On August 22 news, the Financial Times released an article saying that two years ago, China was still Apple's most promising market, but now it has become its most troublesome problem. Affected by factors such as declining demand and the impact of WeChat, the company’s share in the world’s largest smartphone market continues to decline.
The following is the main content of the article:
During his visit to China last year, Apple CEO Tim Cook pulled out his cell phone to use Apple Pay while staying at Starbucks. However, this mobile payment service cannot be used - his account is not connected to China's mainstream payment system, so his assistant had to step up and buy coffee for him.
Apple often has such problems in the Chinese market. In the country, it is now also in a dilemma that it is difficult to attract consumers from cheap devices equipped with widely used local applications such as WeChat.
“The Chinese market is a big problem and it is not easy to solve,†said Geoff Blaber, CCS Insight analyst. “Apple’s differentiation strategy has always been to drive its high-end hardware with content and services. Differentiation strategies are difficult to implement in China."
Figure: Apple's revenue decline in Greater China
From the quarterly earnings report released earlier this month, Apple’s revenue in Greater China decreased by 10% year-on-year, and fell for the sixth consecutive quarter. China was Apple's most promising market two years ago. It surpassed the United States as its largest market, but it has now become the company's most troublesome problem.
Reduced product demand
According to Apple, its main difficulty in the market is in Hong Kong, a popular tourist city. However, in Mainland China, its sales in the most recent quarter have shown a recovery. After adjusting for exchange rate fluctuations, it has increased by 6% year-on-year.
“We feel good about the Chinese market.†Apple Finance Director Luca Maestri told the Financial Times earlier this month, “We believe that sales in the Chinese market will be as of September. The quarter continues to recover."
However, analysts pointed out that a large part of Apple’s sales in Hong Kong come from tourists in mainland China. The slowdown in sales in the region means that the iPhone’s demand in the world’s largest smartphone market has declined.
They added that the iPhone's features are no longer sufficient to support a premium of 150 US dollars compared to the same mobile phone in China. Moreover, local competitors also adopt more aggressive distribution strategies.
"In the past 6 to 8 quarters, we have seen Apple's decline in sales in China."
The impact of WeChat
Figure: Apple's smart phone market share shrunk
The company's problems are partly due to strong local alternatives. The popularity of WeChat across China can be said to be a tiny alternative to Apple’s proprietary iOS operating system. Today, it can also allow users to install “small programs†within the application.
This year marks the 10th anniversary of the birth of the iPhone, and WeChat chose to launch a small program earlier this year and become the only large-scale alternative application provider for the Apple iPhone's App Store.
The construction of WeChat allows many everyday tasks to be completed within the app, making it easier for Chinese consumers to access the services they want to use, whether they are using an iPhone or an Android smartphone.
That means that for the user, the iPhone's unique iOS ecosystem of applications, content, and devices will be less valuable.
Out of touch with the market
The best example of this occurred last week: All Android phones can be used in Beijing's public transportation system. A single swipe before the payment terminal can complete the payment. Apple's mobile phone is excluded from the support. This is because Apple retains the contactless payment of the Apple Pay application and does not integrate it with other popular systems, such as WeChat payment and Alipay.
Chart: China Mobile Payment Market Share Distribution
As a result, Apple Pay is not very useful in China, and its share of the country’s entire mobile payment market (estimated to be US$8.8 trillion in 2016) is less than 1%.
Cooke did not use Apple Pay at Starbucks because his mobile phone was not connected to China UnionPay.
For most companies, this problem is understandable and not a big problem. But for Apple, which has always been proud of a smooth and seamless experience, the incident is obviously not a small thing. It is a microcosm of the disconnect between Apple's ecosystem and the Chinese market.
Therefore, it is not difficult for Apple to understand the downturn in this market. According to data from market research firm Canalys, in the second quarter, Apple’s share in the Chinese smartphone market was 8%, which was lower than the 12% in the fourth quarter of 2014, lagging behind domestic manufacturers such as Huawei, OPPO, vivo, and Xiaomi. However, Apple's share of revenue in the country's smart phone market is much larger - about 20% - indicating that its mobile phone is much more expensive than its competitors.
Gartner Research Director CK Lu said that at present, Huawei and Apple are "very close" in global smartphone shipments. He said that Apple's ability to maintain its leading edge in the future depends largely on the upcoming new-generation iPhone. The new iPhone will test the sustainability of Apple's demand for high-end mobile phones. (Lebang)
Trailer Type Diesel Generator,Trailer Diesel Generator,Trailer Diesel Genset,Mobile Diesel Geneator
Jiangsu Vantek Power Machinery Co., Ltd , https://www.vantekpower.com