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Apple Inc. (AAPL) Fights for Massive Chinese Phone Market

Apple Inc (AAPL) Store China

Apple Inc. and Samsung are seeing a rise of new entrants such as Xiaomi as well as long-time rivals such as ZTE and HTC in China. While Apple is a desirable brand in China, not everyone can spend hefty 4,000 Yuan for an iPhone. China’s own brands are giving a tough fight to the foreign phone makers, grabbing massive shares in the Q2, says a report from Forbes citing industry statistics.

Local players gaining big

In 2010, mobile internet market revenue in China totaled around 17.2bn Yuan. In the next five years, it is expected to account for 251bn Yuan or $35.14bn, says the report. Xiaomi claims the top position in the country, selling more phones than any other brand in the Q2, more than the previous market leader Apple. At present, it holds 18% market, IHS Technology data shows.

Huawei and Vivo outperformed HTC and ZTE with 16% and 10% market share respectively. The iPhone maker totaled 12% of the market share in Q2. Korean firm Samsung’s had dropped from fourth to fifth with 9% market.

Further, Chinese producers are tapping emerging markets for sales. For instance, Xiaomi is expanding into Brazil and India. Even, Huawei, which is primarily a telecommunications firm, is pushing in mobile markets abroad. Huawei sales number outside China surged 40% last year, says the report.

The smartphone market in China is expected to grow by around 3% on a compounded annual basis, believe Gartner. Gartner notes that the vendors in China need to lure in replacement buyers, and add to the “appeal of their premium offerings to attract upgrades” if they want to retain their market share.

Should Apple be worried?

Though local players may appear big threats for Apple  going forward, for now it is seeing a strong sales in China. In the running fiscal, around 50% of all Apple’s revenue and 61% of the increase in operating income was contributed from China.

However, as the stock market in China is in red, some analysts are concerned over the stability of the economy. This is making investors worried over Apple’s fate in China, and has forced CEO Tim Cook to address the concern. Cook said the firm will keep pushing stores in China, adding the share market woes are probably overstated. Cook is frequently visiting China to take a view of the Chinese economy and challenges facing the firm.

On Friday, Apple  shares closed down 0.53% at $124.50, and year to date, the stock is up almost 11%.

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Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.

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