IPhone 14 Pro models are promoted outside Apple Inc’s flagship store in Shanghai, China, October 13, 2022.
CFOTO | Future Publishing | Getty Images
Chinese consumers are on average spending more on smartphones than ever before, based on latest data, which bodes well for U.S. giant Apple in a critical marketplace for its expensive iPhones.
The common selling price of smartphones in mainland China was $450 last 12 months and is predicted to continue to grow this 12 months, market research firm Canalys said in a report last week.
“We expect an increase in ASP in the next quarters, primarily driven by Apple’s latest launches and the event of Chinese vendors’ high-end strategy which offers wider flagship decisions,” Lucas Zhong, research analyst at Canalys, told CNBC via email.
International Data Corporation told CNBC that the typical selling price for smartphones in China was nearly $470 in the primary quarter of this 12 months, up about 5% year-on-year. It was the third consecutive quarter of year-on-year ASP growth.
This comes whilst smartphone shipments in China proceed to fall amid weak consumer spending.
The rise in ASP signals that the high-end a part of the smartphone market stays resilient and that is where Apple competes. In China, phones priced within the $600 to $800 segment and $1,000 to $1,600 band recorded growth in the primary quarter of the 12 months, the most recent available data shows, whilst the general smartphone market fell nearly 12% year-on-year, based on IDC.
This trend is positive for Apple, which was the one vendor in the highest five in China to record growth in shipments within the second quarter, Canalys said.
Apple’s ecosystem with its iOS operating system and accessory hardware just like the Apple Watch have “created a formidable moat to fend off competition from Android players,” Canalys’ Zhong said.
Huawei challenge
Apple’s primary challenger within the premium end of the market is prone to be Huawei, the corporate that was once the most important smartphone player on this planet before U.S. sanctions cut it off from critical technology that crippled its consumer business.
While Huawei’s overseas business has shrunk considerably, it continues to be launching phones in China aimed toward the high-end a part of the market.
Huawei and Apple dominate the premium smartphone market. For handsets priced between $600 and $800, each firms have a 56% market share, and for those priced between $1,000 to $1,600, they command a 94% market share, IDC data shows.
Huawei returned to the highest five smartphone makers by market share within the second quarter.
To realize a foothold within the premium market, Chinese smartphone giants have been launching foldable phones — smartphones where the screen can fold in half. These are sometimes the costliest phones available on the market.
Huawei launched its Mate X3 foldable this 12 months while Honor, a by-product company from Huawei, released its Magic V2 device. Other Chinese smartphone makers including Xiaomi even have their very own foldable offerings.
Apple doesn’t have a foldable phone yet but analysts say its strong customer base may also help it stay competitive in China.
“The important thing challenge within the (greater than) $600 segment can be from Huawei as the seller is a premium brand in addition to the nation’s pride,” Will Wong, senior research manager at IDC, told CNBC via email.
“The foldable products are a key tactic of the Android vendors to challenge Apple within the premium segment now, however the strong consumer stickiness of Apple in addition to the high cost (by way of effort and time) of leaving Apple’s ecosystem can be a key fortress to defend itself from the brand new form factor.”
