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iPhone price cuts might have saved Apple from an even bigger China crisis

Hasan Chowdhury   

iPhone price cuts might have saved Apple from an even bigger China crisis
  • Tim Cook might have helped Apple avert a wider crisis in China.
  • iPhone sales rose 12% in China in March after months of decline.

It looks like Tim Cook can breathe a small sigh of relief about Apple's prospects in China — for now.

After months of freefallling iPhone sales there, signs are emerging of a rebound in what is arguably Apple's most important international market.

Official government data, first reported by Bloomberg, suggests iPhone sales rose 12% in China in March, with overall shipments of non-Chinese smartphones jumping to 3.75 million units.

Though the Apple CEO made a brief remark about the company's iPhone unit growing "on a reported basis" in China during an earnings call this month, it's clear that the reversal hasn't come easily.

Apple has been pushed to take aggressive measures, such as rare price cuts, to rescue iPhone sales in the face of increasingly fierce competition in China.

Local competitor Huawei, for instance, has released two 5G smartphones since August 2023 — the Mate 60 Pro and Pura 70 Ultra — that have managed to gain significant traction with domestic consumers at Apple's expense.

Figures from Counterpoint Research published earlier this year highlighted just how much damage was being dealt to Apple in China, with iPhone sales there sliding 24% year-on-year in the first six weeks of 2024 alone.

Although China's overall smartphone market declined by 7% in that period, Huawei's smartphone sales jumped 64% over the same six weeks. According to Counterpoint estimates, iPhone sales fell 19% in the first three months of this year, leaving Apple trailing Chinese rivals such as Vivo and Honor.

Given Apple generated net sales of almost $72.6 billion from the Greater China region in its last financial year, it's clear that the market is one that the company thinks it must protect.

It's why in the face of waning interest in iPhones — compounded by Beijing banning iPhones for government employees — Apple and its resellers introduced steep discounts on its top models earlier this year.

During the Lunar New Year in January, Apple introduced promotions that cut iPhone 15 prices by up to $70. By the end of February, some resellers were slashing prices on the iPhone 15 by as much as $180, according to one report.

It's worth noting just how unusual this is, with Apple almost never offering discounts on its top models just a few months after their release. But without them, it's possible that Apple's China crisis could have been even worse.

In its second quarter earnings report last week, Apple said net sales in the Greater China region came in at just under $16.4 billion, down from the $17.8 billion the previous year.

For Cook, who made a trip to China as recently as March to open a new Apple store in Shanghai, the bounceback will be welcomed. Sustaining it will be his next big test.