Shipments of Apple’s iPhones plummeted around 20 percent in China during the fourth quarter of last year, as competitor Huawei Technologies was able to steal share.
According to a report in Bloomberg citing IDC, the smartphone market in China contracted 9.7 percent in the last three months of 2018, but the dip at Apple was more pronounced. The price tag of Apple’s latest iPhones, combined with an economic slowdown and extending smartphone replacement cycles, were named by IDC as the culprits behind the dive in sales at the Cupertino, California handset maker.
“The domestic smartphone market environment in 2019 doesn’t look very optimistic,” IDC Senior Analyst Wang Xi said in the report. “5G phones will still only comprise a very small portion of the overall market. We’ve a long way to go before they become mainstream.”
Bloomberg reported that electronics retailers in China have reduced the price of iPhones by 20 percent, something that underscores just how bad it has gotten for Apple in China. Local smartphone maker Xiaomi did worse than Apple in the fourth quarter, with sales declining 35 percent, noted the report.
Nicole Peng, a senior director at Canalys, said Apple’s woes lie in the fact that it hasn’t moved quickly to address the changes taking place in the Chinese smartphone market. Its reaction to the slowdown in the Chinese economy is also weighing on Apple’s prospects, she said in the report.
At the same time that iPhones are losing their luster with Chinese consumers, Huawei is gaining share. The Chinese handset maker has been able to copy Apple’s enhancements to its iPhones and offer them to consumers at a cheaper rate, which has been winning business at the expense of rivals. During the fourth quarter, its shipments increased 23.3 percent, making Huawei the No. 1 smartphone maker in China. Huawei’s success in China comes against a backdrop of international turmoil, with its chief financial officer recently arrested over claims of bank fraud and the U.S. preventing the company from selling its networking equipment in the country.