Apple Cuts iPhone Prices in China, Sparking a Sales Rebound

Apple’s iPhone sales in China are experiencing a resurgence after the company implemented aggressive price cuts in its largest overseas market to attract budget-conscious consumers amid a sluggish economy.

According to data from the China Academy of Information and Communications Technology (CAICT), foreign-branded cell phone shipments in China, predominantly iPhones, surged by 52% in April, reaching 3.489 million units. This is a significant jump from the 12% growth recorded in March for foreign-branded smartphones.

The Global Times, a state-owned tabloid, described this recovery as “impressive.”

Apple faced a challenging start to 2024 in China. The company lost its leading position in the country’s smartphone market during the first quarter as shipments dropped by 19%, as reported by Counterpoint Research. In contrast, local competitor Huawei saw a nearly 70% increase in sales during the same period, bolstered by the successful launch of its Mate 60 series.

Economic difficulties, including declining job and income prospects, have led Chinese consumers to seek discounts on a range of products, from food to electronics.

However, iPhone sales began to pick up in March after Apple and its retail partners reduced prices, according to CAICT data. The price-cutting strategy was further intensified recently. Apple announced significant discounts on some iPhone models on Tmall, an Alibaba-owned e-commerce site, reducing prices by as much as 23% until May 28. Similar discounts were also applied on JD.com, another major online retailer.

These price reductions are part of a campaign for the annual “618” shopping festival, China’s second-largest online shopping event, which runs from late May to mid-June. As a result, the iPhone 15 is now priced competitively with smartphones from Xiaomi and Huawei.

Jefferies analysts stated that these substantial price cuts are essential for Apple to defend its market share in China. They noted that Apple’s pricing strategy has created significant pressure on local brands, especially Huawei’s flagship models.

While this strategy is expected to help Apple regain lost market share, it is also likely to compel competitors to further reduce their prices. Analysts warned that the discounts on high-end models could persist into the third quarter of 2024, potentially affecting the profit margins of all smartphone manufacturers.