Apple’s incredible success in China appears to be slowing down. The iPhone/iPad products have long been revered as a status symbol in the country, however the California tech giant has revealed that sales in China have taken a noticeable drop, The Wall Street Journal reports.
[The] company said on Tuesday that its revenue from China fell 14% from a year earlier to $4.6 billion in the quarter ended June 29. The figure, which represents a 43% decline from the previous quarter, marked the first time revenue fell for the region, which includes Hong Kong, China and Taiwan, since the company began breaking out numbers for Greater China in the quarter ended Dec. 29, 2012.
The Wall Street Journal points out that the iPhone 5 had a comparatively earlier launch than the iPhone 4s, which in turn has slowed down sales for the latest quarter. Increased competition is also hurting Apple as Tech in Asia reports that Android devices are controlling 65 percent of the market while Apple controls the other 35. Bloomberg also reports that local companies Huawei and Lenovo have been undercutting the competition with ultra-low priced smart phones.
A slowdown might have been expected as 2013 has not been the most positive year for Apple’s image in China. Earlier this year the tech giant faced harsh criticism from Chinese media, which deemed Apple’s behaviour in the country as “incomparably arrogant” while boldly claiming that the company’s actions were a form of “Western exploitation.” The allegations came over supposed poor customer service and treatment towards Chinese customers, which Apple boss Tim Cook eventually apologised for, vowing greater transparency between the two parties.
More recently a Beijing man and a Xinjiang woman were shocked while charging their iPhones. The Xinjiang woman sadly died from the shock while the man is reported to have suffered from brain damage due to the incident.
SCMP has also revealed this week that CCP mouthpiece the People’s Daily is reporting that Apple is refusing to reveal how much the company has actually given of the 50 million yuan pledged to Sichuan earthquake victims. The company avoided answering the exact amount given towards the cause, but did insist that they had helped “tens of thousands of families with hygiene kits and counselling for children.” This dizzying PR nightmare will be hard, if not impossible for Apple to recover from.
Earlier this year Apple was in plans to add 11 more stores in the greater China area as well as making a cheaper iPhone 4 model in order to attract first time smart phone buyers. This will hope fully restore Apple’s confidence in the region as CEO Tim Cook continues to feel that “China is a huge opportunity for Apple.”
In response to the numerous reports of Apple’s poor performance in China, it appears the company’s PR machine has kicked into overdrive, claiming that the dismal numbers are due to Hong Kong, not mainland China.
On a conference call with journalists, C.E.O Tim Cook claimed
The datasheet that obviously focuses on revenue doesn’t really tell the complete story here. If you look at the sell-through [the actual number of devices sold to customers]…our sell-through in [Greater] China was only down 4 per cent from the year ago quarter when you normalised for channel inventory.
And then subsequently blamed Hong Kong in an attempt to alleviate the blow back from the reports of the his company’s poor performance.
Hong Kong was actually down more significantly than that. Mainland China was actually up. It was up 5 per cent year on year. But that is a lower growth rate than we have been seeing.
I attribute that to many things, including the economy there…which clearly doesn’t help us. Hong Kong is an international shopping haven for not only tourists but also for some resellers. We saw more dramatic downturns there. It’s not totally clear exactly why that occurred but it was down on a sell-through basis by about 20 per cent. So that weighed Greater China down.
[Image credit: @SimonQ錫濛譙]