Apple (AAPL.O) launches a new tab for weak Although investors were taken aback by the company’s China sales performance, experts and consumers have been observing growing issues in the company’s third-largest region.
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.
In premarket trade on Friday, the company’s shares fell almost 3% as a result of the underwhelming China sales.
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 growth 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.
After Huawei returned to the high-end smartphone market in the second half of the year with its Mate 60 series phones, which are powered by domestically produced chips, pressure on Apple increased.
Other well-known Android companies, such as Xiaomi (1810.HK), have also begun to ply the high-end market that Apple has long controlled. In October, Xiaomi unveiled its high-end Mi 14 model, highlighting its extended battery life and photographic capabilities. In the week following 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 buyers have also expressed dissatisfaction with Apple’s iPhones, citing a lack of innovation overall and in the design especially when compared to previous models.
“How Apple can continue to maintain its reputation as a tech pioneer while providing consumers with more wow elements is another challenge it must solve.
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.
In an effort to boost sales in China, Apple has lowered pricing. Just one month after the iPhone 15’s national release, online retailers Alibaba and Pinduoduo launched 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 discounting push was only able to partially halt the downturn.
