Recent reports have revealed that Apple Inc. has a real problem in China. The company’s premium handsets are having a hard time proving their worth against the country’s local products. The iPhone is in a battle to fend off the growing of threat of Chinese handset giants like Huawei. Rooted massively in the region, Huawei and others like it produce phones that easily match the specs of the latest iPhone. Beyond that, these products are rated to be just as efficient as their U.S. competitors. They come at just a fraction of the cost too.
The biggest challenge for Apple Inc. right now, though, is outdoing itself. Its flagship product — the iPhone — is not only threatened by looming rivals. The overwhelming success of the 6th generation iPhone makes it very unlikely for Apple to surpass its own performance anytime soon. Analysts have stated that the product’s sales growth is headed downhill for the foreseeable future.
This excludes the expected sales spike that should come from this year’s iPhone 7 though. Apple has shown decreases in handset sales for two consecutive quarters and sources like Bloomberg believe the trend will only be slown by upcoming releases. Expected next month, the latest edition of the iPhone is certain to usher in a short period of increased popularity.
Apple has a lot to lose in China
But Asia is a bigger problem. More than 25 percent of Apple Inc. product sales are derived from the continent. China in particular holds the bulk of that figure, and unless Tim Cook and co. can offer lowered prices, the iPhone will soon lose a lot of its stake in the Chinese premium handset market.
For Nie Miao, forking out $800 dollars for the latest iPhone 6S simply isn’t an option. The Beijing local is perfectly content with his Hauwei purchase. He claims to have acquired the product for significantly cheaper, and it offers many of the features he admires in the newest iPhone.
Opting for locally produced gadget is a growing trends among Chinese residents. This can be inferred from the rising popularity of Huawei and Xioami in the People’s Republic. Beyond their financial incentives, they are backed by an increasing 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 patriotism trend works against the growth of their sales.
Why pay more for an inferior Apple iPhone?
Although, the biggest and most obvious iPhone killer in Asia is cost. The entry model of the latest iPhone 6S, the 16GB version, goes for a whole 5,288 yuan. That’s $795.50 in USD. This, while the latest top end Huawei device — the P9 — sets Chinese buyers back a mere 3,688 yuan ($555). The P9 is a hit in China and a surrounding Asian regions. It outdoes the iPhone in a few performance specs, comes with 64GB standard and 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 Apple Inc. has a very hard time ahead of itself in China.
Julie Ask said American companies, even there very large ones, are now battling to hold China’s attention. She works for Forrester Research and depicts the many forces that have slanted the table favor local business.
“It seems there’s an endless stream of ways to give their own companies an advantage,” Ask explained.