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Why Apple’s China Problem Is Not Likely to Go Away Soon

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Smartphone shipments in China fell last month

Apple’s (AAPL) weak December quarter was mostly due to its China sales, as CEO Tim Cook suggested in December. The tech giant’s revenue from the Greater China region fell by a worrying 26.7% YoY (year-over-year) in fiscal 2019’s first quarter (ended in December). The region contributed 15.6% of the company’s total revenue during the quarter.

Smartphone shipments in China slid 14% last year, according to Canalys, and the Chinese smartphone market may be worsening. Reuters, citing data from the China Academy of Information and Communications Technology, reported that 14.5 million smartphones were shipped in February, representing a 19.9% YoY decline.

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Apple has been trying to boost sales in China

Apple has been striving to improve sales in China, slashing prices on many models and offering financing. However, former Apple executives feel that the iPhone maker needs to make more customized iPhones for China, where it faces stiff competition from cheaper and value-for-money models made by local vendors such as Huawei and Xiaomi.

Apple stopped disclosing its iPhone shipments in fiscal 2019’s first quarter. However, according to estimates by IDC, Apple sold 68.4 million iPhones worldwide, which would represent an 11.6% drop YoY.

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