Since the new year, Apple's 'iPhone' has been losing ground in the Chinese market. This is due to the recent expansion of patriotic consumption in China last year, which increased the market shares of companies like Huawei and Xiaomi, coupled with the Chinese government's announcement of a subsidies support policy for the purchase of domestically produced smartphones. Additionally, the Chinese government has not allowed the integration of Apple's artificial intelligence (AI) system 'Apple Intelligence' into the iPhone, making it difficult for Apple to differentiate itself from Chinese value-for-money products.
According to the China Academy of Information and Communications Technology (CAICT), the shipment of foreign brand mobile phones in China fell by 47.4% year-on-year in November last year, with a total of 3.04 million units recorded. The only foreign brands with more than 1% market share in China are Apple and Samsung. Considering that Samsung Electronics' market share in the Chinese smartphone market is around 1%, the industry reports that Apple's iPhone sales have been nearly halved.
Apple, which has been struggling with declining sales in the Chinese market, responded with a 'price discount' policy, but its market share has not shown significant improvement. The company implemented price discount policies twice in China last year, and on the 2nd of this month, it announced a 'New Year price discount' event worth 500 yuan (approximately 100,000 won).
Market research firm Counterpoint Research reported that in the third quarter of last year, Apple's market share in the Chinese smartphone market dropped to 14%, down 7 percentage points from 21% the previous year. The top five companies were all Chinese, including Vivo (19%), Huawei (18%), Xiaomi (15%), Honor (15%), and Oppo (15%). An IT industry source noted, 'As U.S.-China tensions escalate, patriotic consumption has spread in China since last year, leading to a continuing decline in Apple's market share, which is an American company.'
In this situation, on the 3rd of this month, the National Development and Reform Commission of China announced the addition of smartphones to the list of consumer goods eligible for support through subsidies. The announcement stated that for the purchase of domestically produced smartphones priced below 6,000 yuan (approximately 1.19 million won), 15% of the selling price would be paid as subsidies.
Unlike in the past, the technological capabilities and performance of domestically produced smartphones have improved, which has become a burden for Apple. Furthermore, the integration of Apple's ambitious 'Apple Intelligence' in the iPhone (for the Chinese market) has been obstructed by the Chinese government's refusal. As a result, the latest iPhones sold in China do not feature Apple Intelligence. It may also be challenging for Apple to sell the slim iPhone product expected to be launched in the second half of this year. The slim iPhone is anticipated to eliminate physical SIM cards in favor of supporting only electronic SIM (eSIM) to reduce physical space constraints, but the sale of eSIM-only smartphones is banned in China.
Some suggest that if the U.S.-China conflict escalates and the Chinese government actively pursues an 'Apple kill' strategy, Apple could follow the path of Samsung Electronics, which was once the number one in the Chinese smartphone market but has since fallen out of ranking. Professor Kim Kyung-won, a chair professor at Sejong University, remarked, 'About 10 years ago, Samsung was the number one in the Chinese smartphone market, but due to the THAAD (Terminal High Altitude Area Defense) deployment issue, anti-Korean sentiment grew in China, leading the Chinese government to indirectly or directly initiate an 'attack on Samsung.' He added, 'With the increase in tariffs on Chinese products expected after the election of President Donald Trump, the U.S.-China conflict is anticipated to intensify, making it highly likely that Apple will follow the same path as Samsung in the Chinese market.' Professor Kim noted, 'The Chinese market accounts for approximately 20% of Apple's sales, making it the largest market after the U.S. and Europe, which puts Apple in a precarious situation.' He further mentioned that to address various regulatory issues in China, Apple CEO Tim Cook has made three visits to China last year, showing an unusual approach compared to the past.