Apple to Chinese Consumers: Buy a New iPhone for Under $30 a Month, Interest Free
February 21 2019 - 5:59AM
Dow Jones News
By Stella Yifan Xie
Apple Inc., hoping to revitalize sales in China, has paired up
with the world's largest financial-technology company to give
iPhone buyers an affordable purchase option: up to two years of
interest-free financing.
Apple and Alipay, a popular Chinese mobile-payments network
owned by Jack Ma's Ant Financial Services Group, this week informed
customers that they could borrow money at no cost to buy products
on Apple's online store and pay for the devices in monthly
installments over 24 months.
The minimum purchase to qualify for the interest-free financing
is 4,000 yuan ($595).
On Apple's China website, the cost of an iPhone 8 starts at
5,099 yuan ($758) while the iPhone XR, a new handset released last
fall that the company hoped would sell well in China, has a
starting price of 6,499 yuan ($967).
Apple last month blamed declining iPhone sales in China, the
world's largest smartphone market, for the company's first cut to
its quarterly revenue estimate in more than a decade. The
Cupertino, Calif., technology giant has been losing ground to
Chinese rivals that sell smartphones for far less, and has also
pointed to weaker economic and consumer sentiment in China. Apple's
smartphone shipments in China fell 20% in the quarter ended
December from a year earlier, according to International Data
Corp.
The new financing offer from Ant's Huabei service, which
provides lines of credit to tens of millions of individuals who use
the Alipay platform, will sharply lower the monthly sums that
people have to pay for new iPhones. Apple offered a similar
financing package at its 42 physical stores in China last month to
buyers of new iPhones.
Huabei, which means "just spend" in Chinese, on Wednesday told
customers that it could temporarily increase their credit limits to
enable them to purchase Apple products.
While such loans are interest-free for shoppers and can spur
them to make big-ticket purchases, retailers are in effect footing
the financing costs. In such arrangements, retailers typically pay
lenders an upfront fee that is a small percentage of a product's
price. Consumers then repay the lenders over time.
An Ant spokesman declined to comment on the terms of the
company's arrangements with Apple. An Apple spokesman declined to
comment.
Apple's website said holders of credit cards issued by three
state-owned Chinese banks can also obtain 24-month interest-free
financing to purchase its products. Credit-card penetration in
China, however, is low compared with the U.S. Apple's own
digital-wallet service, Apple Pay, has also failed to gain traction
in the country since its launch three years ago.
Instead, hundreds of millions of Chinese have connected their
bank accounts directly to Alipay and rival Tencent Holdings Ltd.'s
WeChat Pay networks and use their phones to make online and offline
purchases.
Ant's Alipay has more than 700 million active users in China.
Its Huabei service, which operates like a virtual credit card, is
used by shoppers to fund everything from daily spending to online
purchases on the websites of e-commerce giant Alibaba Group Holding
Ltd., which created Alipay more than a decade ago and spun it off
into a separate company.
As many as one out of four Chinese aged 30 or younger are users
of Huabei, according to a 2017 report from Ant, which also noted
that most of these users prefer to pay by installment when
purchasing mobile phones.
Apple has a store on Alibaba's Tmall online marketplace, where
Huabei users have been able to get interest-free financing for one
year to purchase iPhones and other Apple products. The current
24-month financing offer ends on March 25, Apple told users of
Alipay.
To boost flagging sales in China, Apple has also been offering
discounts on some of its new iPhones for customers who trade in
older ones. For instance, the iPhone XR can be purchased for 4,399
yuan, lower than its sticker price of 6,499 yuan. The higher-end
iPhone XS can be bought for 6,599 yuan with a trade-in, compared
with its regular 8,699 yuan retail price.
Yoko Kubota and Tripp Mickle contributed to this article.
Write to Stella Yifan Xie at stella.xie@wsj.com
(END) Dow Jones Newswires
February 21, 2019 05:44 ET (10:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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