Apple iPhone sales in China fell 20% in Q4 of 2018

Mae Love
February 14, 2019

Apple investors have been anxious about sales in China since the company last month lowered guidance for the quarter due to economic pressures in the region and weak iPhone sales.

To address the fall, Apple has suggested it will offer new financing and phone replacement services, while the iPhone XR could be discounted in some markets to offset the strengthening U.S. dollar. This could be attributed to China's economic slowdown, changes in consumption structure and also competition from local rivals such as Huawei and Xiaomi. In China, iPhone sales have fallen at twice the overall decline in the smartphone market.

Apple revised its guidance ahead of that report in early January, when it said a weakening economy in China and the strength of the USA dollar were to blame for weaker-than-expected iPhone revenue.

Apple had warned of poor sales in the country weeks ago, an announcement which caused several electronics retailers including Alibaba-backed Suning and JD.com to slash the prices of iPhones sold in their stores. Even the very base-level iPhone, the iPhone XS, sells for $999 in the US but with import duties sells for the equivalent of $1,269 in China. Apple still provides total revenue by region, though, and its "Greater China" sales - including Taiwan and Hong Kong - were down 27% annually to $13 million, according to CNBC. The Chinese slowdown was the driving factor behind Apple's first revenue outlook cut in nearly two decades. That's despite grappling with an unusually turbulent few months during which its finance chief was arrested on allegations of bank fraud, and the USA marshalled its allies to try and block the company from selling next-generation networking equipment.

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IDC says the high prices of the new iPhones had a major impact on sales of Apple's smartphones.

Fifth-ranked Xiaomi, a Chinese name that experienced rapid growth just before its 2018 initial public offering, incurred a 34.9 per cent plunge in shipments due to inventory corrections and an internal restructuring, IDC said.

The industry is now counting on innovations such as foldable screens, 3D cameras and 5G-ready phones to revitalise the market. For example, Huawei has its Honor brand which caters to a younger, more tech-savvy audience and Xiaomi has also launched its budget Redmi line as an independent brand.

China's smartphone market does not look bright this year, said Wang Xi, a China analyst at IDC. "We've a long way to go before they become mainstream", IDC said.

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