A few years back no one would have pictured that Apple would ever face a problem in China. It was, back then holding an unrivaled position as the market leader in the smartphone segment in China. With very less competition from the local rivals, Apple was growing steadily in the Chinese market.
China still remains a major contributor of Apple’s revenue. 12% of the total global revenue of Apple is from the Greater China region alone. But recently there was a decline in the year over year revenue of Apple in China. Also Apple, in the recent few years slowly fell in position and came to the number 5 spot in the top players in the smartphone market in China. In spite of this and the fact that Apple has now begun setting its sights on India, Apple is not going to lose focus on the Chinese market. In fact, China would remain one a paramount market for Apple products and services.
China is still the manufacturing hub:
As most of the essential components for the iPhone manufacturing are still made on a large scale in China, China still remains a major manufacturing hub for Apple products. And in the recent years, Apple factories and manufacturing units in China have become larger than the units in the US. The easier availability of engineers as well as skilled laborers still makes China a crucial area for the manufacture of iPhones.
How Apple accomplishes in the Chinese market would still impact its revenue:
The second-largest market for Apple after the US is China. For almost 4 consecutive years, 13 sequential quarters Apple saw a steady and promising growth in China. The revenue kept growing unstoppably. But for the first time after 13 quarters, in 2016, the revenue dropped in China. But still, in relation to the other markets globally, China still contributes a large chunk to Apple’s revenue.
Increasing number of iOS users:
The fact that in the Chinese smartphone market, though there have been new entrants taking up the lead positions, there is also a good number of users shifting from Android to iOS. Not just with Android, even the users who switch from other operating systems, those who wish for a change often choose iPhones. This means that even if the market is not rising as it did earlier, Apple still has a firm hold among the Chinese smartphone users. Another major fact to support this is that many of the smartphone users in China when they buy their first smartphone it is mostly an iPhone. First-time buyers are great target groups to focus on and the point that this segment still chooses Apple in China is good news! This is why the monetization aspects of iPhones still remain positive in China.
Few more R&D centers of Apple would be coming to China:
In Suzhou and Shanghai, there are 2 new R&D centers of Apple planned to go live. With Apple’s market share in China suddenly getting a little fragile, Apple has now decided to focus on the younger generation. The R&D centers would closely work with the popular educational centers in these regions. A reported $508 million is to be invested for the research and development in China. This would also help Apple to evaluate the current scenario and tackle the situation of the cheaper alternative smartphones taking place of iPhones in the Chinese market.
The sluggish smartphone market still has a comfortable spot for iPhones:
In China, there have been other economic factors affecting the smartphone segment on the whole. The fluctuations in the Hong Kong dollar rates have also been cited as reasons for the fluctuation in the economy. The smartphone segment here, though there has been repositioning in the market positions of the various manufacturers, has been slow moving in the recent years. But even in this situation, Apple’s revenue fall has not been one that has to be worried about. Last year, there was a time when there was less than 1% rise in the sales of smartphones in China. But still, this didn’t push down Apple much in the market.
Mac products are always known for their higher price tag. There are a handful of countries over the globe that showed a rise in the sales of Mac products- China is one of these markets. And even the latest MacBook pricing has been such that the younger generation who normally go for Windows laptops would also consider MacBook as one of the top choices.