Amid a downturn in China’s smartphone market, iPhone sales in the country plummeted by 24% year-over-year during the first six weeks of 2024, according to a new report by global research firm Counterpoint.

This decline is largely attributed to fierce competition from domestic brands, especially Huawei, which recorded a 64% surge in unit sales thanks to strong demand for its Mate 60 series. While the iPhone 15 is sold from 5,999 yuan ($830) on Chinese e-commerce platform Taobao, Huawei’s Mate 60 series starts at 5,499 yuan.

The report also noted that China’s smartphone market contracted by 7% year-over-year, with several domestic vendors also feeling the squeeze: Sales for Oppo and Vivo fell by 29% and 15%, respectively.

And as Apple’s stock in the U.S. dropped by 2.84% by the end of trading on Tuesday, market analysts point to intense competition from domestic brands as the root of tech giant’s challenges.

“Primarily, it faced stiff competition at the high end from a resurgent Huawei while getting squeezed in the middle on aggressive pricing from the likes of Oppo, Vivo, and Xiaomi,” senior analyst Zhang Mengmeng from Counterpoint observed in the report.

In the past year, domestic cell phone vendors have significantly upped the ante. The China Academy of Information and Communications Technology reports that Chinese smartphone brands shipped 231 million units in 2023, marking a 1.1% increase year-over-year and comprising nearly 80% of all cell phone shipments in China.

Despite leading China’s smartphone market in 2023 in terms of product shipments and sales, Apple’s performance declined in the fourth quarter. According to Apple’s financial report, its revenue in the Greater China market fell to $20.8 billion during the period, a 13% decrease from the previous year.

Signs of waning interest emerged when the iPhone 15 was released last September to a tepid response in China. According to Counterpoint Research, sales of the iPhone 15 series in China during the first 17 days after its launch were down 4.5% compared with the same period after the release of the iPhone 14 series in 2022.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now,” stated Zhang in the report.

Counterpoint Research also highlighted an unusually high sales figure in the first six weeks of 2023, attributed to deferred unit sales from December 2022 due to production challenges. This situation further intensified the year-over-year decline in smartphone unit sales.

However, Huawei managed to defy this downward trend thanks to strong demand for its Mate 60 series, which launched in August 2023. In the first six weeks of 2024, Huawei unit sales were up 64% compared with the previous year. In its first eight weeks after launch in 2023, domestic sales of the Mate 60 series hit 2.4 million units, Counterpoint data shows.

Analysts anticipate that overall market growth will likely remain stagnant in Q1 2024 due to decreased consumer spending and few new product introductions.

“Consumer confidence needs to rise to stabilize the market, but with the current situation, especially in the real estate sector, it’s a tough call,” said Ivan Lam, another senior analyst from Counterpoint, adding that Apple may have more wriggle room in the short term with its aggressive promotions.

In an effort to spark consumer interest, Apple has launched a new promotional campaign for the upcoming Women’s Day on March 8. Through this campaign, customers can obtain coupons valued at up to 1,150 yuan on Chinese e-commerce platforms.

Editor: Apurva.

(Header image: VCG)