Daily Management Review

Apple is losing China


According to IDC, decline in sales of smartphones in China in the last quarter of 2018 was 9.7%, but for Apple this figure was twice as high - almost 20%. Only Xiaomi feels worse among the market leaders. Thus, there is a tendency in the market when, in the absence of serious differences in the technical characteristics of smartphones, local brands win competition for customers.

The level of smartphones sales has slowed down for the fifth quarter in a row: the global market has shrunk by 4.9% in the last three months of 2018 alone. The main culprit is China, where sales fell by 9.7% to 103 million units sold, the IDC report said. At the same time, the Chinese market highlights the new trend, when major international manufacturers lose competition with local brands.

In conditions when manufacturers do not offer their customers anything fundamentally new, and the economic situation in the country is worsening, Chinese consumers are not ready to spend money to buy a new gadget every year, and so they prefer a less expensive option when choosing a smartphone.
Therefore, neither Samsung nor Apple is among the leaders in sales in China. Huawei occupies more than two thirds of the market (29% of the market and + 23.3% of sales), and is focused primarily on the domestic market.

In the fourth quarter of 2018, Apple's sales in China fell by 19.9%. Now the American company ranks only fourth among manufacturers with a market share of 11.5%. Only Xiaomi had worse performance this quarter, sales of which fell by almost 35%. But according to the results of the whole year, Xiaomi achieved positive results - a sales growth of 32.2% and more than 100 million devices sold.

Apple's weak performance in China was exacerbated by low demand in the US. In both markets, the company's smartphones showed the worst annual sales dynamics in the entire history of the iPhone.

At the end of the fourth quarter of last year, Apple reported a drop in both revenue and net profit, and this is a unique case for the last decade, that is, the iPhone era. Global sales of the company's smartphones decreased by 11.5%, which led to a drop in revenues from them by 15%. The company's revenue was corrected by the profitability of services, which for the first time in history reached $ 10.9 billion. Nevertheless, the company failed to get a plus - $ 84.3 billion in revenues from the entire business, which is 5% less compared to a year earlier, and net profit amounted to $ 19.97 billion against $ 20.06 billion for the same reporting period last fiscal year.

source: bloomberg.com