Despite the trade war, Chinese consumers still embrace iPhone

June 06, 2019 12:55
Apple’s iPhone XR is the top-selling model on the JD and Tmall platforms. Photo:  Bloomberg

It seems that ordinary Chinese consumers don't give a hoot about the raging Sino-US trade war.

Several online shopping platforms in mainland China, including JD and Tmall, are organizing their mid-year shopping festivals in the first half of June.

Smartphones continue to be the best-selling items for both platforms. And according to preliminary sales data released by JD and Tmall, Apple’s iPhone XR is the favorite model, beating local brands Huawei Technologies, Vivo, Oppo and Xiaomi.

The report demonstrates that Apple still enjoys a very high appeal in the Chinese market, in spite of Beijing's escalating trade conflict with Washington.

Based on JD's ranking of top-selling smartphones as of Wednesday afternoon, iPhone XR is No. 1, followed by Huawei's Honor 8X and Apple's iPhone XS Max. Xiaomi's Redmi K20 Pro ranks fourth.

Tmall's ranking also places iPhone XR on the top of the heap with 120,000 units sold. Huawei's P30 Pro ranks second with 59,000 units, followed by P30 and Redmi Note 7.

The strong market response for iPhone XR is mainly due to Apple's decision to cut the price of the model earlier this year. Currently, JD sets the price of iPhone XR 64GB at 4,999 yuan (US$723.16). The 128GB version is priced at 5,199 yuan, 1,800 yuan cheaper than its original price of 6,999 yuan.

The sales figures show that Apple is still one of the most popular brands for Chinese consumers, especially for models in the 5,000 yuan price range.

The iPhone XR competes directly with Samsung Electronics' S10e, Huawei P30 Pro, and OnePlus 7 Pro.

While the iPhone XR is not the best in terms of hardware specifications, its A12 bionic processor and upgradable iOS are key selling points.

As Apple chief executive Tim Cook said earlier this year, the price of an iPhone might have been too high for some markets due to the strong US dollar. And that being the case, a price adjustment should help Apple to win back market share from local competitors.

Indeed, the price cut did make the iPhone more affordable for Chinese customers, but it remains a premium product in the market.

For example, the iPhone XS Max is still priced at 7,000 yuan, making it much more expensive than local brands. But even so, the premium model still manages to be the third best-selling smartphone on the JD platform.

This proves that many Chinese customers still prefer prestige and quality, which they could find in a premium brand like Apple.

That's also the reason why local brands are coming up with their own premium models to tap this market segment.

The Trump administration's move to ban Huawei in the United States and its call on allies to make similar moves have triggered calls in China for a boycott of Apple and other US brands.

But no less than Huawei founder and CEO Ren Zhengfei has sought to discourage such a mindset among his compatriots. He urged people not to attack Apple operations in China, noting that he considers Apple a teacher that has inspired him a lot.

Apple's Cook also remains confident that his company's business in China would not be affected by the trade war. He told a recent interview that the Chinese have not targeted Apple and he did not expect that happening in the future.

Of course, the potential 25 percent tariff on iPhones could make the smartphone cost US$160 more, and that would surely hurt sales.

But Cook warned that the iPhone is made everywhere and assembled in China. The tariff would hurt all of those countries and China would be hurt the most. He hopes the new tariffs would not happen.

So far, Chinese consumers have not shown any bias against the iPhone, and the recent price cut, along with Apple's aggressive marketing campaign on Chinese online platforms, will help the US company in protecting and boosting its market share in China.

The next test for Apple would be the expected launch of the next iPhone flagship in September. What is foremost in the minds of Chinese consumers, it seems, is whether Apple would set a reasonable price for its latest models.

– Contact us at [email protected]


EJ Insight writer