Apple slashed iPhone prices in China. Sales are bouncing back

By Laura He, CNN

Hong Kong (CNN) — A rebound in Apple’s iPhone sales in China is gaining momentum, after the company aggressively cut prices in its largest overseas market to lure back consumers actively hunting bargains in a weak economy.

Shipments of foreign-branded cell phones in China, the vast majority of which are iPhones, surged 52% in April to 3.489 million units, according to CNN calculations based on data released Tuesday by the China Academy of Information and Communications Technology (CAICT). The academy is a research firm under the Ministry of Industry and Information Technology, a regulatory body.

The increase is a major acceleration from the 12% growth logged in March by foreign-branded smartphones, according to previous data from CAICT.

The Global Times, a state-owned tabloid known for its patriotic views and promoting Chinese companies, has described the rebound as “impressive.”

Apple (AAPL) had a tough start to 2024 in China.

In the first quarter, it lost the top spot in the country’s smartphone market as shipments tumbled 19%, according to a report by Counterpoint Research. Apple took a hit from growing competition with local brands including Huawei, which saw sales increase nearly 70% in the same period because of the successful launch of its Mate 60 series.

An economic slump, including worsening job and income prospects, has prompted Chinese consumers to tighten their belts and seek discounts on everything from food to cars.

But iPhone sales started to bounce back in March after Apple and its retail partners slashed prices, according to CAICT data.

The price-cutting intensified recently. Last week, Apple said it would slash prices on some of its smartphones on Tmall, an Amazon-like site owned by Alibaba (BABA), by as much as 23% until May 28. Similar reductions were made on JD.com, another major e-commerce site.

The unprecedented discounts were part of a campaign launched during the annual “618” shopping festival, China’s second-biggest online shopping bonanza of the year, which usually runs from late May to mid-June.

After the discounts, the iPhone 15 is now in the same price range as smartphones made by Xiaomi and Huawei.

The hefty reductions are “the only way” for Apple to defend its market share in China, Jefferies analysts said earlier this week.

“We believe Apple has created significant pricing pressure on the local brands,” especially Huawei’s flagship models, they said.

That will help Apple regain its lost market share but is also likely to put pressure on its competitors to cut prices further.

“The discounts on high-end models could extend into the third quarter of 2024, pressuring all smartphone (makers’) margins,” they added.

The-CNN-Wire
™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.