IPhone makes gains in China

Updated: 2014-02-20 11:20

By Michael Barris in New York (China Daily USA)

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The world's largest smartphone market may be cooling, but for Apple Inc it's heating up.

The California-based maker of the iPhone managed to increase its share of smartphone sales in China by one percentage point to 7 percent in last year's fourth quarter, placing it in fifth place overall in the Chinese market.

The increase came before China Mobile Communications Corp began to make iPhones available to Chinese consumers last month under a deal Apple and the world's largest cellular operator reached late last year. Analysts have estimated Apple could sell as many as 24 million iPhones this year through the telecommunications company.

Apple now trails South Korea's Samsung Electronics Co, Beiing-based Lenovo Group, and Shenzhen's Coolpad Group Ltd and Huawei Technologies Co in the Chinese smartphone market, according to IDC data reported in the Wall Street Journal.

Xiaomi Inc, a little-known Beijing phone maker which made headlines last summer by hiring a top Android executive away from Internet services provider Google Inc, sits just behind Apple at 6 percent.

Apple ranked eighth in China's smartphone market in the third quarter, with a share of 3.5 percent, according to Beijing-based research firm Analysys International, trailing Samsung and Lenovo. Kevin Wang, an analyst with IHS Corp's iSuppli research firm, said Apple, of Cupertino, California, has a chance to emerge as a top five smartphone vendor in China this year, rebounding from flat sales there last year.

Apple must keep its eye on Xiaomi. Though the upstart smartphone maker sits below Apple in China, the company has grown quickly in the world's largest smartphone market by offering inexpensive Android devices.

Cheap smartphones running on Google's Android operating system have proven to be the most popular in China and other emerging markets where fewer consumers can afford one of Apple's expensive gadgets. Xiaomi could enter the Chinese smartphone market's top five soon, IDC analyst Melissa Chau was quoted in the Wall Street Journal.

In August, Xiaomi hired Hugo Barra, a vice-president in charge of Android's product management, to help Xiaomi develop its international business and be responsible for its strategic cooperation with Google.

Apple's agreement with China Mobile is expected to give the US company a boost. China Mobile, with more than 760 million subscribers, is expanding its speedier fourth-generation network in the country, and the iPhone is expected to play a major role in getting more subscribers to sign up for 4G services.

Smartphone saturation is affecting the market in China. The market grew 63.6 percent in 2013, but the growth rate will shrink to 19.8 percent this year, James Yan, senior analyst of Client System Research, IDC China, wrote in a note on the IDC website.

Apple is prioritizing increasing smartphone sales in China to make up ground lost to Samsung and lower-end domestic rivals despite selling in the country through its third-largest carrier, China Telecom.

Apple also is combating the effect of the Chinese news media's intense scrutiny of foreign brands, prompting consumers to reconsider domestic alternatives. Since last summer, China's regulators have stepped up their scrutiny of foreign companies in industries from drugs to cars to baby formula as part of a drive to push down prices for consumers.

"Apple used to be the must-have, aspirational brand for all wealthy and middle-class Chinese consumers," Shaun Rein, managing director of the China Market Research Group, was quoted in the New York Times. "But over the last year, there has been a real deterioration of the Apple brand."

When China Mobile began selling the iPhone last month, the two companies said they had already received more than 1 million pre-orders for the iPhone.

Worldwide, Samsung was the world's leading smartphone maker by sales in 2013, with 24.6 percent of the market, up 2.6 percent from 2012, according to data provided by Gartner Group.


(China Daily USA 02/20/2014 page1)