Two of Apple’s major resellers in China have cut prices of some iPhone models by more than a fifth, as they try to battle the poor sales in the region that led to a rare earnings warning.
The steep discounts come a week after Apple shocked investors with a rare revenue warning, blaming its negative revenue forecast for the final three months of 2018 on lower demand in China.
Domestic analysts have said that Apple’s latest models, such as the iPhone X, have suffered the most because of their high prices relative to other high-end models by competitors such as Huawei.
“Apple’s days in China are getting harder and harder, and they’ve admitted their problem,” said James Yan, director at Counterpoint, a technology research firm. “Retailers are trying to make use of the shopping season before Chinese new year [in February] to win back any losses on iPhones.”
“Apple is under a lot of sales pressure in China, so local sales managers will try to use their connections with local retailers to sell as many as they can,” Mr Yan added.
Apple’s outlet on JD.com, one of China’s biggest ecommerce platforms, dropped the price of the basic iPhone 8 model to Rmb3,999 ($590), a 22 per cent drop from the price on Apple's China website. The iPhone 8 Plus fell to Rmb4,799, a fifth below Apple’s website price.
Prices on ecommerce platform Suning for the iPhone XR, last year’s new release, fell to Rmb5,399, from Apple’s website price of Rmb6,499.
Both Suning and JD appear on Apple’s list of authorised online resellers. Most of Apple’s iPhone unit sales are through such third-party channels and not from their own stores or official website, according to market research firm Canalys.
The price drop may have been initiated by the retailers themselves, said Yiting Guan, an analyst at Canalys. Although prices on Apple’s website are fixed by US headquarters, prices for local retailers are set in co-ordination with Apple in China, said Mr Yan.
“Apple has given retailers more flexibility in setting their prices since the launch of the high-priced iPhone X in 2017, which gave them the ability to better digest inventories,” said Ms Guan. “Before that, Apple had been relatively strict in its control of retailers’ prices.”
Apple had previously tried to push sales of new phones through an unusually highly promoted trade-in scheme that gave iPhone users credit towards a new phone. The amounts offered in person in Apple stores are even higher than those advertised online on Apple’s official website.
An owner of an iPhone 6 Plus would receive Rmb1,445 in credit towards buying a new iPhone, nearly twice the Rmb770 advertised on the official website, said an Apple employee in Beijing, who added that Apple was particularly pushing for owners of the iPhone 6 series to upgrade.
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