American manufacturing giant, Apple, is scheduled to release its financial report for the second quarter of the fiscal year 2018 later today. Many analysts believe that Apple’s performance in the Chinese market will be sluggish. They said that due to the high price of the iPhone X, along with the rise of local smartphone manufacturers such as Huawei, Apple’s performance in the Chinese market this quarter is not magnificent. In the near future, Apple’s sales in the Chinese market will also decline.
Morgan Stanley analyst Katy Huberty said
“In the next few quarters, Apple’s performance in the Chinese market will remain sluggish.”
In addition, UBS analysts and analysts Nomura also used “weak” to describe the recent performance of Apple in the Chinese market. In fact, in the past three years, Apple’s share of the Chinese smartphone market has lost 1/3 or more. Data from UBS and Gartner shows that in 2015, Apple sold 71 million iPhones in the Chinese market. In the 2017 fiscal year, the figure fell to 49 million. UBS now predicts the value to fall to 47 million in fiscal year 2018. UBS also said that in 2015, Apple’s share of the Chinese smartphone market (first-tier and second-tier cities) was about 40%-50%, and today it has dropped to 20% to 30%. Morgan Stanley expects Apple’s current market share to be about 18%.
Analysts pointed out that Apple faces two major problems in the Chinese market. First of all, China has a population of 1.3 billion, but Apple’s iPhone is mainly targeted at China’s first-tier and second-tier cities, and the population of these cities is only 200 million to 300 million. Of these, only 150 to 220 million have the ability to purchase iPhones.
Second, the rise of local Chinese manufacturers is eroding Apple’s market share. Today, the market share of Huawei and other local Android vendors has reached 56%. In 2015, Apple’s market share was as high as 54%. The competition in the Chinese smartphone market is evident in the nosedive of Samsung’s market share from 20% five years ago to 2% presently. The likes of LG has pulled out of this market because it cannot keep up. Apple either develops a new strategy or its market share in China may continue to plunge.