Crowds gathered at Apple’s flagship store in downtown Beijing on Friday morning to buy the latest iPhones, defying concerns that the popularity could have a negative impact on U.S. companies’ sales in China.
Many people also prefer to order for home delivery. According to Dada statistics, as of 10 a.m. Beijing time on Friday, iPhone 15 sales on JD Dada One-Hour App were up 253% compared to last year’s iPhone 14 sales.
In the first 10 minutes With delivery starting at 8 a.m. Dada reported that 25,000 phones were activated for customers. Dada also pointed out that its cooperation with Apple in China has expanded significantly this year and that it has cooperated with 4,600 authorized Apple stores, and this number will increase by 500 in 2020.
Shipment of iPhone 15 starts on Friday after pre-orders begin. Ordered on September 15th. The launch comes at a time when Apple is facing economic and political challenges in its third largest market.
About two weeks before Apple’s event this month, Chinese smartphone giant Huawei carefully announced the Mate 60 Pro equipped with a 5G chip from SMIC in China in 2019. This development comes despite US sanctions that have greatly affected Huawei’s smartphone business since 2019.
However, there seems to be general dissatisfaction on the part of those waiting in line at Apple stores.
Consumer Perspective, Choosing Between Huawei and Apple
A man named Zhao expressed his intention to buy Huawei’s latest phone, but when he tried to buy it online, he found that the phone was sold out instantly. “Since I couldn’t buy the Mate 60, I decided to choose a new iPhone,” he said in Mandarin. “I don’t think there’s any real difference,” he added.
Due to the sensitivity of the matter, Zhao chose not to disclose his name. He was the tenth person in line at the Apple store in Sanlitun, Beijing, and said he arrived at 6:30 a.m. A man at the front of the line, who asked not to be named, said he arrived at 6.30am. 01:00
According to Zhao, Huawei’s phones will exhibit poor performance in about two to three years, while Apple’s technology will maintain its performance for a longer period of time, perhaps four to five years. “But I still plan on getting a new phone in two to three years, so this is important to me.”
“I don’t think he’s a fan of the name,” said. “After all, Huawei and Apple pay taxes to China, and Apple can contribute more,” he said. Zhao elaborated that he intended to switch from his current Huawei device to purchase the iPhone 15 Pro Max, which carries a list price of 9,999 yuan ($1,370).
At the beginning of September, The report said that government employees at the central level had received instructions not to bring iPhones to their workplaces or use them for professional purposes.
The extent and recentness of this directive were not definitively established. Bloomberg, drawing on sources with knowledge of the situation, similarly indicated that a workplace ban on iPhones could potentially expand to encompass other government-related entities.
The Ministry of Foreign Affairs in China asserted that the country had not issued any prohibitions on the acquisition or utilization of Apple iPhones.
The stock of Apple, which holds the position of the largest U.S. stock in terms of market capitalization, has witnessed a decrease of approximately 7% since the beginning of this month.
iPhone 15 Pre-Orders
Apple’s iPhone 15, pre-sales in China have demonstrated significant demand. Earlier this week, when checking online shopping platforms JD and Alibaba’s Tmall, it was evident that the higher-priced iPhone 15 Pro and Pro Max models were virtually sold out, with estimated delivery waiting times extending to approximately one month or even longer.
Will Wong, a senior researcher at IDC, a market research firm, commented on the current pre-order figures, stating, “Despite challenges such as the introduction of Huawei’s new products and the absence of the usual social media hype in China, it is clear that Apple’s sales resilience remains intact.”
He further anticipated, “We anticipate a year-over-year growth of 5% to 6% in Apple’s overall shipments in China for the second half of this year.” However, he cautioned that pre-order results may not necessarily reflect the final sales figures, and he pointed out that China was still contending with the impact of COVID-19 last year.
Residents in less urbanized areas, beyond major cities like Beijing, Shanghai, and Hangzhou, also displayed a strong desire to purchase the new iPhone. Dada reported that orders from these less developed cities increased sixfold compared to the previous year.
Apple’s Competition in the Chinese Market
Apple faces significant challenges in China, which accounts for approximately 20% of its total revenue. In the second quarter, the company’s sales in Greater China rose nearly 8% year over year to $15.76 billion. The performance compares with a 5.6% decline in the US, which recorded sales of $35.38 billion.
China’s success is significant due to its extensive trade in the region. China’s total retail consumer goods sales in August rose 4.6% year-on-year, following a 2.5% increase in July.
Also, the Chinese market is quite competitive. For example, Huawei plans to release new products soon. In addition, the popularity of foldable devices, which Apple has not yet entered, has also increased in China.
Counterpoint Research’s most important expectation for Apple in the Chinese market is that iPhone shipments will increase by 4% on an annual basis in the fourth quarter and decrease on an annual basis.
The company’s worst case scenario is a loss of 15% on an annual basis.
Tarun Pathak, head of research at Counterpoint Technology Market Research, said in an email on Wednesday: “We need to confirm the existence of original equipment, especially for the Pro series. Delivery time is two days before the Order is extended. If delivery issues persist and are not resolved in time , we will find ourselves facing a worse situation.”
Pathak found that Huawei’s decline was happening. The iPhone, whose price is over $600, attracts the attention of many customers, and it is estimated that those using the iPhone 11 and iPhone 12 models may be inclined to switch to the iPhone 15.
Counterpoint Research, iPhone 15 pre-sales on JD exceeded 3 million units.
However, as of Wednesday, Shanghai-based CINNO Research made a more pessimistic forecast, predicting that overall iPhone 15 sales would be 22% lower than iPhone 14 sales in China. Despite the decline, iPhone 15 sales are still around 10 million units, and China is expected to sell 45.5 million iPhones this year, down 2% from last year.
The decline is thought to be attributed to the “economic crisis” and the impact of Huawei’s much-hyped new Mate 60 Pro. In its heyday, Huawei was Apple’s closest rival in China’s high-end smartphone market. Huawei’s major effort to regain a foothold in China may put pressure on Apple.
Tarun Pathak from Counterpoint Research said: “There is no doubt that this year’s new Mate 60 series will give competition to the iPhone.”
The launch of Apple’s iPhone 15 in China led to huge demand and pre-sales, especially for the higher-end models. While some customers have had issues protecting their favorite devices, their satisfaction is evident.
However, analysts have a different view; It predicts that iPhone 15 sales will decrease by 22%, down from a 4% increase compared to the previous model. Huawei’s reemergence and marketing has been considered a blow to China’s smartphone industry.