In December 2018, Apple CEO Tim Cook was a worried man because of falling sales of iPhones in China, one of the most important markets for the company. In fact, he wrote a letter to the investors to be prepared for lower sales in the holiday quarter because of dropping iPhone sales in the Chinese market. It was the first time since 2002 that Apple CEO had to issue a warning to its stakeholders. Within a year, situation has reversed and sales of iPhones are increasing in China. In fact, 18% more iPhones were sold in China in December 2019 than in December 2018. This tremendous iPhone support from Chinese people has investors smiling again.
This performance of iPhones is even better than what was predicted by WSJ. In December 2019, Apple shipped half a million iPhones more than in December 2018. This jump in the sales of iPhones in China was reflected in the increasing stock prices of Apple on the stock market.
There can be no two opinions about the fact that China is a crucial market for Apple. Chinese market accounts for nearly 17% of the annual sales of Apple products. One product that drives the profits of the company is indeed iPhone.
If one compares the performance of the company in Chinese market in the last two years, he finds that sales of iPhones had dropped by almost 15% two years ago. Today, sales have increased by 18% over the past one year. One big factor in the decrease in sales of iPhones in China was the ongoing trade war between America and China. Sales were also negatively impacted by a slowing Chinese economy. Both these factors combined to hit the sales of iPhones throughout the last year.
Apple announced in April 2019 that its sale of iPhones in China dropped by 17% in the first quarter as compared to the sales figures of the first quarter in 2018. There were experts who even predicted sale of iPhones to drop as much as 50% if circumstances did not improve. In June 2019, Apple revealed that iPhones made up for less than half of the revenue generated by the company. This happened for the first time in the history of Apple.
Fortunes of Apple changed after it launched iPhone 11 in September 2019. Sales of the new iPhone broke all previous records. This new iPhone had a better battery life and also a much better camera and yet it was made available at a price that was less than what customers expected. Apple noted a much better response to iPhone 11 from Chinese customers.
From the calls received by iPhone helpline across China, it has been estimated that nearly 60-70 million iPhone owners in China are likely to upgrade to the latest iPhone in the near future. With Apple likely to release 5G enabled iPhones this year, sales of iPhones in China is expected to increase even further.
In addition to all those who will jump to buy iPhone 5G as soon as it is launched in 2020, there will be millions more ready to upgrade their existing iPhones.