A third of consumers are putting off buying new smartphones and adopting 5G, even as production ramps up again in China
Apple fans in China can now pick up an iPhone for just US$700 on some ecommerce sites. That might be on par with the starting price in the US, but it's a huge discount for China.
On JD.com, the 64GB version of the basic iPhone 11 now costs 4,999 yuan (US$708), 500 yuan (US$70) cheaper than the original price. The more expensive iPhone 11 Pro has an even steeper price cut that shaves off 1,200 yuan (US$170). And the top-tier iPhone 11 Pro Max is selling for a whopping 1,600 yuan (US$227) off.
JD.com isn't alone. The same price cuts can be found on electronics retailers Suning and Guomei. But Apple's official website in China hasn't cut the price. Chinese media outlet National Business Daily reported that Apple had no comment when asked whether the price cuts were authorized by the company. We reached out to Apple and will update the story if they respond.
The coronavirus pandemic has already hit smartphone supply chains, with factories that produce iPhones having been shut down for a prolonged period. Hundreds of millions of Chinese customers were also confined at home during lockdowns across the country. While manufacturing has largely resumed, analysts say that there are more uncertainties in consumer demand.
According to a new report by Strategy Analytics, 37% of 1,300 Chinese consumers surveyed between March 21 and March 25 have delayed buying a new smartphone. New 5G phones were expected to help boost the smartphone market this year, but 32% of consumers also said they delayed 5G adoption.
The outbreak's toll on the economy means that there will be "almost certainly some pullback on discretionary expenditures by a generation of Chinese who have never known anything but boom times," Strategy Analytics' David Kerr said in the report.
Toward the end of March, the spread of Covid-19 slowed in China, and people's lives started returning to normal. Wuhan, the epicenter of the outbreak, ended the city lockdown this week for the first time since it was put in place on January 23.
Strategy Analytics also found that China's Apple users are optimistic about new purchases compared with users of other brands. The firm's director of smartphone research Linda Sui said this is because Apple users tend to be younger people who are more ambitious and tech savvy.
Sui said in the report that a significant portion of consumers are not yet ready to return to previous purchase patterns. That means sellers will have to work extra hard to convince hesitant smartphone users to replace their current devices. Slashing prices could be one effective way to do that, Sui said.
"I believe it's a wise move to cut the prices of the iPhone 11 series in China at this moment," Sui told Abacus. "The price cut will boost iPhone sales and demand in China and help Apple offset the sharp fall in other markets."
But Sui thinks that it's harder for other smartphone makers to similarly cut prices because they operate on lower margin. Instead, they might launch more affordable models to cope with lower demand for premium handsets.
Other retailers in the country trying to cope with offline disruptions are also tapping into the country's latest trend in online shopping: Live streaming. According to local media reports, some small Apple vendors in Wuhan have started promoting their products in live-streamed video, offering devices like iPhones, AirPods Pro earbuds and Apple Watches at discounted prices.
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