Smartphone sales dropped by 3.2 percent year over year in the world’s second-largest economy, with iPhone sales plunging by a little more than 18 percent, as Huawei and Xiaomi gained market share.
“The country’s smartphone market saw a rebound in the first three quarters of the year, with positive year-over-year growth each quarter,” said Ethan Qi, associate director at Counterpoint. “However, momentum began to slow in the fourth quarter as consumers adopted cautious spending behavior.”
There have been the best and the worst times in China for the California-based tech giant. The best times were between 2010 and 2015, when the iPhone was an affordable luxury for Chinese consumers, thanks to a bubble of prosperity driven by the blowing of multiple asset bubbles, prominently real estate. In addition, the smartphone pioneer had little competition from local upstarts.
The worst time was in 2020, when China’s share of Apple’s global sales dropped to 15 percent, only to recover slightly before its overall sales declined with the rest of the iPhone market in the past quarter.
The sluggish performance of Apple sales in China over the past decade coincides with a slowdown in the economy led by a burst in multiple asset bubbles. This slowdown has made it harder for Chinese people to find well-paying jobs and discretionary money to afford luxury items.
Over the past 12 months, several luxury makers have reported a shortfall in China sales, including the Swiss-based maker of prestigious maisons such as Buccellati, Cartier, Delvaux, and Montblanc. It contrasts with other world regions where luxury goods company Richemont experienced a strong sales rebound.
To deal with this change in consumer behavior, Apple did something unthinkable for its leadership in the early days of the iPhone release. It began making inexpensive phones catered to the less-affluent consumers of emerging market economies such as China. For instance, the iPhone 13 Pro Max, which caters to the upper end of the market, sells for between $1,099 and $1,599, depending on the features, while the iPhone SE sells for less than half of that price, at $429.
However, these low-end phones cannot compete effectively with China’s local smartphone makers, as overall smartphone sales worsened at the end of 2024. For instance, Xiaomi climbed to the second spot in the fourth quarter of 2024, led by the popularity of its flagship Mi 15 series, launched in October.
“Apple’s sales in China dropped because its high prices no longer match what many Chinese customers are willing to pay,” Georgios Koimisis, economics and finance associate professor at Manhattan University, told The Epoch Times via email.
“Local brands like Vivo and Xiaomi offer more affordable options with similar features. Apple’s premium pricing works well in other markets, but in China, people are more price-sensitive and have plenty of high-quality alternatives.”
Adding to Apple’s woes in China is a government ban on iPhones in public offices, which could be another factor in the change in consumer behavior.
Koimisis believes Apple needs to pay more attention to localization.
“Another reason is that local brands, especially Huawei, have added features tailored to the Chinese market, like locally made software and hardware, while Apple hasn’t adapted as much,” he said.
“At the same time, competition has become more intense, with Chinese companies offering cutting-edge designs, like foldable phones, and making it harder for Apple to stand out.”
