Apple plans to extend its retail stores into China, a report claims.

A recent report in the South China Morning Post reveals the company is considering launching three retail stores in Hong Kong, claims Apple Insider.

The stores offer up to 12,000 square feet - approximately half the space of the company's largest shops.

Merril Lynch anslyst Steven Milunovich first suggested Apple may hold Chinese retail plans in May 2004.

"Expansion overseas is expected with London and Osaka in process, Canada likely, and China being considered," he said.

China to drive global economy

Modern China is emerging as a powerful market with an estimated 35-40 million households now having the spending power of a US middle class home.

In December 2004 Forrester Research predicted that China would account for 178 million PC sales by 2010. There are 575 million PCs in use today, the researchers claim.

Business Week's Alex Salkever last year suggested: "How about an Apple flagship store in Beijing or Shanghai to whip-up interest in the iPod line and other digital-lifestyle accessories?"

"Apple ignores China and its booming markets at its own peril," he warned.

Apple’s Chinese focus

Apple isn't ignoring China, as evinced by the company's deal with the region's Founder Computer to ensure iTunes is pre-installed on all PCs sold by that company.

In April 2004 Apple's Asia-Pacific product marketing manager Danny Lam stressed the company's focus on the market: "The Asia-Pacific is an important market for us. In this region India and China are growing fast and we expect their contribution to our revenues to increase."

Apple also boasts a very active Mac user group in Beijing, which is currently preparing for a major iPod event later this month