Apple may be the giant in Tablet market with the iPad, but the competition from cheaper products is heating up. China continues with their age-old motto of manufacturing: Whatever the world does, we can do it cheaper.

The iPad currently controls an estimated 80% of the market in China, which is an overwhelming advantage over the nearest rival. But will they be able to hold on this massive market in the face of stiff competition from domestic markets? This will be the key to a lot of Apple’s revenues in the coming quarters. The biggest threat to iPad is poised by rival manufacturing units that produce white-box rivals that can be rebranded as any other brand. These tablets are identical in looks with the iPad but are retailed at a much reduced price of CNY 400-1200 (US$65 – $195).

These cheaper lookalikes are posing a real and present danger to Apple’s market hegemony as well as future growth as China is the fastest growing market for Apple. The year-on-year growth of Apple in China was an astonishing 67 percent in the first quarter, several times ahead of growth in the American continent (15 percent) and Europe (11 percent).

The threat perception has been heightened in Cupertino as the white-box tablets are not run-down old technology models, but are equipped with the latest hardware. For example, the 7.85 inch Ramos X10 boasts quad-core processing technology and retails at $145, a huge price difference from the iPad mini at around $340. They also come laced with latest screen technology, which is making it harder and harder for the iPad to stand out as a state-of-the-art tablet.

But do these generic tablets have enough brand name and quality that an Apple product guarantees? Interestingly, the high end of Chinese market is completely cornered by the iPad and the low-end has gone to the white-box manufacturers. But a big home-grown brand in the middle of these two has so far not been seen. Apple executives are confident that the intrinsic value of Apple products deserved to be priced at the current levels and demand will continue at present levels.

Till now, most Apple analysts didn’t consider this a credible enough threat to dent Apple’s fortunes, pointing out that people look at an iPad as an aspirational device rather than a simple consumption device to run generic apps. The strong Apple brand was expected to overcome the other shortcomings of the iPad. But as the market is increasingly getting polarized, the onslaught of cheap Chinese tablets on hitherto Apple market has not gone unnoticed. Though the market will continue to be dominated in the near future by Apple, this may become a threat to the Apple model of pricing in the longer run and strain their revenue streams.