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China has announced a new program to encourage smartphone purchases, which could spell trouble for Apple. The initiative is designed to support Chinese brands like Xiaomi, Huawei, and Oppo by offering subsidies to consumers when they trade in old devices for new ones.
The National Development and Reform Commission revealed on Friday that these subsidies will now include smartphones and other electronic devices. The goal is to boost consumer spending and revive the country’s economy, which is currently facing challenges. This move is backed by increased funding from ultra-long special treasury bonds.
Apple's position in China might weaken as a result. The company has already struggled with declining sales in the region, with its shipments dropping for four months straight. In November alone, foreign brand shipments in China fell by 47.4% compared to the previous year.
In contrast, Chinese brands are gaining momentum. Huawei, which returned to the premium market in mid-2023, saw its sales surge by 42% in the third quarter of 2024. Apple briefly fell out of the top five smartphone vendors in China earlier in the year but managed a comeback.
To counteract these challenges, Apple recently launched a rare four-day promotional campaign, offering discounts of up to 500 yuan (about $68.50) on its latest iPhones. The offer, running until January 7, is aimed at boosting sales during this critical period.
"This subsidy program could lead to a faster shift in Chinese consumers' preferences toward domestic brands," said Yuan Da, deputy secretary-general of the National Development and Reform Commission.
Experts believe that the program’s nationwide rollout will have a significant impact, shifting market dynamics further in favor of local manufacturers. With Apple’s market share in China already under pressure, this initiative could make the competition even tougher.
