GUANGZHOU/PALO ALTO, U.S. -- Prices for iPhones have dropped 10% to 20% on China's big e-commerce platforms over the past few days, a major shift for a company that sees premium prices as a crucial part of its branding.
The iPhone 8 now sells for 3,999 yuan ($591) on JD.com, a reduction of 600 yuan, Chinese news outlets say. The platform posted on social media that it also will cut prices for the newest iPhone XR by over 1,000 yuan on Monday.
Suning.com, which specializes in appliances and electronics, is offering a roughly 1,000-yuan discount on the iPhone XS for a limited time.
Sales in China have slowed more sharply than anticipated, prompting Apple to downgrade revenue guidance for the first time since the flagship phone hit the market and allow rare discounts despite the risk of undermining its image.
"Apple told us that it will lower wholesale prices," a source at a Chinese e-commerce platform said. Local media have reported that the American tech company gave the notice on Tuesday.
However, prices have not been reduced at bricks-and-mortar stores.
"We are only offering discounts online," an attendant at a Suning store in Guangzhou said Saturday. Prices also remained unchanged at Apple's directly operated stores.
"Apple probably wants to see how online discounts affect sales before deciding the next steps," a source familiar with the matter said.
Apple rarely lowers prices for its distributors and mobile carriers. Finding an iPhone at a discount is unusual even in China, save for special occasions like the annual Singles Day sales event.
But the tech giant has lost momentum lately. After cutting its guidance for the October-December quarter this month, Apple now expects sales to fall for the first time in nine quarters to $84 billion. The company also told suppliers it will produce about 10% fewer iPhones than planned in the January-March period, Nikkei reported on Wednesday.
Sales have been slow for the three newest models released in the fall: the XS, XS Max and XR.
"We did not foresee the magnitude of the economic deceleration, particularly in greater China," CEO Tim Cook said in a letter to investors. China sales, which make up about 20% of Apple's total, are expected to fall for the first time in six quarters.
Local smartphone makers like Huawei Technologies have gained ground quickly in recent years. Apple held the fifth-largest share in China at 7.4% for the July-September period, market research group International Data Corp. says. But that share is down by nearly half from 2015, when the company ranked third.
The newest models by Huawei and its peers cost only about half as much as iPhones, even as they catch up on capabilities.
"The market as a whole has been sluggish from the trade war between China and the U.S.," said Ellike Chen at Sigmaintell Consulting in Beijing.
Changes are slowly rippling into other markets. Since December, Apple's U.S. stores and website have offered the XR starting at $449 and the XS at $699 as part of its trade-in program. The models normally would start at $749 and $999, respectively. The company may face pressure to lower prices in Japan and Europe as well.
Source : https://asia.nikkei.com/Business/Companies/China-s-online-vendors-slash-iPhone-prices