Apple’s grip on the Chinese smartphone market, once a significant source of revenue and growth, appears to be loosening as the company seems to be under pressure. The first six weeks of 2024 saw a concerning decline in iPhone sales in the Asian market. A report from Counterpoint Research now reveals that the sales of the iPhone – Apple’s flagship smartphone – plummeted by 24% year-on-year during the first six weeks of 2024 in China.
This sharp decline, coupled with a drop in market share from 19% to 16%, resulted in the Cupertino-headquartered Apple slipping from the second-largest smartphone vendor position to fourth in China. This slump is even more concerning when considering the overall Chinese smartphone market itself experienced a 7% decline during the same period. Apple’s shares are currently priced at $175.10 after a dip of 1.9% in premarket trading.
A key factor contributing to Apple’s woes is the resurgence of Huawei, its main competitor in the Chinese premium smartphone segment, during the first six weeks of the year. The launch of Huawei’s successful Mate 60 series in August 2023 seems to have reignited consumer interest, leading to a staggering increase of 64% in unit sales for the company. This surge not only bolstered Huawei’s market share to a significant 16.5% (from 9.4%) but also directly contributed to Apple’s struggles. Add to that Chinese government persuasion to prevent people from using American tech and shift towards China-made hardware.
The report by Counterpoint Research noted the same – Mengmeng Zhang, Senior Analyst at Counterpoint Research, said that Apple and its flagship smartphone faced “stiff competition at the high end from a resurgent Huawei while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi. Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now.”
Beyond the specific challenge posed by Huawei, the report revealed that Apple faced intense competition from other established domestic brands like Vivo, Xiaomi, and Oppo. These companies have adopted aggressive pricing strategies, particularly in the mid-range segment, making iPhones appear less attractive in terms of value proposition (even after Apple rolled out rare discounts on its web stores). This strategy proved particularly successful for Vivo, which went on to have a market share of 19% in the Chinese market – despite this, it failed to manage a positive growth. On an annual basis, Oppo clocked a drop of 29% of its smartphones during the period, while Xiaomi and Vivo saw their sales drop by 7% and 15% respectively.
Counterpoint Research reveals that going forward, things are unlikely to undergo a drastic change and clock a string growth. “Consumer confidence will need to rise to stabilize the market, but it is a tough call right now with everything that is happening, especially in the real estate sector,” said Senior Analyst Ivan Lam, adding, “As far as Apple is concerned, there is more wriggle room in the short term. This weekend’s aggressive promotions are just one example.”
