Low-cost Rivals Gnaw at Apple’s Far East Sales
On Tuesday, Apple reported a growth in first-quarter sales, but the fine print reveals an interesting point: Sales grew everywhere but China, Taiwan and Hong Kong. Sales in Greater China decreased 12% for the quarter that ended on December 31st, compared with 14% growth a year earlier. That’s especially bad when you look at a year before – when growth was at 14%.
This is the fourth consecutive quarter in which Greater China serves as the company’s worst-performing region and the implication could be severe.
China means potential growth and weak performances in China means global sales are pushed down. Want an example? You got it. Although sales in America were up 9%, Apple’s global sales only showed a 3% increase. Who, do you think, is responsible for that difference?
For several years, China’s booming smartphone market fed Apple’s growth, but now cheaper local competitors dish out devices that are almost as advanced as the iPhone, and for a much lower price. One of the new rivals is Oppo, a local brand that has become a massive success over the past year.
Chinese are not North Americans, and the similarity between iPhone 6S and iPhone 7 worked against Apple. In the Far East, where income is substantially lower, consumers evidently did not like the idea of buying a new phone that looks like the old one – especially with so many more affordable options around.
According to research, at least four local companies have higher sales in China than Apple: Oppo, which we already mentioned, Xiaomi, Huawei and Vivo.
Is this the end for Apple is China? Of course not. The region is still responsible for over 20% of Apple’s revenues. It is also interesting to note that 8 is considered a lucky number in China. Will the iPhone 8 answer expectations? We’ll have to wait and see.