People shop at an Apple store in Shanghai on October 23. The new iPhone 12 was recently launched. Photo: cnsphoto

Apple is reportedly restricting dealers from reselling its latest products, including the iPhone 12, to third party e-commerce platforms such as Pinduoduo, in an effort to keep its prices elevated in the Chinese market, according to multiple media reports. 

A statement allegedly issued by Apple has been circulating online, which shows that Apple's dealers are forbidden to supply online platforms including Pinduoduo, Taobao and Tmall, with penalties ranging up to 400,000 yuan ($59,820) per device. Dealers also have to promise that when supplying to unauthorized stores, devices must be activated when sold to the customer, in case it is resold to online platforms. 

Neither Pinduoduo nor Apple had responded to requests for comment as of press time. 

Apple's pricing power has been severely eroded by e-commerce sites in recent years. Pinduoduo, the e-commerce site famous for its large discounts and subsidy-based marketing models, has been offering Apple products at prices far below the official prices since late 2018. Last year, the iPhone 11 was available on Pinduoduo on the same day it was released in China, but up to 900 yuan cheaper than its official price. 

For the new iPhone 12, Chinese customers' excitement has remained elevated since its release earlier this month, and so has the price. 

Pinduoduo took Apple's iPhone 12 out of its sales campaign on Friday, having previously promised to offer a substantial discount on the smartphone upon its release. 

On other sites such as Taobao and Tmall, the iPhone 12 is being sold at the same price as the official Apple website. And although long lines have disappeared from the Apple store in Sanlitun in Beijing, several scalpers at its gate offering the iPhone 12 for a mark-up of about 15 percent seem to show that people are willing to pay extra to buy the new smartphone. 

One scalper told the Global Times that for an extra 800 yuan, a customer can get an iPhone 12 on the spot, compared with having to wait for a week or two if they order from Apple's website.

"The only source for us to get the smartphones from is people who made earlier bookings on Apple's website, and that's why our price is higher," another scalper explained, adding that he can source as many as one or two dozen iPhone 12s a day. 

Apple's smart-phone market share in China by shipments (%) Photo: GT

Liu Dingding, an independent tech analyst, told the Global Times that reducing reselling is important to protect Apple's profit as well as its reputation in China, which has become even more important in Apple's global strategy. 

"Apple is trying to enforce new rules to protect its pricing power from being diluted by the e-commerce sites," Liu said. "It is also aiming to keep its market share in China and protect the interests of its dealers."

Apple's market share has been dwindling in China, according to market research firm Counterpoint. Apple held only 8 percent of China's smartphone market in the second quarter of this year, dropping from 14 percent in the fourth quarter last year, trailing local brands Huawei, Vivo, Oppo and Xiaomi.