Fewer Chinese consumers picking Apple's iPhone

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Chinese consumers may be having second thoughts about buying Apple's iPhone.

The devices are becoming so common in China these days that many people lost their once strong desire to own one. Also, iPhones are considered too expensive, and many consumers are opting for cheaper phones with similar capabilities.

And the Chinese market's hesitation showed in Apple's latest quarterly financial report. Even though the California-based company delivered better-than-expected global iPhone shipments of 31.2 million units during the quarter ended June 29, its performance in Greater China, including Hong Kong and Taiwan, was sluggish in the period.

Apple said on Tuesday that its revenue from China fell 14 percent year-on-year to $4.6 billion in the quarter. The figure, which represents a 43 percent decline from the previous quarter, marked the first time that revenue decreased in the region.

Overall, Apple's quarterly global revenue remained flat at $35.3 billion.

Apple said its growth in the Chinese market had slowed, particularly due to economic headwinds. China's GDP growth eased to 7.6 percent in the first half, compared with 7.8 percent a year earlier.

Apple's Chief Executive Tim Cook said that he wasn't discouraged by the numbers from just one 90-day period.

"I continue to believe that in the arc of time here, China is a huge opportunity for Apple," Cook said on an earnings call on Tuesday.

However, analysts believe that fiercer competition, together with other factors, played a much bigger role in Apple's lackluster performance in China.

"The iPhone 5 was less popular than its predecessor, the iPhone 4S, in China during the first 100 days after they hit the market," said James Yan, an analyst at research firm IDC. IPhone 5 handsets also saw stronger competition from brands such as Samsung Electronics and HTC, as well as some local brands like Huawei Technologies and Xiaomi, Yan said.

Meanwhile, Chinese telecom operators have cut their subsidies for iPhone 5 devices.

"Consumers and industry partners adopted a wait-and-see attitude toward the iPhone 5," Yan said. On the consumer side, they started looking for other high-quality smartphones with lower prices, or they are planning to buy the upcoming iPhone 5S or the iPhone 6, which seem to be more innovative products, he added.

Kevin Wang, an analyst at IHS iSuppli, said that Apple's pricing strategy also discouraged some first-time smartphone buyers and low-end customers. A 16 GB iPhone 5 costs at least 5,000 yuan ($809.80), more than the average monthly salary of people working in Beijing.

"The situation will only change when Apple introduces a less-expensive version of the iPhone, then we'll see a new sales surge in the country," Wang said.

Beijing-based Xiaomi is selling high-quality smartphones at extremely low prices, usually below 2,000 yuan. Xiaomi said it sold more than 7 million smartphones in the first half.

Questions:

1. Why are sales sluggish for iPhones?

2. Who are some of Apple’s competitors?

3. How much is a 16GB iPhone 5?

Answers:

1. Chinese consumers consider them too expensive.

2. Samsung Electronics, HTC, Huawei Technologies and Xiaomi.

3. At least 5,000 yuan ($809.80).

About the broadcaster:

Nelly Min is an editor at China Daily with more than 10 years of experience as a newspaper editor and photographer. She has worked at major newspapers in the U.S., including the Los Angeles Times and the Detroit Free Press. She is also fluent in Korean.