iPhone losing its aura in China amid fierce competition

Photo: The New York Times

Apple's iPhone is apparently losing its lustre among Chinese consumers amid increasingly fierce competition from its counterparts in the world's largest mobile phone market.

Earlier this month, the company issued its first revenue warning in nearly 12 years, citing poor Chinese demand, sending its shares down 10 percent or the biggest intra-day fall in six years.

iPhone has been Apple's chief moneymaker for years, accounting for nearly 60 percent of the company's total sales in the three months ending in September.

To attract Chinese consumers to buy iPhone, Apple has reportedly given green light to price cuts of the product.

Last week, several major Chinese shopping sites including Alibaba's Tmall, JD.com, and Alibaba-backed Suning slashed iPhone prices after Apple recently blamed poor sales of the smartphone in the country for the rare revenue warning.

JD.com said that Apple has nodded its agreement to reduce the prices of the 64GB iPhone 8 and the 64GB iPhone 8 Plus by more than 1000 yuan from the prices listed on Apple's official China site.

Tmall has promised to subsidize iPhone models including the XS and XS MAX by up to 1,500 yuan.

Suning is selling the 128GB iPhone XR at 5,799 yuan through coupons, 1,200 yuan lower than Apple's official price. The deal is part of a seasonal sales event, said Suning.

China is a huge and lucrative market for Apple, making up about 15 percent of its revenues globally.

However, the company's leading status in the country is increasingly challenged by homegrown handset brands like Huawei, Oppo, Vivo, and Xiaomi, which held a combined 78 percent market share in the third quarter of 2018 according to a report by the research agency Counterpoint.

Those Chinese smartphones compete with iPhone on both quality and value, and lure customers with price comparisons that make them balk at buying Apple's signature product.

The price difference is fairly obvious: In China, an iPhone XR starts at 6,499 yuan, while Huawei's top-end handsets start at only around 4,000 yuan, and Xiaomi's comparable models start at even less. The iPhone XS starts at 8,699 yuan.

Companies like Huawei, Oppo, and Vivo have also made striking improvements in features and overall quality that are enticing a large number of wealthy Chinese people.

Founded in Shenzhen in 1987, Huawei overtook Apple to become the world's No. 2 seller of smartphones in the second quarter of 2018, following South Korea's tech giant Samsung.

Although its products have been blocked for alleged national security reasons in some key western countries such as the United States, Australia, and New Zealand, Huawei still generated over US$100 billion in sales last year.

In December, Canada arrested Huawei's Chief Financial Officer Meng Wanzhou, who is also the daughter of the company's founder Ren Zhengfei, at the Vancouver International Airport at the request of the United States after the executive was accused of defrauding banks to help Huawei's business in Iran.

The arrest was largely interpreted by Chinese media and public opinions as a political assassination attempted on Huawei as part of the rising Chinese high-tech industry as a whole, particularly the telecommunications sector.

Oppo and Vivo, both are the products of BBK Electronics, have enjoyed ever higher popularity among China's young women especially with their "pretty outlooks".

To offer consumers a premium experience at a lower price, the two handset brands chose to eschew online and instead open retail stores on high streets in rural provinces. Last year, Vivo even sponsored the World Cup in Russia to raise its prestige.

Xiaomi, which is based in Beijing and was founded in 2010, became the world's fourth-largest smartphone manufacturer last year, leading in both China and India, the second-largest market.

With its generally affordable prices, Xiaomi commands a passionate fan base in China.

Apple products have long been seen in China as conferring on their owners the ultimate in cachet and cool.

But those Chinese companies have used slick marketing and celebrity endorsements in hopes of giving their products more personality, while promoting advances in camera technology, battery life, and microchips.

iPhone currently ranks fifth in China with about 9 percent of the market, according to a latest report by the research agency Counterpoint.

However, many consumers have complained that iPhone had not achieved any revolutionary breakthroughs in recent years and attributed it to the handset brand's recent unsatisfactory sales.

"Why would people pay such a high price for an iPhone," asked an interview. "If, from a hardware perspective, there isn't much of an upgrade from iPhone or Huawei and, from a platform perspective, there's nothing to lock consumers in?"

Related Stories
Share this page
Touched Sympathetic Bored Angry Amused Sad Happy No comment

iPhone losing its aura in China amid fierce competitionChina goes all out to boost its economy during trade talks, while the effect of US stimulus is fadingChina steps up censorship on booming short video industryLuckin Coffee expects to become biggest coffee chain in China in 2019, surpassing StarbucksChina powers up electric car marketChina’s biggest gay dating app blamed for rise in underage HIV infectionsChina's livestreaming industry mushrooming despite challengesTesla boss Elon Musk says he loves China, so Premier Li Keqiang offers him a green cardChinese investors ‘facing severe situation in the US’Shanghai university professor suspended after student suicide
< Prev Next >