Although investors were taken aback by Apple’s poor sales performance in China, experts and consumers have been pointing out the growing difficulties the firm is facing in its third-largest market.
Apple’s growth in China has been hindered by increased competition from domestic rivals, longer upgrade cycles, and cautious consumer spending during the economic slowdown. As a result, sales in the China region fell by 13% to $20.8 billion in the December quarter, falling short of estimates of $23.5 billion.
According to Toby Zhu, an analyst at research firm Canalys, “Apple’s sales decline in China is not surprising given the strong competition it faced from local brands like Huawei and Xiaomi.”
Apple did not answer a request for comment right away.
China is vital to Apple’s development in smartphone sales as it is the largest smartphone market globally. Although Apple has long been the preferred luxury phone brand in the nation, things are starting to change.
Following Huawei’s resurgence in the high-end smartphone market with its Mate 60 series phones, which are powered by domestically produced chips, the pressure on Apple increased in the second part of the year.
Leading Android companies like Xiaomi have also begun to challenge Apple’s long-standing dominance of the high-end market. In October, Xiaomi unveiled its high-end Mi 14 model, highlighting its extended battery life and photographic capabilities. In the week following the introduction, one million copies were sold.
According to Zhu of Canalys, Chinese producers are progressively infiltrating Apple’s primary market sector with the introduction of more expensive foldable devices.
Chinese customers have also expressed dissatisfaction with Apple’s iPhones, citing a lack of innovation overall and in the design department specifically when compared to previous models.
“How Apple can continue to maintain its reputation as a tech pioneer while providing new wow elements for consumers is another challenge it must conquer. This is particularly important because other Android makers are already incorporating AI and foldables into their devices, according to Will Wong,” an IDC smartphone researcher.
Simultaneously, due to the economic downturn, Chinese consumers are keeping their phones longer. According to Consultancy Counterpoint, the replacement cycle lasted more than 40 months in June.
To boost sales in China, Apple has lowered pricing. Just one month after the iPhone 15’s national release, online retailers Alibaba and Pinduoduo started a big discounting campaign in October to clear out the device’s inventory. Apple provided exceptional savings on its iPhones in January.
According to research organization IDC, Apple’s phone shipments dropped by just 2.1% in the fourth quarter of 2023, but Huawei‘s sales soared by 36.2%. This suggests that the October pricing push was only able to partially reverse the loss.
China will probably keep putting pressure on Apple in the future. According to experts at Jefferies, Apple’s sales in China are expected to decrease by double-digit percentage by 2024.
According to Bob O’Donnell of TECHnalysis Research, “the big miss in China is concerning as it could be the start of a longer downward trend there.“
