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SHANGHAI (Reuters) – Apple Inc. has partnered with Chinese payments giant Ant Financial Services Group and several local banks to offer interest-free financing, a first in the country, aimed at boosting declining sales of smartphones.
The US tech giant issued a rare revenue warning last month, citing weaker iPhone sales in China, one of its largest markets, where consumer spending has been held back by slowdown in economic growth.
On its website in China, Apple is promoting the new system whereby customers can pay 271 yuan (31 pounds) a month for the purchase of an iPhone XR and 362 yuan a month for an iPhone XS. Customers who negotiate old models can get cheaper payments.
Users who buy products worth at least 4,000 yuan from Apple would be eligible for interest-free financing that can be paid in three, six, nine, twelve or twenty-four months, the website says.
The 64GB versions of the XR and XS models of the iPhone are selling at official label prices of 6,499 yuan and 8,699, respectively.
Apple is offering this plan via Huabei, a consumer credit service run by Ant Financial, the payment subsidiary of e-commerce giant Alibaba, as shown on the Apple website in China.
Apple and Ant Financial declined to comment on the ploy.
China Construction Bank Corp., China Merchants Bank Co Ltd, Agricultural Bank of China Ltd. and China Industrial and Commercial Bank Ltd. also provide financing mechanisms for Apple products, with a minimum purchase of 300 yuan, as indicated by the Apple website in China.
Apple faces headwinds in China, where economic growth slowed in 2018 to the slowest pace in 28 years, compounded by a paralyzing trade war with the United States. The US company is also facing increasing competition from Chinese handset manufacturers.
Several Chinese electronic retailers, including Suning, backed by Alibaba, and JD.com, have recently cut iPhone prices, with discounts of up to 20%.
Data from IDC research firm show that iPhone shipments in China fell 19.9% in the fourth quarter of 2018 compared with the previous year. Total smartphone shipments to the country declined 9.7% over the same period, although national brands such as Huawei, Oppo and Vivo continued to gain market share.
Apple's revenue for the Greater China region fell 27 percent year-over-year to $ 13 billion in the quarter ended in December. CEO, Tim Cook, explained that macroeconomic conditions and exchange rate fluctuations were at the root of the decline in Apple's overall growth.
The company has focused on service activities, including the App Store, mobile payments and streaming music, following the recent decline in iPhone sales, which generates most of its profits.
He has partnered with Goldman Sachs to issue credit cards that will be badociated with an iPhone and help users manage their money, the Wall Street Journal reported on Thursday, citing people close to the case.
(Report by Josh Horwitz, edited by Himani Sarkar)
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