Apple (NASDAQ:AAPL) is taking unprecedented steps to counter growing competitive pressures in China by offering rare discounts on its iPhones. The U.S. tech giant has slashed retail prices by up to 500 yuan ($70), a 5% reduction, as revealed on its Chinese website on Monday. This time-limited promotion, labeled a Lunar New Year event, is scheduled from January 18 through January 21, leading up to the holiday in mid-February.
Sales of Apple’s latest iPhone 15 series have faced challenges in the world’s largest smartphone market, with lackluster performance compared to previous models. Chinese competitors like Huawei Technologies (HWT.UL) and Xiaomi (1810.HK) are presenting compelling alternatives. Additionally, reports suggest that some companies and government entities are curbing the use of Apple devices among their staff, echoing U.S. government restrictions on Chinese apps for security reasons.
Jefferies analysts noted a 30% decline in Chinese iPhone sales in the first week of 2024 compared to the same period last year, following a 3% decrease for the entirety of 2023. Analysts anticipate a more challenging competitive landscape in the coming year.
This move by Apple marks a departure from its longstanding strategy of not reducing prices on its latest iPhones. The price cuts come after the company surprised the market by not increasing prices for the iPhone 15 series during its September launch.
Online shopping platforms, including Pinduoduo, have already been slashing prices for the iPhone 15 and iPhone 15 Pro by up to 16% since the beginning of the year. Nicole Peng, senior vice president of market research firm Canalys, noted that these discounts were expected, given Apple’s global sales pressures and the reluctance of Apple fans to upgrade.
Peng highlighted the resurgence of Huawei, attributing it to patriotic sentiments among Chinese consumers. Canalys projects Apple’s global sales to remain flat this year while experiencing a slight decline in China. Despite requests for comment, Apple has not responded to inquiries regarding its pricing strategy shift.
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