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Apple fights back locally with price cut

Apple is likely to allow more leeway for prices and sales channels for distributors.
Imaginechina

A customer tests a new iPhone XS Max in the Apple Store in Moscow, Russia, on September 28, 2018. 

Apple Inc, which this week took the rare step of cutting its sales forecast in the face of the rise of China’s smartphone makers, has told its Chinese distributors to slash iPhone prices, local media reported Thursday.

Wholesale prices have been cut in China for most iPhones, including the iPhone XS, iPhone XR and iPhone X, by up to 450 yuan (US$65.20), the reports said, citing unidentified distributors in Shenzhen.

Apple has not commented and on its official network, including directly operated retail stores and Apple China online, prices remain unchanged.

But it is offering big discounts for iPhone trade-ins. Its aggressive pricing policy in December saw the new iPhone XS selling from 6,599 yuan with a trade-in — more than 2,000 yuan lower than the official price of 8,699.

The prices of the iPhone XR and iPhone XS on Chinese online shopping platforms, such as JD.com, Pinduoduo and Taobao.com, are already about US$100 or more cheaper than Apple’s prices.

Dealers to get more leeway

A check by Shanghai Daily yesterday found one seller on Taobao offering the iPhone XR 128 GB (gigabyte) at 5,800 yuan yesterday, 300 yuan lower than Wednesday and compared with the official price of 6,999 yuan. The iPhone XS and iPhone XS Max were also 60-100 yuan cheaper Thursday.

“Apple is likely to allow more leeway for prices and sales channels for distributors,” said Jia Mo, Shanghai-based analyst of research firm Canalys.

Last week, Apple cut its revenue forecast for the last quarter of 2018, blaming lower-than-expected iPhone sales in emerging markets, especially China where local companies — such as Huawei, which recently passed Apple to become the world’s second-largest smartphone company — are booming.

“We knew the quarter would be impacted by both macroeconomic and Apple-specific factors,” CEO Tim Cook said in an open letter to investors.

In Apple’s first fiscal quarter, ended December 29, the company’s revenue is now forecast at US$84 billion, lower than original estimates of between US$89 and US$93 billion.

As Chinese firms gain a bigger global market share, Huawei expects to see a 21 percent jump in revenue for 2018 to US$109 billion, marking its fastest pace of growth in two years.

It’s all a sharp contrast to the past, when Chinese consumers waited overnight in long queues to buy the newly-released iPhone 5 and iPhone 6 or were willing to pay up to an extra 1,000 yuan for privately imported phones on Taobao.

In the third calendar quarter of 2018, China’s smartphone sales fell 15.2 percent year on year.

Apple accounted for 8 percent of sales in that quarter — but its high prices made it one of the leaders by value.

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