Apple craze cools down in China
Trade war, domestic brands adding pressure to popular smart phone: expert
Despite the launch of new products, US tech giant Apple and its supply chain are facing growing pressure amid the ongoing trade war launched by the US against China, as well as the rise of China’s mobile phone brands in the market.
Within three hours since Apple started pre-selling its iPhone XS and iPhone XS Max at 3:00 pm on Friday on its Chinese mainland website and third-party e-commerce platforms, 2,965 units of iPhone XS and 9,181 units of iPhone XS Max had been ordered on JD.com.
The pre-sale figures were far lower than its iPhone X first day performance on the same platform: more than 160,000 units in the first three hours were ordered since reservations were opened on October 27, 2017, media reports said.
“Most Chinese consumers are taking a wait-and-see attitude and not rushing to the new products like in the past few years,” Liu
Dingding, a Beijing-based industry analyst told the Global Times Friday, attributing the preorder slump to the high prices and easy access to new Apple products based on an improved supply chain.
It is no longer that easy for the US firm to enable Chinese consumers to stick to it, especially as it is increasingly faced with competitive domestic mobile phone vendors and the prolonged trade frictions between China and the US, industry analysts said.
Chinese mobile phone maker Huawei and food delivery giant Meituan Dianping have replaced some of the Chinese people’s favorite brands like Apple and Nike, Bloomberg reported Thursday, citing a new survey on the country’s 50 most relevant brands by consultancy firm Prophet.
The survey pointed to more trouble for Apple in the Chinese market, its second-largest one after the US. The California-based company has struggled in China as domestic rivals like Huawei and Xiaomi gain in popularity, according to the report. Huawei rose to No.4 on the 2018 ranking, and Apple dropped from No.5 to No.11 this year.
“In terms of design and technology, Chinese vendors have advanced a lot in recent years, and also provide consumers with good value. Even in some aspects, domestic ones fared better than Apple,” said James Yan, research director at Hong Kong-headquartered Counterpoint Research.
In the second quarter, Huawei shipped 54.2 million smartphones worldwide, up 40.9 percent year-on-year, overtaking Apple as the world’s number two smartphone seller, according to recent data released by market research firm IDC.
Relying on China
Trade frictions between China and the US also put pressure on US firms, and if the frictions continue to escalate, US companies will suffer even further, and Apple could be an example, experts noted.
Bank of America Merrill Lynch estimated that if Apple assembles in the US, as what US President Donald Trump wants to happen, iPhone prices could rise by up to 20 percent.
“It is impossible to realize mass production in the US within a short period even if Apple’s assembly line is transferred to the country,” said Yan, noting it takes at least three to five years to solve such issues as manpower training and logistics.
China urged US policymakers to respond to the clamor from US industries and consumers, and the consensus of the international community on multilateralism and free trade, Chinese Foreign Ministry Spokesperson Geng Shuang told a regular briefing on Friday. “Among the 1,400 suggestions sent to the US Trade Representative Office, most said tariffs [on Chinese goods worth $200 billion] will increase Americans’ cost of living from cradle to grave.”
Foxconn Technology, a major manufacturer of Apple products, has entered a high season for its plant in Central China’s Henan Province, as it has taken the new iPhone order, jiemian.com reported Friday.
Foxconn’s factory in Wisconsin, which was launched earlier this year, still needs people to operate high precision instruments, Liu said. “In that sense, the well-trained Chinese technicians who get paid less are valuable for Foxconn and Apple.”