New report highlights just how much Chinese consumers are ditching Apple

  • A new report highlights Apple’s shrinking smartphone market share in China.
  • Huawei, Xiaomi, and other Chinese manufacturers are growing, gobbling up Apple’s share of the world’s largest market.
  • Apple will need to release cheaper phones with more innovative features if it wants to earn its share back.

There have been plenty of reports over the past year about how Apple’s smartphone ambitions in China aren’t going so well. The Cupertino-based company faces stiff competition from Chinese manufacturers including Huawei and Xiaomi.

However, a new report from Reuters highlights just how much Chinese consumers are moving away from buying iPhones.

According to the report, Apple’s Chinese market share dropped from 81.2 percent to 54.6 percent over the past year in the $500 – $800 pricing category. Meanwhile, Huawei’s market share in that same category jumped from 8.8 percent to 26.6 percent, giving a clear indication of where Apple’s market share is going.

“Most Chinese smartphone buyers are not ready to shell out beyond $1,000 for a phone,” said Neil Shah, research director at Counterpoint, referring to the iPhone X line which starts at $1,000 and goes up from there. “This left a gap in the below-$800 segment which Chinese vendors grabbed with both hands.”

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It’s not just pricing, though (although even Apple admits that’s a part of it). According to members of the Chinese retail industry, iPhones don’t have the features Chinese consumers want, specifically when it comes to the camera. Even the highest-end iPhone only has two lenses on the rear, for example, and Chinese citizens are flocking to phones with three or more lenses, such as the Huawei P20 Pro and the Huawei Mate 20 Pro.

He Fan, CEO of Huishoubao, which buys and resells used phones, said, “Huawei’s cameras have become noticeably better than Apple’s in that they suit the tastes of Chinese consumers more.” Fan said that he has seen a shift in the retail market from Apple to Huawei over the past year.

With Apple’s iPhone sales dropping not just in China but worldwide, industry players are starting to feel the heat. A separate Reuters report highlights how Japan Display — one of the world’s top vendors of LCD displays — has factories running at half-capacity due to the low sales of LCD-powered iPhones, such as the iPhone XR.

In order to turn the tide, Apple will need to embrace the Chinese market’s two main focuses: aggressively-priced devices that offer new and innovative features, especially when related to the camera. Otherwise, Huawei and other Chinese manufacturers will eventually boot Apple out of the world’s largest smartphone market.

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