BRUISED APPLES

Apple’s glory days in China are fading fast

Obsession
China's Transition
Obsession
China's Transition

Apple took a beating in China last year.

A report from research firm IDC estimates that Apple’s smartphone shipments to China in 2016 shrunk significantly as competition increased from domestic Android phone makers. Analysts peg the hardware company’s shipments at 44.9 million for the whole year, marking a 23.9% decrease from 2015.

The company’s overall market share fell as a result. Last year, iPhones made up 9.6% of all smartphones shipments in China, down from 13.6% the year prior.

What’s gaining at Apple’s expense? Oppo and Vivo, two sister brands under the Dongguan-based electronics holding company BBK, have enjoyed skyrocketing sales thanks to ubiquitous advertisements and strong relationships with vendors in second- and third-tier Chinese cities. Huawei, which was the top smartphone vendor in 2015 according to IDC, continues to grow in China thanks to its retail inroads with telcos, which have purchased the company’s networking equipment for years. These three brands, along with Xiaomi—the popular but fast-fading Chinese smartphone maker—collectively made up 57% of all smartphone shipments last year in China, according to IDC.

Apple’s revenue from greater China, which includes Taiwan and Hong Kong, fell 11.4% last quarter from the year prior, marking its fourth consecutive year-over-year dip in the region. That ought to be particularly troubling, however, as that same quarter the company’s total revenue reached an all-time high. Revenue for the entire year, meanwhile, dropped 23.9% annually, from $60.94 billion in 2015 to $46.36 billion in 2016.

That means if the company is indeed breaking from the slump it endured globally throughout most of 2016, China might become a sore spot and not the bottomless gold mine it once was.

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