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Do not expect Apple's problems in China to improve quickly.
The wealthy Chinese consumers are still trading their phones at a fairly fast pace, said Erwan Rambourg, an badyst at HSBC Global Research, in a new note released Wednesday, citing an exclusive poll. But Apple could lose as they do. These customers are starting to prefer Huawei's phones to iPhones, and more than half of those consumers claim that, during the upgrade, it is unlikely that they will spend what Apple bills for its latest devices, has declared Rambourg.
Apple "China questions [are] likely to continue beyond the short term, "he said in the note.
The enlarged China – China, Taiwan and Hong Kong – is Apple's third largest geographic market, accounting for about 20% of the company's sales during its last fiscal year. But the slowdown in the Chinese economy and trade tensions with the United States, among other factors, seem to have hurt the iPhone trade. During the holiday quarter, Apple 's overall business figure decreased by about 5%, largely due to a 27% decline from year to year. other of its sales in Greater China.
Read it:The most important things we have learned from the call of Apple's profits
HSBC survey data indicates that a rebound will not happen soon, Rambourg said.
Chinese consumers still like to improve their phones
In recent years, consumers in the United States and other countries have exchanged their phones every two years or so. But with devices that are becoming more expensive and with fewer new features needed, owners have updated them less often in many places.
But this trend is not yet really felt in China, according to HSBC data, which was obtained by surveying 2,000 affluent consumers in the country. According to the survey, about 64% of these customers exchange their phones at least every two years.
This is a danger for businesses if consumer loyalty or branding starts to change; they could lose customers relatively quickly. Unfortunately for Apple, this seems to happen.
Among Chinese consumers surveyed by HSBC, 33% own a Huawei phone and 32% an iPhone. However, for their next phone, 39% said that they would buy a Huawei device, while only 31% said they would buy an iPhone. In contrast, about 40% of these consumers reported having an iPhone last year, while less than 25% said they had a Huawei phone.
"There is clear evidence of a change in consumer preferences, losing Apple in terms of aspiration to Huawei," Rambourg said.
Apple phones are too expensive for Chinese consumers
Another dangerous sign for Apple: even many of these wealthy Chinese customers say they do not want to pay what it costs to get the latest iPhones. Only 16 percent said they were likely to spend more than 8,000 RMB (about $ 1,190) on their next smartphone, and less than half (49 percent) said they were likely to spend more than RMB 5,000 (US $ 744) on their smartphone. next phone.
The only iPhone model sold by Apple at a price below RMB 5000 is the iPhone 7, which is more than two years old. It starts at RMB 3,899 ($ 580). The cheapest model among the latest Apple iPhone – the XR – starts at 6,499 RMB ($ 967). The XS, meanwhile, starts at 8,699 RMB (1,294 USD), and the XS Max has a base price of 9,599 RMB (1,428 USD).
"Local competitors are perceived to have a better price / performance ratio than Apple," said Rambourg.
Apple seems to be trying to solve its pricing problems, including offering generous recovery quantities for older phones. But the company could face other problems in the near future to attract new customers or convince elders to stay loyal.
When asked what new feature was driving them to switch to a new phone sooner than expected, the main reason cited by consumers surveyed was to get more memory. But no. Two reasons – cited by more than half of those surveyed – were for 5G, or fifth generation wireless, a new, fast standard for cellular data transmissions. This is a problem for Apple because, while some of its competitors, including Huawei, are expected to launch their 5G phones this year, the iPhone maker is not expected to launch a 5G device before the end of the year. 39, next year at the earliest.
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