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People browse the iPhone 15 at a flagship store in Beijing on September 22, 2023.
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CNN
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Apple is slashing prices in its largest overseas market, spurring a recovery in iPhone sales in China, in a bid to lure back bargain-hungry shoppers amid a sluggish economy.
Shipments of foreign-branded phones in China rose 52% in April to 3.489 million units, most of them iPhones, according to CNN calculations based on data released Tuesday by the China Academy of Information and Communications Technology. (CAICT). The academy is a research institute under the regulatory body, the Ministry of Industry and Information Technology.
This increase represents a significant acceleration from the 12% growth recorded. Previous data from CAICT showed that domestic smartphone sales in March were higher than those of foreign brands.
The Global Times, a state-run tabloid known for its patriotic views and promotion of Chinese companies, He described the recovery as “impressive.”
Apple (AAPL) is off to a tough start to 2024 in China.
Apple lost its top spot in the domestic smartphone market after first-quarter shipments fell 19%, according to a report from Counterpoint Research, hurt by increased competition from domestic brands such as Huawei, whose sales rose nearly 70%. During the same period, the successful launch of the Mate 60 series helped drive sales growth of 30% year-over-year.
The economic downturn, including worsening employment and income prospects, has led Chinese consumers to save money They ask for discounts on everything from food to cars.
But iPhone sales began to recover in March after Apple and its retail partners slashed prices, according to CAICT data.
Price cuts have intensified recently: Last week, Apple said it would slash the prices of some of its smartphones by up to 23% through May 28 on Tmall, the Amazon-like site owned by Alibaba (BABA). Similar cuts were made on JD.com, another major e-commerce site.
The unprecedented discount was part of a campaign. The campaign was launched during China’s 618 shopping festival, the second-biggest online shopping extravaganza of the year, which usually takes place from late May to mid-June.
After the price cut, the iPhone 15 is now in the same price range as smartphones made by Xiaomi and Huawei.
Jefferies analysts said earlier this week that deep price cuts were the “only way” for Apple to protect its market share in China.
“We believe Apple is putting significant pricing pressure on domestic brands, especially on Huawei’s flagship models,” they said.
This will allow Apple to regain lost market share, but it will also put further pressure on competitors to lower prices.
“Price discounts on high-end models are likely to continue into the third quarter of 2024, putting pressure on margins for all smartphone[makers],” they added.
