After six years of decreasing sales, Apple reconquered it’s first place in the Chinese smartphone market. But is the company’s presence here to stay?
With over 900 million users, China has the biggest smartphone market in the world, quickly followed by India and the United States. While only experiencing a serious boom around 2012, the country sees over 300 million units being shipped yearly since 2020.
Mobile technologies and services generated from it amounted for 5.4% of China’s $14.28 trillion GDP. Apple’s comeback on the Chinese front scene is surprising but not unexplainable. However, questions arise on how long this lead will last, especially with recent evolutions of the smartphone market itself.
Apple’s History in China
Twenty years ago, Tim Cook’s Apple entered China as one of the first main smartphone brands in the country. But its step inside the largest market in the world was not just for sales: Apple now assembles and produces quasi all of their products in places like Foxconn, Pegatron or Wistron, in the country’s industrial regions.
A new data centre recently opened in Guiyang in the southwestern mountainous region. For a long time, Apple has remained number one in the smartphone market, conceding important demands from the Chinese government such as the removal of “Designed by Apple in California” at the back of iphones.
The company even censored parts of its Apple Store in order to comply with Chinese norms and regulations.
The Decline and Resurgence of Apple Sales in China
However, these efforts have come out of breath in the last 6 years, since Apple has lost its place. Up to 2020 and ever since 2015, Apple has remained third, if not forth in the market, outranked by the Chinese brands Vivo, OPPO and HONOR.
The company fell at its lowest in Q3 2020, with 8% of the market shares, compared to respectively 17%, 15% and 14% for the other three brands. 2021 Q4 was the first success after half a decade of decline for the company, with a total of 23% of the highly competitive market – the other giants were nevertheless not too find behind.
This explosive increase in market share can be explained by “a mix of its pricing strategy and gain from Huawei’s premium base” according to Counterpoint research analyst Mengmeng Zhang.
Indeed, Apple’s important competitor Huawei’s growth was significantly impacted by the US-China trade war which is still ongoing since 2018.
Accused of containing ‘backdoor’ application which would allow Chinese governmental infiltration in phones, Huawei development was drastically slowed down, through a Google ban from accessing certain Android updates, as well as the use of microchips.
This led Huawei sales to decline of 73% year-on-year, with their revenue falling by nearly a third from previous years. The dramatic decrease of Huawei presence is an enormous factor to Apple resurgence.
The Future of the Chinese Smartphone Market
While Apple has been doing exceptionally well in the last months, the same cannot exactly be said about the smartphone market itself. In the last couple of years, smartphones sales in the country have dropped by 9% year-on-year.
This is a testament to China’s average smartphone replacement cycle becoming longer and longer – inscribed in a general context of consumer spending decrease.
Even though a general effort by smartphone companies is noted on pricing, customers seem to be more reluctant to renew their smartphone.
Explained by China’s (very limited) slowing economy as well as the crisis caused by the COVID-19 pandemic, the general trend does not seem to forecast such a glowing future for the smartphone market as it has in the past years.
This, of course, does not mean that Apple’s success was a short-termed victory for the US giant. The company’s first place is significant, especially with the latest iphone 13 release, old of a few months.
But notable Chinese launches may destabilise this in the future, with the newest arrival HONOR 60 or Magic V for example.
While most have conflicting opinions on Apple’s pole position, the ongoing fight for better, cheaper and sleeker technology continues.