HONG KONG—Apple Inc.'s two newest retail stores in the Greater China region—a long-awaited Hong Kong outlet and a third Shanghai store, the region's biggest—are drawing much fanfare even as the company has shifted to a more measured expansion strategy.  How long it took Asian markets to get the latest Apple products  The Cupertino, Calif.-based consumer-electronics maker is opening larger stores at a slower pace in China, where demand for its iPhone 4 has outstripped supply in local Apple stores. Analysts say the company's distribution network in Greater China—which includes just six stores in the region so far, despite originally planning to open 25 stores by the end of the year—still lags behind competitors, but the company is in the midst of an aggressive expansion.  Analysts say the slow pace at which Apple is opening its trademark full-service Apple Stores in China is partly to blame for the rise of copycat stores in the region. Earlier this year, the company found fake retail outlets that purported to be official Apple stores in the city of Kunming in southwestern China.  Apple relies on a network of resellers as well as its mobile operator partner, China Unicom (Hong Kong) Ltd., to distribute products throughout China. But the pace of Apple's retail expansion in the region still lags behind the likes of Lenovo Group Ltd., Hewlett Packard Co. and Acer Inc. which have wide-reaching distribution networks in the country.  Staff gather for the opening ceremony of a new Apple store in Shanghai on Friday.  "They've been quite slow," said Torsten Stocker, a China-based partner at consulting firm Monitor Group. "It has given rise to copycat stores as others jump to fill the gap because the demand for the products is there."  An official at Apple declined to comment.  In the fiscal third quarter that ended June 25, the company sold $3.8 billion worth of products in the Greater China region, which includes Hong Kong, mainland China and Taiwan, representing a more than six-fold increase from a year earlier. Chief Executive Tim Cook said Apple is merely "scratching the surface" when it comes to reaching its potential in the Chinese market.  The Hong Kong flagship store—which has been the center of rumors among online Apple forums for months and opens officially Saturday—will span 16,000 square feet over two floors in IFC Mall in the city's Central district and requires a staff of 300.  The mall's management had to terminate, move or not renew the leases of nine stores and knock down several walls to accommodate Apple. Renovations for the new store started in March in the shopping center that averages 200,000 visitors a day, the mall's management said.  The new Shanghai store is Apple's largest in mainland China. It occupies four floors and has more than 300 staff providing service to customers.  New stores alone won't expand Apple's relatively small market share in China, said Sandy Shen, research director at technology consulting firm Gartner. According to Gartner, Apple's market share is relatively small at just 13% of the smartphone market in China and only 2% of the overall mobile phone market, trailing Nokia Corp. and Samsung Electronics Co., the world's two biggest makers of handsets.  "These stores are more important from the marketing perspective than sales," Mr. Shen said. "It will help Apple increase brand awareness and consumer mind share, which will then drive demand for its products."  Mr. Shen added that the six stores are "a drop in the ocean in China, considering most brands have tens of thousands of stores."  Resellers in Hong Kong say that the new Apple store will only boost their business because they expect the official Apple outlet to be a powerful marketing tool for the brand.  "It's not a bad thing for us," said Dennis Ng, marketing manager at DG Lifestyle, which has a chain of stores in Singapore, Hong Kong and Macau dedicated to selling Apple products. "At first, it'll be competing. We'll see a bit of difference [in our sales]. But after the customers try an Apple store, they'll look to us for convenience. Hopefully, [Apple] won't have enough stock in their stores, so they'll come back to us."  Experts say that the store in Hong Kong is especially important to Apple's overall China strategy given that the city is a magnet for shoppers from mainland China who flock to the former British colony to buy consumer goods at lower prices. Unlike mainland China, Hong Kong doesn't charge sales tax and import duties on goods. An iPad 2, for example, costs 16% more on Apple's Chinese online store than it does on the company's Hong Kong site.  Moreover, many Apple products are launched in Hong Kong before they are put on the market in mainland China. The original iPad, for example, was available in Hong Kong for 56 days before its official launch in the rest of China.  "Hong Kong is very important for Apple," said Gabriel Chan, retail analyst at Credit Suisse. "The mainland Chinese have the idea that things sold in Hong Kong are of higher quality, and trendier and fashionable. For a brand, if you have a shop here in Hong Kong, it's good advertising."
New Apple stores in Hong Kong and Shanghai have generated lots of fanfare, but the company has opened just a fifth of its planned 25 stores in China this year.