Apple CEO Tim Cook recently spoke about the fierce competition in the Chinese market and expressed optimism about the long-term development of the Chinese market. Although Apple faces stiff competition from domestic mobile phone brands in the Chinese market, Cook believes that through continuous innovation and deep localization, Apple can still gain a foothold in this important market. The data shows that Apple's market share in China is gradually being eaten away by domestic brands, and iPhone sales have also declined significantly in the past year. In the face of the grim situation, in addition to increasing investment in China, Apple has also adopted strategies such as product price reduction to retain existing users.
Competition in the Chinese market is fierce, and domestic brands are rising
In recent years, the competition in China's smartphone market has become increasingly fierce. According to the data, in the first quarter of 2024, China's smartphone market increased by 1.5% year-on-year, while Apple's iPhone sales in China fell by 19.1% year-on-year, ranking fourth from the previous second place. This is mainly due to the fact that domestic mobile phone brands such as Huawei, OPPO, and vivo have had a huge impact on Apple in the mid-to-high-end market through aggressive pricing and innovative marketing.
Taking Huawei as an example, since the launch of the Mate 60 series equipped with 5G chips in August 2023, its high-end mobile phone sales have rebounded significantly. In the first six weeks of 2024, Huawei's shipments in China surged nearly 70% year-on-year, highlighting its overall rise in the Apple-led premium market. It is worth noting that nearly half of the parts of the Huawei Mate 60 series are supplied by domestic manufacturers, reflecting the improvement of China's manufacturing strength.
Apple's product innovation is weak, and upgrades are unattractive
In addition to the fierce competition from domestic brands, Apple's own lack of product innovation is also an important reason for the decline in its sales in China. People pointed out that although the iPhone 15 series has improved its hardware specifications, it has lackluster core features and user experience innovation, which is difficult to attract consumers to upgrade, so sales have slowed down.
In this regard, Apple's top management is also self-aware. Cook acknowledged in his latest earnings call that the Chinese market is extremely competitive, and the lack of major upgrades to the iPhone 15 series makes consumers feel the need to replace older models. This also shows that innovation will be the key to stand out in the increasingly homogeneous smartphone market.
Geopolitical factors affect Apple's business in China
In addition to market competition, geopolitical factors are also important factors affecting Apple's business in China. In recent years, the U.S.-China tech war and rising nationalist sentiment have caused Chinese institutions and companies to restrict employees from using iPhones, which has had a certain impact on Apple's sales in China.
The U.S. government's sanctions on Chinese technology companies such as Huawei have also contributed to the sentiment of Chinese consumers to "buy domestic products" to a certain extent. According to third-party data, in the first six weeks of 2024, Chinese consumers have chosen to buy domestic mobile phone brands, at least in the smartphone sector, which is one of the important reasons for Apple's sharp decline in sales in China.
Apple has increased its investment in China and deepened its localization layout
In response to the challenges of the Chinese market, Apple is increasing its investment in China, including opening new retail stores and expanding its local R&D team, in an effort to improve the localization of its products and services.
Cook's recent trip to China showed how important Apple is about this important market. He not only visited Apple's latest retail store in Shanghai, but also attended the China Development Forum in Beijing to share his views on Apple's development plan in China.
Apple has also adopted strategies such as lowering prices for its products in an effort to tide over the difficulties in the Chinese market. Since the beginning of this year, Apple has repeatedly promoted and discounted iPhones on China's official website and Tmall flagship store, with a maximum price reduction of 1,000 yuan. The results do not seem to be satisfactory, and iPhone sales in China are still declining.
Cook remains optimistic about the Chinese market and adheres to a long-term approach
Despite the current challenging situation, Cook remains optimistic about the long-term prospects for the Chinese market. He reiterated at the latest earnings call that while he doesn't know the specifics of each quarter, he is "very positive" about the Chinese market in the long run.
China is Apple's second-largest market outside the United States, with revenue of $20.8 billion in fiscal 2023, accounting for about one-third of Apple's total mobile phone revenue. Apple will adhere to its long-term strategy and continue to cultivate this important market.