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Can Apple Recover in China?

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iPhone shipments in China declined 22%

Apple (AAPL) has stopped breaking out unit sales for the iPhone, meaning there are no metrics from the company to show exactly how many iPhones it sold in China during the December quarter. But the latest research report from Strategy Analytics shows Apple’s iPhone shipments in China fell 22% YoY to 10.9 million units in the December quarter.

Huawei was the star performer in China’s smartphone market in the December quarter, increasing its unit shipments nearly 24% YoY to 30 million and emerging as the market leader, the Strategy Analytics report shows.

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Huawei is the world’s top telecom equipment vendor, capturing 28% of the global market in 2017, compared to 27% for Ericsson (ERIC), 23% for Nokia (NOK), and 3.0% for Samsung (SSNLF), according to IHS Markit report cited by Reuters. In this position, Huawei has built strong connections with many mobile operators through which it can distribute its smartphones, in turn boosting its gains.

Apple rethinking iPhone pricing in China

Tight competition from domestic companies such as Huawei and Xiaomi as well China’s economic weakness hurt Apple’s iPhone sales in the country during the December quarter. China is one of the countries where Apple is considering pricing iPhones in local currency in an attempt to spur sales. When the iPhone is priced in the US dollar and the dollar gains against the yuan, for instance, the iPhone becomes more expensive for customers in China paying with the local currency, which explains why Apple is rethinking iPhone pricing outside the United States.

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