14 DAY TRIAL // China has proved to be one particularly challenging market for Apple, and in addition to struggling to deal with an iPhone injunction locally, Cupertino is also making big efforts to increase demand for new iPhones.
But according to Bank of America Merrill Lynch analysts, Apple has more to be concerned about, as the poor iPhone sales could also be the result of a different factor.
Apple’s CEO Tim Cook pointed to the growing trade tension between the United States and China as one of the reasons for weaker than anticipated iPhone sales in the Chinese market, but the analysts believe there’s something more.
Chinese buyers may be part of an informal boycott of US products, which steers them away from Apple products, and intends convinces more customers to try out products from Samsung, Huawei, or other local brands.
Further decline?
Quoted by Bloomberg, the analysts explain that the trade war is also weakening the yuan, which in turn makes products sold by American companies less competitive. The iPhone itself is hit hard by this, and Apple is rapidly declining in terms of phone sales on the local market.
Apple dropped to the third place when it comes to the number of phones sold in China, and given the rapid rise of Xiaomi and the drop Cupertino is struggling to deal with these days, there’s a chance it could fall one more position during the course of 2019.
According to people familiar with the matter, Apple has already reduced production of 2018 iPhones at least twice in order to align the inventory with the worldwide demand. The company isn’t yet offering any discounts, but instead increased the trade-in value of the existing iPhones in an attempt to convince more existing customers to upgrade to the new generation.
For now, however, analysts expect a continued decline in the current quarter, especially as the high prices of the 2018 iPhone generation remain a decisive factor towards a new purchase.