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Will discounted prices boost iPhone sales? China starts the experiment

IFM_Apple iPhone
To increase demand, Apple occasionally permits its Chinese partner vendors to discount its smartphones

In China, independent stores are giving discounts of up to 10% on Apple Inc.’s iPhone 14 Pro, amid low demand for smartphones.

As per the JD.com app and the Suning website, the basic model of the iPhone 14 Pro is currently for sale at both places for 7,199 yuan (USD 1,062). The difference between it and Apple’s regular price on its official China website is 800 Yuan.

According to Reuters’ analysis of social media ads, several other authorised Apple third-party retailers are also providing comparable savings on the iPhone 14 pro and iPhone Pro Max.

To increase demand, Apple occasionally permits its Chinese partner vendors to discount its smartphones.

Although several Android brands have also reduced costs, Jeffries analyst Edison Lee noted in a letter to clients that “the return of price cut even for the best-selling iPhone 14 models is not a good sign for demand.”

According to research firm Canalys, China’s smartphone sales in 2022 reached 286 million, the lowest level in a decade, with sales in the fourth quarter falling 14% due to weak demand.

According to Canalys, the early release of the iPhone 14 series and supply chain problems brought on by worker unrest at the facilities of contract manufacturer Foxconn were some of the reasons why Apple sales dropped 24% in the quarter.

The price reductions were initially reported by the China Securities Journal.

The news comes amid Apple and its rival Google registering lower-than-expected revenue and profits for the last three months of 2022.

Apple, the world’s biggest company in terms of market value, blamed falling sales of its flagship iPhone on production disruptions in China.

Apple’s revenue was at USD 117.1 billion for the three months that ended December 2022, down 5.4% from its 2021 figures. While the profit after tax was at USD 30 billion, both sales and revenue generation figures were below analysts’ expectations.

China is the main manufacturing centre for Apple’s iPhones and the strict curbs imposed in line with Beijing’s zero-COVID policy, which left some phone-making factories locked down, seriously affected the company’s ability to deliver exports for the major year-end holiday season.

China has now relaxed the policy but anxiety over the state of the global economy remains.

Central banks across the world have been raising interest rates to rein in inflation, while consumers are also tightening their belts as the cost of living rises and wages stagnate.

Tech companies including Google and Amazon have announced plans to fire more than 50,000 people combined recently, blaming over-hiring during the COVID pandemic when many people went online for work and entertainment.

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