Why Apple’s Strong Market Share in China Is Bad News for Local Rivals
When a new model is launched, it is not uncommon to see long lines of eager customers queueing outside Apple stores. However, the recent launch of the latest iPhones and watches in China has caused more of a stir than usual, and it spells trouble for Apple’s local competitors.
On the surface, Apple’s rivals in China seem to be in a strong position. The company is facing challenges in the country, with the launch of the iPhone 15 coinciding with the release of two 5G-powered handsets from Huawei, its main competitor. Additionally, the Chinese government is expanding its ban on iPhone use in certain agencies and state-owned enterprises, and it has long recommended the use of locally made devices by employees.
The stakes are high for Apple, as China accounts for about a fifth of its sales. Tensions with the US over technology and the history of Chinese consumers showing patriotic support for domestic brands add to the risks. However, despite these challenges, Apple’s market share in China has been surprisingly strong, accounting for about a fifth of the local market.
This puts Apple on par with Oppo and Vivo, the two most popular smartphone brands in terms of market share, and it is even ahead of local electronics group Xiaomi by a third. What’s more, Apple recorded the biggest sales growth among all brands in China in the second quarter, even without the release of new models and despite the higher price tags compared to local counterparts.
Meanwhile, Xiaomi’s shares trade at a discount to global peers, despite a 24 percent boost in the past year. The company has launched a premium line to differentiate itself from other local competitors engaged in price wars. However, its margins remain thin, at just over 2 percent last year.
Additionally, no local brand in China has yet produced a premium model that can seriously compete in the global high-end phone market. Furthermore, iPhones are seen as a status symbol among Chinese youth. As long as this perception remains unchanged, it is unlikely that government restrictions will shake Apple’s grip on the Chinese market.
In conclusion, despite the challenges Apple faces in China, such as competition from Huawei, government restrictions, and patriotic consumer sentiment, the company’s market share remains unexpectedly strong. With its brand image and reputation among Chinese consumers, Apple’s dominance in China’s smartphone market is likely to continue unless local competitors can produce a serious contender in the global high-end phone market.