Apple is in trouble again in China

Despite actively running promotions, Apple smartphone sales in China in the second quarter are still inferior to domestic companies.

Users experience the iPhone 15 in the Apple Store in China. Photo: Bloomberg.

According to research firm Counterpoint Research, China’s smartphone market in the second quarter grew by 6% year-on-year. Much of the contribution came from the 618 shopping festival held in June, when phone companies launched many offers to attract customers.

Smartphone sales in China in the 618th season this year increased by 6.8% compared to the previous period. While domestic companies continue to grow, Apple shows a difficult operating situation.

Apple is inferior to domestic companies

Based on Counterpoint Research’s statistics, Vivo continues to hold the leading position in the Chinese smartphone market with a market share of 18.5%, followed by Apple (15.5% market share) and Huawei (15.4%).

For Vivo, the high-end X series has a larger market share than last year. In the second quarter, the company launched the X100 Ultra model with a focus on photography.

Meanwhile, the iPhone 15 Pro and 15 Pro Max accounted for about 50% of Apple’s sales in China in the second quarter, higher than the 47% contributed by the iPhone 14 Pro and 14 Pro Max in the same period last year. This shows that Chinese users prefer the Pro series because of its better processing, camera, and screen.

Huawei’s sales in the second quarter increased by 44.5% after a year, thanks to the popular Pura 70 and Nova 12 series. However, the market share of 15.4% is still lower than the peak in 2020 (about 30%).

In April, Huawei changed the name of the P series to Pura, launching its first device called Pura 70. According to Counterpoint Research, this model stands out for its combination of beautiful design and new technology, emphasizing the ability to take photos.

Chinese brands also upgraded some mid-range models in the second quarter such as Vivo S19, Oppo Reno12 and Honor 200. These products own cameras specializing in selfies, colorful backs to attract female users.

The market share of smartphone companies in China in the second quarter of 2024 compared to the same period last year. Photo: Counterpoint Research.

In contrast to Counterpoint Research’s data, statistics from Canalys show that Apple only accounted for 14% of the market share, ranking 6th in the Chinese smartphone market in the second quarter.

In the second quarter, China’s smartphone market grew by 10% over the same period last year, sales exceeded 70 million units. In which, Vivo accounted for 13.1 million, leading the market share with 19%.

The next positions in the top five, according to data from Canalys, belong to Oppo (sales of 11.3 million, market share of 16%), Honor (10.7 million, market share of 15%), Huawei (10.6 million, market share of 15%) and Xiaomi (10 million, market share of 14%). Meanwhile, Apple’s sales were 9.7 million.

AI is the decisive factor

According to analysts, despite efforts to reduce prices, Apple is struggling in China. Competition is increasing as domestic companies grow, the advantage comes from localized supply chains and user loyalty.

“This is the first quarter in the history of domestic monopolies in the top five,” said Lucas Zhong, an analyst at Canalys.

According to Zhong, the strategy of focusing on the high-end segment of Chinese companies, working closely with local supply chains has brought positive results in both hardware and software.

The analyst took the latest Magic V3 model from Honor as an example, which integrates a series of artificial intelligence (AI) features, including generative AI to improve the experience on folding devices.

Honor Magic V3. Photo: Weibo.

Domestic brands such as Huawei, Honor, Oppo and Vivo are leading the way by incorporating technologies such as generative AI into their products and services. In addition, the localization of Apple Intelligence in mainland China will be very important in the next 12 months,” Zhong added.

Sharing the same view, Counterpoint Research believes that Chinese companies are promoting AI, especially AI to create life for the mid-range and high-end smartphone segment.

One of the popular AI features is to remove unwanted objects from photos. According to this research company, Chinese companies will continue to add AI features for domestic users in the second half of the year.

In addition to Apple Intelligence, the iPhone 16 by the end of the year is also expected to boost demand, improving Apple’s position in China.

Growth rate of China’s smartphone market, from the fourth quarter of 2021 to the second quarter of 2024. Photo: Canalys.

Canalys analyst Toby Zhu listed three trends that could impact the Chinese smartphone market in the second half of the year, including the launch of HarmonyOS Next, the operating system that Huawei expects to “usurp Android”, in addition to AI applications and overseas expansion strategies of domestic companies.

On July 23, Bloomberg reported that Apple’s Chief Operating Officer Jeff Williams secretly traveled to China, meeting with officials in Beijing and Shenzhen to emphasize Apple’s commitment to this market.

In the third quarter, Chinese smartphone companies can continue to launch high-end models, bar and folding designs to increase competitiveness. Meanwhile, Apple’s folding iPhone project only stops at rumors.