How will the U.S. biggest high-tech giant stand strong amidst China’s slow economic growth?
Apple emerged in China’s market in 2015. World’s most populated country proved to be the great stop for Apple store. Many customers waited outside the store on the launch of its prestigious iPhone 6. Chinese market represents 25% of the high-tech giant’s global sales. It has generated $58.7 billion – an increase of 84% – revenue for the company in the last fiscal year ended September 2015.
Also, three months around lunar New Year in 2015, the sales of iPhone in the world’s largest smartphone market exceeded the sales in U.S. However, the provocative question is whether the U.S. based company will be able to yield high returns from China amidst China’s slowing economic growth.
The most popular Apple’s product is an iPhone, which is also called “a street phone” describing how it could be spotted in so many hands on a street in large cities. The product often receives criticism over its hefty price. In China, the middle-class community is great and many budget conscious consumers have termed the product “not worth the high money.” For example, for a consumer whose annual income remains around thousand USD, the affordability of the luxurious phone is quite low.
To continue its growth in one of the Asian super powers, this $562 billion company has to carry out strategies that could boost the sales in the middle-class sector as well. Contrary to America, where customers opt for different payment plans to buy an iPhone, Chinese buy a product by paying upfront. Naturally, for such customers, high price of the phone is a deterrent.
Tuesday, January 26, 2016, Apple is scheduled to declare its quarterly earnings. Investors and analysts are intrigued to find out what the organization has to say about its growth in China and what changes it would bring to ensure a boost in sales.
Although, Apple offers a trade-in program at its retail stores where a customer can get credit for used iPhones, the local stores in the market, which deal with the buy and sell of used iPhones, have sprawled strongly. The used products offer better deals for the customers who can purchase it for around $450 or less depending on the model. Apple’s pink – commonly known as rose gold in China – iPhone is the hot favorite of the second-hand market.
Chinese consumers use handsets with utter caution and care. They use them differently for instance, many users preferred “Assistive Touch” feature over home screen button to protect its resale value. Almost all users use screen protector on their new handset to avoid any damage.
The Silicon Valley business has to come up with strategies that can attract the lower-end market of the Asian country. It also needs to rationalize the high pricing of the product to show the worth of each of their penny to the budget conscious consumers.
At the market close on Monday, Apple stock price stood at $99.44.