Apple’s iPhone sales in China witnessed a significant decline in the fourth quarter of 2024, according to the latest report from Counterpoint Market Pulse Service. This drop was attributed to the sluggish local economy and the competition from domestic brands.
In the world’s second-largest economy, China, smartphone sales in the final quarter of last year decreased by 3.2% compared to the previous year, with iPhone sales plummeting by over 18%. Meanwhile, Huawei and Xiaomi gained more market share.
Ethan Qi, the Deputy Director of Counterpoint, stated, “In the first three quarters of 2024, the Chinese smartphone market saw a rebound with growth in each quarter. However, in the fourth quarter, as consumers adopted a more cautious spending attitude, the market growth started to slow down.”
For Apple, based in California, its journey in China has experienced both the best and the worst times. The best times were between 2010 and 2015 when the iPhone was considered an affordable luxury for Chinese consumers, benefiting from an economically prosperous era driven by multiple asset bubbles, notably in real estate. Additionally, as a pioneer in smartphones, Apple faced minimal competition from emerging local brands at that time.
Based on data from Statista.com, iPhone sales in China surged from less than 5% of global market share in 2010 to around 25% in 2015, making the region the second-largest market for Apple smartphones globally.
However, the worst moment came in 2020 when Apple’s market share in China dropped to 15%, albeit slightly recovering until the past quarter. The sales in the region declined alongside the overall iPhone market during that period.
Apple’s soft sales in China over the past decade have mirrored the country’s economic slowdown, primarily due to the burst of several asset bubbles. The economic deceleration made it harder for Chinese individuals to secure high-paying jobs, thereby reducing their purchasing power for luxury goods.
In the past 12 months, several luxury goods manufacturers reported a decline in sales in the Chinese market. This includes various luxury brands under the Swiss-based Richemont Group, such as Buccellati, Cartier, Delvaux, and Montblanc. Conversely, the group witnessed a robust rebound in sales in other regions worldwide.
To adapt to shifting consumer behaviors, Apple made a bold move that was seemingly unimaginable for its leadership during the early days of iPhone releases – producing affordable smartphones targeting lower-middle-income consumers in emerging markets. For instance, the iPhone 13 Pro Max, aimed at the high-end market, has a price range of $1,099 to $1,599, whereas the iPhone SE is priced at less than half of that, at $429.
However, these budget phones have not been able to compete adequately with Chinese local smartphone manufacturers, especially against the backdrop of further slowdown in overall smartphone sales at the end of last year. For example, Xiaomi climbed to the second position in the market in the fourth quarter of 2024, thanks to its flagship Mi 15 series released in October last year, which resonated well with local consumers.
“The decline in Apple’s sales in China is due to its high prices no longer aligning with the affordability levels of many Chinese consumers,” said George-Os Koumisis, an Associate Professor of Economics and Finance at Manhattan University, in an email to the Epoch Times.
“Local brands like Vivo and Xiaomi offer more affordable options with similar functionalities. Apple’s premium pricing works well in other markets, but in China, consumers are more price-sensitive and have plenty of high-quality alternatives to choose from.”
Adding to Apple’s woes is the Chinese Communist government’s ban on using iPhones in public office spaces, which could be another factor contributing to changing consumer behaviors.
Koumisis suggests that Apple needs to focus more on localization.
He mentioned, “Another reason is that local brands, especially Huawei, have enhanced their product features tailored for the Chinese market, such as locally produced software and hardware, whereas Apple has been slower in this regard.”
“Meanwhile, the competition in the local market has become fiercer. Some Chinese companies have introduced cutting-edge designs like foldable phones, making it even more challenging for Apple to stand out.”
In the context of a slowing economy and heightened competition from local brands, Apple faces the challenge of adapting its strategies to suit the evolving preferences of the Chinese consumer market.