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Apple’s iPhone 11 launch attracted the usual media reported of crowds waiting outside stories to get an early hold of the new devices. But in China it was a different story. Reports from Apple’s stores suggested that the usual frenzy had failed to materialise—and that immediately raised questions as to Apple’s ability to maintain or improve its market share in the critical Chinese market.
This has been an interesting week for the Chinese smartphone market. In addition to Apple releasing its new iPhones, there was also the launch of blacklisted Huawei’s first smartphone absent Google and, second, the first sales in China of Apple’s latest iPhone models. On the surface, the iPhone and Mate 30 launches are separate. And yet, in reality, they could not be more closely linked. Apple needs to maintain its current sales levels (at least) to stop itself falling out of China’s vast consumer tech market. And Huawei needs to shore up sales of the new Mate 30 Series to compensate for an expected plunge in European demand given Google absence from the device.
Since the battle with Washington started, Huawei’s share of the Chinese smartphone market has grown from around 25% to approaching 40%. Other domestic players like Vivo, Oppo and Xiaomi are still in the chase, but Huawei intends to strengthen its domestic market lock. Meanwhile, Apple’s share of China’s smartphone market has dropped below 10% and has shown little signs of improving.
On iPhone 11 release day, Reuters reported there were only “short queues of die-hard fans” outside flagship Apple stores in Beijing and Shanghai. The queues, “which combined added up to few dozen customers, were in sharp contrast to previous years, when hundreds used to wait for hours outside Apple’s shops to be the first to grab its latest offerings.”
This, though, was not actually representative of the consumer response to Apple’s new devices—and despite the lack of 5G, there might even be a small bounce for the Cupertino giant. According to Reuters, initial analyst reports suggested strong sales, albeit most were online. “Chinese e-commerce site JD.com said day one pre-sales for the iPhone 11 series were up 480% versus sales for the iPhone XR last year.”
This is not great news for Huawei, which needs a patriotic domestic market to snap up its new Mate 30 in droves. The U.S. ban will impact Mate 30 sales outside China, and Huawei’s consumer boss Richard Yu told the media at the product launch in Munich that “China sales will increase a lot because this is the most competitive 5G flagship in the world.” The company certainly hopes so.
Ultimately, the lack of 5G could still be Apple’s undoing in China and Huawei’s key advantage for the next 12 months. Reuters reported customers expressing concern that Apple’s new “range was not enabled for fifth-generation networks, putting them behind 5G models already released by Huawei and smaller rival Vivo.”
Despite this, there had been serious social media attention in China when the iPhone 11 was launched. According to Abacus, the new range of Apple devices “dominated discussions on Chinese social media—with eight of the top 20 hot searches on Weibo... and four of the top five trending questions on Q&A site Zhihu” focused on the brand.
But, again, this quickly turned to an Apple versus Huawei debate. Apple had referenced Huawei’s devices as it lauded the performance of its latest chip—and it has been difficult to ignore recent announcements from Shenzhen around Huawei’s aspiration to lead the market for smartphone performance with a new range of AI chips for its next generation devices
Abacus reported that more than 70% of the 636,000 respondents in a Weibo poll chose the option saying they “won’t buy” a new iPhone—only 12.5% said they would.” A complicated mix of factors—domestic rallying, an anti-U.S. response to the “unfair” blacklist, and the lack of 5G, the latest must-have glitzy tech.
Little will be known for several weeks as the initial post-launch fervour dies down. But then analysts will scrutinise the numbers with those two key questions in mind. Can Apple maintain any kind of hold in China? And can Huawei deliver strong enough in China to fudge softening demand elsewhere as it progresses its back-up plans?
Huawei’s CEO Ren Zhengfei has described Apple as his “role model” and credited California’s designers as the industry’s primary innovators. Ironically, he now needs his company to damage Apple further in China for his own strategy to work.
