Apple’s iPhone Is Getting Crowded Out of the Chinese Market

Apple must be feeling a little green about its China business. 

iPhone sales fell nearly 20% in the first quarter, with many consumers flocking to three domestic rivals, according to data from market research firm Counterpoint.

Crabapples

Tim Cook & Co. had been a shining example of an American enterprise succeeding in the Middle Kingdom until the US and China entered a trade war in 2018 that seems to escalate with each passing day.

Not only is Apple a target of Chinese legislation that bans foreign devices in state-backed firms and government agencies, but consumers have steadily shifted toward local smartphone makers that offer more novel designs, unique AI capabilities, and substantial hardware upgrades between each generation of phones. 

It’s a running gag that Apple will debut a new iPhone every year with very minor improvements but people will still buy it anyway. However, that brand loyalty is subsiding in China, where Apple just experienced its worst quarter since 2020:

• China’s total smartphone sales grew 1.5% year-over-year. China-based Vivo saw its sales decrease less than half a percentage point but still managed to be the top-selling smartphone company, followed by domestic rival Honor and then Apple in the No. 3 slot. Counterpoint called it “the most competitive quarter ever.”
• Huawei, which was on the brink only a few years ago due to US sanctions denying it access to foreign semiconductor technology, has returned to Chinese markets with a vengeance. Huawei saw its phone sales jump a whopping 70% in the first quarter. The success can be attributed to its 5G-capable Mate 60 series, which uses a Chinese-made chip that even US Commerce Secretary Gina Raimondo called “incredibly disturbing” shortly after its launch in September. 

But She’s Got a New Hat: Even though its China sales are in flux, Apple remains the second most valuable company in the world with a market cap of $2.57 trillion. China is still its third-largest market, generating $73 billion in sales last year. And by market close on Tuesday, its share price was up 0.6% It has more than enough potential to bounce back. Researchers at Counterpoint suggested something as simple as offering the iPhone in a few more colors could be enough to start turning heads again. Might we suggest Granny Smith Green?