Apple encountered a decline reflected by a reduction of over 20% in sales during the first six weeks of 2024 as reported by Counterpoint Research. This caused Apple stock to tumble slightly, causing a 5.8% decrease in Apple's shares this week (8.8% YTD decrease) but remains the world’s second most valuable company. Despite Apple's challenges, rivals like Huawei and HONOR experienced significant increase in sales, highlighting a shift of consumer patterns in the Chinese smartphone market.
iPhones are also being further discounted by Chinese retailers by over 10% attempting to entice buyers as demand wanes
Rise of Huawei and Vivo
The smartphone market in China changing significantly. Apple’s sales are diminishing, but its rivals are enjoying enhanced progression. With Vivo, Huawei and HONOR fuelling the competition.
o Vivo - 18% market share.
o Huawei – 16%
o HONOR -16%
o iPhone – 15.7%
According to Counterpoint Research, Huawei's success is attributed to the 64% year-over-year increase in smartphone unit shipments during the first six weeks of 2024.The shipments of HONOR handsets also saw a 2% increase
Factors contributing to decreasing sales.
Several factors have contributed to the change in rankings and market share, causing a decline in Apple's position in China:
- The overall Chinese smartphone market experiencing a setback, shrinking by 7% in the first six weeks of this year compared to the same period last year despite China’s per capita income levels rising.
- Apple's struggle to sell its new iPhone 15 in globally is something also reflected China. The extent of Apple's decline is seen by its fall in market share from 19% to 15.7%, signalling a huge loss in its dominance in the Chinese market.
- Politicisation: Huawei has been banned in the UK, USA. Australia and New Zealand based on it being used to collect data on behalf of the Chinese government. Similarly, the Chinese government has banned government officials and employees at SOE’s from using iPhones. One of the main reasons why Apple has not completely been banned in China may be Foxconn: Apples major supplier which is also located in China and attracts a great deal of FDI into China as well as employing over 200,000 people. Foxconn is accused of mistreatment of Chinese workers, yet jobs are very competitive as many Chinese people want to work there.
Final Thoughts
A similar trend is emerging in other industries such as the EV industry where Tesla sales have fallen to their yearly lowest in China, with the stock falling around 10% this week as Chinese EV firms begin to increase their market share. However, the previous Chinese “Tesla killer” NIO has failed to live up to its name and burnt over 3.5Bn dollars’ worth on its journey to a carbon free world. Many speculators believe the Chinese economy is beginning to slow down, this doesn’t mean that Chinese firms are necessarily slowing behind their American counterparts in terms of manufacturing power and innovation.
Tesla (-27.88 YTD) Rivian (-40% YTD)
Li Auto (+3.44% YTD) BYD Group (+34.1 YTD)