profit decline as China sales lose momentum

CEO Tim Cook said he expects to see the number of Apple stores double in China, to 22, in less than two years, which would add 8,000 points of sale for iPhones, bringing the total to 19,000.

Carolina Milanesi, an analyst with technology research firm Gartner Inc, said its performance in China is crucial to Apple's success.

"We have seen Apple cater to the Chinese market with specific local content," she said.

"Apple is also using China to learn about other emerging markets," Milanesi added, citing Latin America as a region where the company has increased its focus.

The company has had a strained relationship with China in recent months, including claims that iPhone warranties discriminated against Chinese customers. Negative publicity led the company in April to apologize, in a letter signed by Cook, to Chinese consumers and announce changes in some warranty terms.

"Its sales in China should improve as a result, but one should not expect dramatic change from past sales in China," said Kenneth Kraemer, a business professor at the University of California, Irvine.

Greg Linden, a business-innovation researcher at the University of California, Berkeley, said Apple clearly wants to participate in China's economic success and has demonstrated flexibility toward that goal.

"The speed with which it responded to the warranty issues probably headed off major harm to its image," he said. "But Apple's image worldwide is what will drive its long-term level of success in China."

Despite China's importance, "the company's primary need is to continue creating innovative products for major world markets, of which China is just one", Linden said. "Of course, Apple's China-specific measures help to unlock its potential there."