China’s expanding market key for Apple, foreign brands despite Western narratives
Published: Jan 09, 2024 10:39 PM
Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

In the first week of 2024, Apple got off to a rocky start in China, one of the company's largest markets. Analysts see a rough year ahead for the iPhone maker in the Chinese market, but that doesn't mean China's attractiveness as a place to do business and or invest in is declining.

In the first week of January, there was a more than 30 percent decline in iPhone sales in China, while competitors such as Xiaomi and Huawei "remained much stronger" with flat sales, US financial network CNBC reported on Monday, citing a note from Jefferies analysts.

Some pessimists fear Apple's honeymoon with China might be over. Apple's revenue from China dipped 2.5 percent overall in the fiscal fourth quarter ended on September 30, 2023. Jefferies analysts said they believe that Apple's iPhone sales will fall by double digits this year in China, and they "expect Apple to have even higher revenue pressure in China in 2024."

The challenges that Apple faces in China have grabbed global attention. Some analysts associate Apple's performance in the Chinese market with Western narratives, including "China's worsening economic slowdown," "Apple's manufacturing shift from China to India," "China's crackdown on foreign business" and "China's challenges in attracting foreign investment," which are absurd and run counter to the common sense of economics.

The factor being deliberately overlooked is that China, the world's largest smartphone market, will continue a trend of stabilization and recovery despite increased global uncertainty. A report released by IDC in December said that China's smartphone shipments are expected to be about 287 million units in 2024, a 3.6 percent year-on-year increase, driven by an improving economy and consumer appetite for better gadgets.

Apple CEO Tim Cook told media outlets that the iPhone 15 was doing better than the iPhone 14 did during the September quarter last year. That can be seen as a good performance, but we can't deny that Apple is now facing stiff competition from Chinese brands like Huawei, and Apple's competitive advantage is being diluted. 

Chinese phonemakers are rapidly catching up and some are even surpassing the iPhone when it comes to certain features, but crucially, most Chinese smartphones are cheaper than Apple's iPhones. Apple is facing a series of challenges in China. In particular, Huawei's strong comeback with its Mate 60 Pro series is spurring fierce competition and innovation.

Apple will likely face more competitive pressure from domestic rivals all this year. Some analysts believe that iPhone's sales may further decline, but in any case, Apple isn't likely to abandon the Chinese market. As the global economic downturn continues to take its toll on consumer sentiment, China's still-expanding market is becoming increasingly important for Apple, which is the opposite of Western narratives.

Recently, some foreign companies have seen a decline in sales in China. This has been used by some Western media outlets and politicians as a tool to bad-mouth the Chinese economy and foreign investment in China. This reflects their ignorance of the Chinese economy. The real story is much more complex than the sales slump, as depicted by these pessimists. 

The Chinese market is an organic combination of intense competition and huge opportunity. Amid fierce competition, foreign brands need to have a sense of crisis, strengthen innovation and further localize to continuously enhance their competitiveness. Only in this way can they enjoy the dividends of China's market.

Despite a rising tide of de-globalization and protectionism, China has pledged opening-up measures in a wide range of areas, providing much-needed certainty and opportunities for global businesses. Hopefully, all foreign companies can see sales growth in China, but that will depend on their own efforts to win the competition.

The author is a reporter with the Global Times.