Apple’s position has been rather ineffective as it has become only the third player on the Chinese market of smartphones for 2024, pushed by its rivals – Vivo and Huawei. Data from Canalys research showed that the company’s shipment fell by 17% reflecting the biggest annual decline the company has ever recorded in China.
Apple Falls to Third in China's Smartphone Market as Local Rivals Surge
Year on year, Apple’s sales in China were down across all four quarters. Quarterly shipments declined by 25% in the last quarter and is indicative of increasing difficulties for the technology company in one of its key markets internationally.
The original brand that launched cheap smartphones dominates the market; it occupies 17% of it, whereas the company’s premium brand is Huawei – 16%. For the year Apple’s market share is currently sitting at 15% in China, the rise of domestic manufactures puts Apple under pressure due to their insights into the local market.
There are various issues happening to Apple that led to this problem, for one, Apple failed to integrate AI features in its new models of iPhones. Currently, AI application such as ChatGPT is becoming popular in the market; therefore, the absence of such features in Apple might be demoralizing the Chinese consumers.
The change in the strategy can also be best described by the fact that local brands are becoming more popular within the Chinese market than before when Apple was stronger within the market. Over time Apple will have to look for new approaches for competing in the China’s smartphone market since it will be facing continued pressure from brands that provide more localized functions and value.
Apple Faces Major Setback in China as Premium Market Shrinks
Apple’s revenue in China has reached an all-time low, as the firm recorded its lowest yearly sales in the country. Speaking to Canalys analyst Toby Zhu on this he pointed to several issues that are threatening Apple’s premium market position these include stiff competition from domestic competitors.
Thanks to high-end releases, Huawei has been strengthening the pressure to Apple’s high-range devices nonstop. Huawei today has a strong brand and has developed technologies; it has weathered previous blows from the U.S. sanctions which earlier affected it.
Another factor contributing to the problems the company has faced in the last year is the emergence of inexpensive domestic foldable phones in China. It is a range of devices with top-shelf specifications for the first time attract Chinese consumers in search of innovative solutions lacking in new iPhones.
Also, excluding Huawei and foldable phones like Samsung, other Android brands Xiaomi and vivo have been strengthening the consumer trust due to technologies and reasonable price levels. This has let them to occupy even more significant slices of the market within middle to premium, which was the previous domain of giants like Apple.
With the sanctions to Huawei in 2019 and before that stable consecutive years of growth in China for Apple that looks like is over now. Although the sanctions weakened Huawei’s ability to obtain technology from the US benefactor, resulting in Apple gaining leverage, local players have slowly emerged to create new value propositions in the eyes of the consumer.
Huawei's Comeback and Apple’s Discount Strategy Shake Up China's Smartphone Market
Huawei has particularly captured a robust market share back in the premium bracket in China upon releasing new smartphones with indigenous chipsets in August 2023. Gross sales for the quarter rose by 28% on year, gross profits by 23%, while it further demonstrated its dominance in the high end market that apple had previously held.
Apple has declined to comment on this on its performance in China after several attempts. To circumvent this, the company is now employing the rarity that is iPhone discounts on its latest models. In the beginning of January Apple held a four-day sale to Chinese customers where the iPhone 16 was discounted up to 500 yuan ($68.50) through the company’s official channels.
It’s therefore important to note that Chinese e-commerce gait have copied this strategy by offering their own promotions for the new iphone 16 series. For instance, Tmall, which is Alibaba’s B2C marketplace, offered up to 1,000 yuan ($136.7) cuts on the current iPhone models, and subsequently stepped up on price cuts in a bid to boost sales as rivals increase market competition.
One of Xiaomi, a dominating company in Chinese smartphone market, had the highest growth rate of 29 percent in the fourth quarter. Both Oppo and Vivo showed spaces for improvement, and based on Canalys data, they obtained the growth of 18% and 14% respectively, which again confirm the changes in the market condition.
However, the overall China smartphone market’s annual shipments continued to grow at a year-on-year pace of 4% to 285 million units in 2024. Nonetheless, local companies such as Huawei have exploited Apples’ weaknesses, while the market in China remains highly competitive and is fuelled by new inventions as well as the offer of cheaper products.