Apple Inc. (AAPL) Needs To Repeat This Mantra – “China Matters”

Apple Inc (AAPL) Store China

Apple Inc. flagship store in Wangfujing (China) is quite busy with window shoppers, but not many are actually buying the products. As per a staff member at the store, part of this problem may be short-term as many consumers in China are probably waiting for the iPhone 7, which is coming out in September, says a report from FT.

Apple Inc (AAPL) Store China

Chinese users not as excited now

The employee adds that a change in sales is highly expected before a big launch. Well, the Cupertino-based firm hopes so as well. The employee adds there is no reason for any concern, and says sales will pick up when the new phone comes out.

One of the few consumers in the shop to buy a phone is Liu Shan, but she doesn’t look excited about the new iPhone model, says FT. It not only dwindles Apple’s hopes to increase its sales in the country, but also seriously questions the loyal Apple fandom that made the country the world’s largest market outside the US.

The problem for the smartphone maker in China is such lack of excitement. A sharp drop in revenues in the last quarter in the country indicated that Apple’s capacity to influence smartphone shoppers has been slowly dropping amid tighter competition from cheaper local rival that produce more advanced handsets.

The consumers in China are no longer as excited about the iPhone as they first were. The iPhone was a status symbol for young Chinese middle-class customers when Apple Inc. first released an iPhone in 2009. With the launch of several new iPhones aimed at the local market, the tech giant consolidated its position. Last year, the group came at top of China’s smartphone market.

Apple needs to keep itself interesting

As per Canalys, in the previous quarter, Apple came fifth in China with a market share of just 9%. The smartphone market in China grew by 3% in the last quarter.  Oppo overtook Huawei in Q2, and became the top-selling smartphone in China, as per Counterpoint Technology – a market research firm. The research found that Oppo has around 22% market share.

This decrease in sales should not have come as a shock to the US firm, given the figures of last quarters. Baidu – China’s biggest search engine – predicted a 23% to 24% year-on-year fall in the quarterly revenue for Apple Inc. in China, using the drop in search queries as a proxy for foot traffic to Apple stores.

Now, the US firm faces a challenge in “keeping itself interesting” in China, says Xiang Ligang, an expert on China’s telecommunications sector. Xiang says for example, the forthcoming iPhone 7 is expected to have a dual-lens camera, but by the time it releases in September it will look old. As it is, many smartphone makers have dual-lens cameras on their newer devices already, like P9 by Huawei that launched in April, and Redmi Pro by Xiaomi.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.

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