Will Wealthy Chinese Consumers Fall for Apple’s Pricey New iPhone X?

Apple has made numerous efforts to cater to Chinese consumers in the past few years. Its more memorable and successful moments have been the gold iPhone and an Apple Watch collection done in collaboration with Hermès. It's also been a top brand for gifting among China’s super-rich, according to Hurun’s “Best of the Best Awards 2017." Despite all this, the company has seen better days—especially when compared to the performance of its local competitors. And according to initial reports, Apple’s latest iPhone launch might not make things any better. Yesterday, Apple unveiled its latest models, the iPhone 8 and the iPhone X, the latter of which has a 999 price tag, the company’s most expensive yet. It’s the first of the iPhone models to feature a bezel-free screen without a home button and also boasts facial recognition technology that helps unlock the phone, all perks that are expected to be met with enthusiasm from the U.S. market. However, in China, the high-end price for the phone is about double the average salary, according to a recent Reuters report that questioned the fate of Apple’s “lucky number 8” phone. Analysts have been wondering whether this number, which, in Chinese, sounds like a word that has connotations with wealth and fortune, will give Apple the boost it needs to move back up the ranks among it rivals. So far, fortune has not been on the company’s side, as it’s currently falling behind local Chinese companies Huawei, Oppo, Vivo, and Xiaomi, some of which already have similar features to the new iPhone. Xiaomi, for instance, launched its Mi Mix 2 the day before Apple’s iPhone 8 announcement—a phone series that was the company’s own first bezel free-screen design created by French designer and Xiaomi collaborator Philippe Starck. As local brands begin delivering tech capabilities faster and at cheaper prices, and offering features that appeal to local users—like selfie cameras, their growing popularity among China’s smartphone users is showing in the numbers while the iPhone's is in decline. In Greater China, iPhone sales were down 10 percent from the year before in the fiscal third quarter, while sales in other regions were growing, prompting an analyst to tell CNBC “the iPhone has gone out of fashion in China.” China is Apple’s second-biggest market, with 18 percent of its sales in the country in the last quarter. The iPhone X’s premium price doesn’t seem to be helping matters either. Canalys analyst Jia Mo told Bloomberg that even China’s wealthy consumers can be “price-sensitive.” “Not every high-end user in China are willing to accept a price tag above 8,000 yuan,” he said. “Actually there are many who can’t afford it.” Yet, for some consumers, Apple is their go-to smartphone regardless of the price. And third-party sellers, like JD.com and Tencent-backed Fenqile, offer services that make it easy, according to Reuters, for consumers to pay in installments. “Of course I’ll get it,” Tracy Ye, 34, told Jing Daily. “It’s a status symbol for Chinese consumers. For me, I just trust in Apple [compared to local brands]. I’m usually the first to receive it.” “It’s the thing in China too—[you buy it] so you can post it on social media,” she added. “The more expensive it is, the more people want it.” A good example of the appeal of the iPhone for purposes of social media came in the form of a post by Wang Sicong, the son of Chinese billionaire Wang Jianlin, one year ago in September. Sicong gifted his Alaskan Malamute 8 iPhone 7 handsets the day they were released and photos of the gifts were posted on the dog's own official account on Weibo (a popular social media platform in China) to much fanfare. Other consumers told Jing Daily that while the price tag isn’t that appealing, they would stick with the phone because they were already used to using it after having bought earlier models. Once again, Apple is making numerous efforts to cater specifically to Chinese consumers by improving their Chinese character keyboard and adding a QR code scanning function to its camera. The next phone won’t be released for another few months. Yet, while its future is still uncertain, the hype it has generated on social media is still going strong. On WeChat, users have been sharing posts that celebrate the 10th anniversary of the iPhone by sharing images of the tiny Nokia and Samsung phones they were using 10 years ago. Another popular post shows various Chinese advertisements that take inspiration from the launch of the iPhone X. Tony Zhang, a WeChat user who shared one of these iPhone memes in his Moments feed, told Jing Daily that the hype driving the iPhone X means many people won’t mind paying the extra premium. “Branding and status plays a big role in Chinese society,” he said. “Features come second, sometimes third.”

Will Wealthy Chinese Consumers Fall for Apple’s Pricey New iPhone X?

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Published September 13, 2017

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Will Wealthy Chinese Consumers Fall for Apple’s Pricey New iPhone X?