Apple's sales in China fell by 13% in the quarter ending in December to $20.8 billion, missing the expected $23.5 billion amid increased competition from local entities and consumer caution in spending due to economic slowdown. The weak sales in China came as a shock to investors, but customers and analysts noted the growing challenges the company faces in its third-largest market.
Shares of the company fell by about three percent in early trading on Friday following the disappointing sales in China. Toby Chu, an analyst at Canalys, stated, "The decline in Apple sales in China is not surprising given the strong competition it faces from local brands like Huawei and Xiaomi." Apple has not yet responded to requests for comments.
China, the largest smartphone market in the world, plays a significant role in Apple’s sales growth, as it has been the leading phone brand in the world's second-largest economy for years, a status that is changing now. Pressure on Apple has increased in the second half of the year following Huawei's return to the premium smartphone market with the Mate 60 series, backed by a domestically produced chip. Xiaomi's sales, operating on the Android system, have also surged in China after Apple had dominated the market for years. In October, Xiaomi launched its flagship Mi 14 phones with longer battery life and greater camera capabilities, selling a million units within a week of the phone's launch.
Chinese consumers have also complained about the lack of innovation in the iPhones released by Apple, particularly in aesthetic design compared to previous versions. Apple has lowered the prices of its phones to support sales in China. Alibaba Group and Pinduoduo have offered strong promotions to sell Apple's inventory of the iPhone 15 just a month after its launch in the country. In January, Apple offered rare discounts on iPhones.
