Apple’s performance in China’s smartphone market has shown signs of significant decline, raising questions about whether its success in the region has reached its peak.
Market Share Decline
In 2024, Apple experienced a 17% year-over-year decrease in iPhone shipments in China, marking its largest annual decline since 2016. This downturn resulted in Apple falling to third place in the market, behind local competitors Vivo and Huawei, who held 17% and 16% market shares, respectively .U.S. News Money+1Business Insider+1Huawei Central+7Financial Times+7U.S. News Money+7
The fourth quarter of 2024 was particularly challenging, with Apple shipping 13.1 million units, a 25% decrease from the previous year. Despite retaining the top spot during this peak season, the overall market share dipped to 17%, indicating intensified competition from domestic brands .Business Insider+5GSMArena+5Digitimes+5Business Insider+2Apple World Today+2MacRumors+2
Factors Contributing to the Decline
Several factors have contributed to Apple’s diminishing presence in China:
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Absence of AI Features: Apple’s iPhone 16 models launched in China lacked advanced AI capabilities, a significant drawback in a market where such features are increasingly valued. In contrast, Huawei’s Mate 70 series, equipped with AI functionalities, saw a 24% rise in shipments during the same period .The Times of India+6Reuters+6The Verge+6@EconomicTimes+3MacRumors+3Digitimes+3
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Government Subsidies Favoring Local Brands: Chinese government subsidies are primarily directed towards smartphones priced under 6,000 yuan ($821), which excludes many of Apple’s premium models. This pricing strategy has made it challenging for Apple to compete effectively against local brands offering more affordable options .Reuters+3Business Insider+3Business Insider+3Financial Times+1Business Insider+1
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Economic Factors: The broader economic slowdown in China has led to reduced consumer spending, affecting demand for high-end smartphones like the iPhone. Additionally, ongoing trade tensions between the U.S. and China have introduced uncertainties that may influence consumer purchasing decisions .AInvestWSJ
Strategic Responses
In an effort to regain market share, Apple has implemented several strategies:
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Discounts and Promotions: Ahead of China’s “618” shopping festival, Apple has offered significant discounts on iPhone 16 models through major e-commerce platforms like JD.com and Tmall. For instance, the iPhone 16 Pro with 128GB storage was priced at 5,380 yuan, down from the official price of 7,999 yuan .The Times of India+3Reuters+3Business Insider+3Business Insider+1Reuters+1
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Partnerships for AI Integration: Apple is collaborating with Chinese tech giants such as Alibaba and Baidu to integrate AI features into its devices, aiming to enhance their appeal in the Chinese market .The Verge
Outlook
While Apple’s brand remains strong globally, its position in China is under significant pressure. The company’s ability to adapt to local market dynamics, including incorporating AI technologies and aligning with government policies, will be crucial in determining whether its success in China has peaked or if it can reclaim its former prominence.