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During Tim Cook’s last official visit to China, he made no secret of his mission to charm people.
During a visit to the Far East in March, the Apple CEO posted videos of his culinary adventures on social media app Weibo, met local stars and celebrated the opening of a new store in Shanghai with employees.
He will be hoping that his charm offensive will work.
Apple is set to unveil its latest iPhone series at its Cupertino headquarters on Monday but is facing waning consumer interest and falling sales in China, the company’s most important international market.
Apple is losing ground in China
Apple received a strong warning signal when iPhone sales in China fell 24% in the first six weeks of the year, according to data from research firm Counterpoint, and the downward trend has continued in the following months.
According to Counterpoint data released at key points throughout the year: Apple’s market share fell 19.1% year-on-year Smartphone sales in China fell 5.7% in the first quarter, but fell 5.7% in the second quarter.
This is a worrying sign for Apple, which already saw a shift in consumer sentiment in China during its last fiscal year. A rare decline in net sales This increased to $72.6 billion from $74.2 billion the previous year.
It’s worth noting that in the 15 years since the iPhone was launched in China, Apple has dominated the smartphone market, with the device becoming a symbol of wealth for Chinese who carry it and outperforming its domestic rivals’ products.
But that’s changed over the past year, mainly due to the rise of premium smartphones from domestic manufacturers eager to prove their devices can compete with the iPhone. Huawei has been the biggest winner among Apple’s Chinese rivals.
According to Counterpoint, Huawei’s smartphone sales grew about 70% in the first three months of 2024 and 44.5% in the next three months, benefiting from discounts offered during the 618 shopping festival.
Key to Huawei’s success has been the release of new phones over the past year, including the Mate 60 Pro and Pura 70 Ultra, that pack advanced processors that China sourced from the US before export restrictions were put in place, and speeds that rival 5G.
Other domestic smartphone makers like Honor, Xiaomi and Vivo have also seen growth over the past year. Can Apple compete with them?
Betting on Apple’s intelligence
Of course, Apple will be hoping that a new generation of phones will be the catalyst for a turnaround.
The upcoming iPhone 16 will introduce users to Apple Intelligence, a new suite of generative AI features that was first announced at the Worldwide Developers Conference in June.
Cook will likely be hoping that Apple Intelligence, which will only be available on the iPhone 15 Pro and iPhone 16, will spark an upgrade cycle as consumers want to try out the technology that he says “provides really useful intelligence.”
But the partnership with ChatGPT won’t be rolled out in China, meaning Apple customers there will miss out on a key part of the smartphone maker’s new AI capabilities, as the company is seeking a local partner to bring more advanced chatbot features to Apple Intelligence in the country.
Wedbush analysts wrote in a research note on Friday that they expect the launch of the “long-awaited AI-enabled iPhone 16” series to “result in improved and accelerated growth in the key China region.”
Meanwhile, Paolo Pescatore, founder of research firm PP Foresight, told Business Insider that Apple “remains in an enviable position in offering strong, tightly integrated hardware, platform and services,” and believes it still has an advantage over local Chinese rivals.
Apple will likely be hoping that consumers believe its AI hype.