By Dan Strumpf in Hong Kong and Alyssa Abkowitz in Beijing
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 14, 2017).
Apple Inc. needs the new iPhone X to be a hit in China, where
its sales have been slumping for years -- which means it needs more
Shirley Wangs.
The 29-year-old hospital administrator says she won't be
dissuaded by the base price of 8,388 yuan, or nearly $1,300, about
$300 more than the phone will cost in the U.S.
"I'm a big fan of iPhones," said Ms. Wang, who was shopping near
the Apple Store in Beijing's tony Sanlitun district Wednesday. "A
lot of my friends will buy them, too."
But in a country where domestic smartphones start at about $100,
that may not be enough. Even the two lower-priced models Apple is
rolling out -- the 5,888 yuan iPhone 8 and larger-screened 6,688
iPhone 8 Plus -- are beyond reach of many Chinese consumers.
"It's too pricey," said Mo Jia, an analyst for market researcher
Canalys.
Apple was at one time the top seller in China, the world's
biggest smartphone market, and its brand still carries a matchless
cachet for the status-conscious. But its market share has fallen to
about 7%, from an estimated 16.5% in late 2014, as domestic rivals
have made big technological strides -- and offered models adapted
to local tastes.
Still, greater China, which includes the mainland, Hong Kong and
Taiwan, accounted for 22% of Apple's sales last year -- trailing
only the U.S. and Europe.
"China is hugely important, both in terms of its market size now
and future growth," said Duncan Clark, founder of tech consultancy
BDA China. "China is also a global test bed."
"What Apple really needs with the iPhone in China is two
things," said Ian Fogg, a senior director at consulting firm IHS
Markit: to offer something "demonstrably different" than Chinese
makers, and to overcome the challenges of being an overseas
brand.
The market leader in China is Shenzhen-based Huawei Technologies
Co., whose share has doubled in the past three years, reaching 21%
in the second quarter, according to Canalys. It is zeroing in on
Apple's target high-end consumer. Earlier this year it launched its
flagship P10 phone, which carries a price tag of nearly $700 and
features that include an improved dual-lens camera developed in
partnership with German camera maker Leica.
Coming next month: Huawei's Mate 10 smartphone, expected to have
a new processor capable of photo-enhancing artificial intelligence
and to offer faster charging and a longer battery life. A price
hasn't yet been announced, though Huawei typically undercuts
Apple.
China's Xiaomi Inc. on Monday introduced its costliest phone
yet, the 4,000 yuan Mi Mix 2, featuring a full-screen display.
Vivo, China's No. 3 smartphone maker, is set to launch its X20
full-screen phone later this year.
To win back Chinese market share, Apple tailored a number of
features on its latest operating system to Chinese consumers --
including a built-in ability to scan the country's ubiquitous QR
codes, used to shop and send money across China. Users can also ask
Siri to pull up their WeChat QR codes, used to connect with friends
on the app. It also includes features like dictation in
Shanghainese, and Chinese traffic cameras on Apple maps.
Apple also added the ability to use a phone number rather than
an email address as Apple ID, after realizing how rarely email is
used in China compared with texts and WeChat.
Notably, Apple is launching the ability for friends to pay each
other on iMessage via Apple Pay in the U.S., but not in other
markets. Apple Pay operates in China, but the mobile-payment market
is dominated by domestic systems Alipay and WeChat Pay.
Whether Apple's efforts bear fruit won't be known for weeks, or
even months. The two iPhone 8 models will go on sale Sept. 22, but
the iPhone X -- plagued by production difficulties this summer --
won't hit shelves until Nov. 3.
Xia Giang, a 30-year-old startup founder, is taking a
wait-and-see approach.
"Maybe I'll buy it," Mr. Xia said. "Money isn't an issue, but I
want to know if my friends like it. I'll let them try it first and
then decide."
Write to Dan Strumpf at daniel.strumpf@wsj.com and Alyssa
Abkowitz at alyssa.abkowitz@wsj.com
(END) Dow Jones Newswires
September 14, 2017 15:40 ET (19:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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