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iPhone sales are tanking in China because Apple’s charging too much

The decline in iPhone sales is accelerating as Apple Inc. sees its sales plunge in China, previously one of its biggest markets, thanks to its high-price strategy.

Apple reported a 19.9 percent decline in shipments in China in the fourth quarter, according to figures from IDC Inc. reported by the South China Morning Post. While Apple’s share of the Middle Kingdom’s smartphone dropped, sales of devices from rival Huawei Technologies Co. Ltd. jumped 23 percent.

The overall Chinese market, reflecting a similar trend in the West, declined 9.7 percent in the quarter, to 103 million units.

Apple Chief Executive Officer Tim Cook is blaming a slowing Chinese economy for the drop in sales, but others suggest that the company’s expensive pricing strategy may be to blame. Even the very base-level iPhone, the iPhone XS, sells for $999 in the U.S. but with import duties sells for the equivalent of $1,269 in China.

“The imbalance between the increasingly severe domestic market environment and Apple’s high product unit price has led to the declines of iPhone shipments in [the] Chinese market,” IDC told the Post.

In contrast, Huawei, China’s largest smartphone maker and occasionally the second most popular phone maker in the world, sometimes third, offers premium phones at a lower price point.

Surprisingly, Apple may be spooked enough by the drop in sales to lower its prices. Again blaming everyone but itself, Apple says it “will pursue iPhone price cuts in markets that has [sic] been affected by the stronger dollar.”

Although the U.S. dollar has strengthened against the Chinese Renminbi over the last 12 months, the difference hasn’t been huge. One RMB was worth 16 cents USD 12 months ago, and today it’s worth 15 cents.

Apple wasn’t alone is losing market share in China, however. Xiaomi Corp., often called the “Apple of China” saw its sales drop by 34.9 percent in China over the same period. The company blamed “a number of factors, including the adjustment of product line and inventory channels.”

Photo: Simon Wade/Wikipedia Commons

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