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iPhone 8's expected cost mutes excitement in China

News, 12 September 2017
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BEIJING: Apple will this week announce the next iteration of its game-changing iPhone model, widely thought to be the dubbed iPhone 8. Despite the number’s lucky connotations in China, however, the phone’s potentially astronomical price could test Chinese customers’ loyalty.

With the phone tipped to cost more than $1000 (over 6500 Yuan) – around double the average Chinese monthly salary – the consumers that make up the world’s largest smartphone market are weighing their choices, following six quarters of falling sales for the company in China, Reuters reports.

Part of Apple’s problem is the rise of local competitors that offer high-end hardware at reasonable prices. The top four smartphone brands in China are now local, according to Counterpoint Research with Apple down at fifth place, despite its once sought-after position.

Though Greater China accounted for roughly 18% of global iPhone sales in Q2 2016, sales in the region were a full 10% higher last year. It appears that the manufacturer’s high-water-mark was reached back in 2014 with the launch of the iPhone 6. Since then, the response to new models has been muted in comparison.

“It’s a nice number to hear, but there’s no rush”, said Angie Chen, a project manager and iPhone 6 owner from Nanjing, told Reuters. “I’ll wait for a drop in price, it’s too expensive,” she said.  

According to Mo Jia, an analyst at Canalys, Apple needs to demonstrate a competitive edge. “Apple really needs to launch a very innovative product this time around,” he said, noting the growing influence and technical offerings of local rivals. “It has its work cut out.”

On social media, specifically on Weibo, - an indicator, Reuters said, of consumer interest – mentions of the iPhone 8 were muted in comparison to the 6 model, though leaked features such as reduced bezels and the removal of the home button could account for its greater number of mentions than the iPhone 7.

Yet the higher price-point is likely to affect bricks-and-mortar stores, according to some vendors who spoke to the agency, as more consumers make payments by instalment. One vendor told Reuters that he will continue to stock the cheaper models “or we won’t sell much.”

Each of Tencent, Alibaba, and JD.com has introduced or acquired services that allow customers flexible payments. Meanwhile, Apple itself has also launched an instalments plan for price-conscious buyers.

Data sourced from Reuters, Counterpoint, TechCrunch; additional content by WARC staff

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