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Can the iPhone 7 Help Apple Inc. (AAPL) Get a Grip on China?

Apple Inc (AAPL) iPhone

Reports suggest that Apple Inc. is losing its grip on the Chinese handset market. The consumer tech giant’s iPhone is currently fending off the rising popularity of China’s local gadgets. The likes of Huawei, Xioami and Oppo are seeing steady rises in sales while love for the iPhone appears to stagnate. Top Chinese phone maker Oppo, and those much like it, make gadgets that effortlessly stand in par of the latest iPhone. Their products are rated to be just as efficient as their U.S. competitors and sell at just a fraction of the cost.

Residents in China say digging out $795 for the latest iPhone 6S simply isn’t an option for them. One local in Beijing claims to be more than happy with his Hauwei purchase. Mr. Miao says he bought the product for much less. It also comes with a lot of the features he admires in the newest iPhone.

iphone 7 apple inc (NASDAQ:AAPL)

China goes local

Locally made devices are becoming the go-to option in the People’s Republic. This can be inferred from the rising popularity of Huawei and Xioami in the country. Beyond their low cost incentives, they are backed by a growing sense of product nationalism.

“There is also a sense of pride of being a Chinese phone user and owning a Chinese phone,” reports a Kantar analyst, Lauren Geunveur. Handset makers in China are gaining more favor simply for being Chinese. The likes of Apple Inc. are notoriously American. This growing product patriotism trend works against the growth of their sales.

Apple vs Apple

The greatest obstacle for Apple Inc. at the moment, though, is beating itself. It is very unlikely that the company will outdo its performance anytime soon due to the incredible success of its sixth generation iPhone. Looming rivals aren’t the only threat to the flagship device, with many analysts agreeing that sales growth will be downhill for the foreseeable future.

The expected spike in sales that should come from next month’s iPhone 7 is among the only exceptions. Apple revealed stoops in handset sales for two consecutive quarters and sources like Bloomberg claim the trend will only be slowed by new releases. A new generation of the iPhone is anticipated for September and is certain to usher in a short period of increased popularity.

Over 25 percent of Apple product sales are derived from Asia though. Which makes a loss in popularity in the continent a massive issue. China holds the bulk of that figure, and unless Tim Cook and co. can push out lower priced handsets, the iPhone could soon lose much of its hold over the premium handset space in then region.

China gets cheaper, better phones

Cost is the greatest and most obvious iPhone killer in Asia. The entry version of the iPhone 6S, the 16GB model, sets buyers back 5,288 yuan. That translates to $795.50 in USD. The latest high-end Huawei phone — the P9 — costs only 3,688 yuan ($555) in China. It is a hit in region and surrounding Asia. It is noted to surpass the iPhone in a number of performance specs, and comes with 64GB standard as well as expandable storage.

“It’s a function of cheaper phones becoming good enough. Apple has done well at the upper end, but there’s not much more growth at the upper end of the market.” That comment was made by Abhey Lamba of Mizhuo Securities. Her sentiments are matched by many others, who believe the Apple Inc.  has a very hard time ahead of itself in China.

U.S. firms like Apple Inc. , according to Julie Ask, now have to fight quite a bit to hold China’s attention. She works for Forrester Research and depicts the many forces that have slanted the table in favor of local businesses. “It seems there’s an endless stream of ways to give their own company an advantage,” Ask explained.

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