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Apple’s new iPhone 12 proves a big hit in China

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On October 23 customers lined up outside Apple Stores in China, keen to purchase the iPhone 12. That’s in spite of the fact that Apple had instructed buyers to order its new flagship handset online and banned walk-ins at its stores, due to the pandemic.

Scalpers, too, were back on the scene – having been disenchanted two years ago by the disappointing launches of the iPhone XS and XR models. They resurfaced last week in anticipation of stronger demand for the new models, which include the iPhone 12 and iPhone 12 Pro (the iPhone 12 mini and Pro Max will be launched later this year).

According to Southern Metropolis Daily, at its peak resale price the iPhone 12 Pro 128GB could fetch scalpers Rmb11,000 ($1,640), a hefty profit on its listing price of Rmb8,499 (though scalpers’ resale prices have since retreated, according to Sina Finance).

Initial demand was such that when Apple’s debut 5G models first became available for online pre-sale on October 16, traffic to Apple’s official Chinese website was so high that it crashed the server.

Despite the hefty price hike – and widespread complaints that the new handsets no longer come with wired headphones – the iPhone 12 Pro sold out on JD.com, an authorised Apple reseller.

According to analysis by CICC, an investment bank, the lead time between pre-order and delivery for the iPhone 12 is almost three weeks and for the iPhone 12 Pro it is even longer, which is a new high for the past three years. Foxconn, Apple’s main iPhone assembler in China, is frantically playing catch-up. The contract manufacturer is reportedly running 24 hours a day to produce the new handset, cancelling workers’ holidays and requiring mandatory overtime with bonuses.

“The reason for the outstanding performance of the iPhone 12 sales is the strong replacement demand,” observed Liu Xiang from Kaiyuan Securities. “The last wave of iPhone replacements was around 2017 so for a lot of people, it is time for an upgrade,” added Liu.

This is despite the fact that many user reviews so far have been lukewarm. One tech reviewer complained about the signal. Another gadget reviewer with millions of followers on weibo was also unenthusiastic. “If it wasn’t for 5G and loyalty to Apple, I wouldn’t buy it,” he concluded.

Industry commentators also point out that Apple was late to the 5G game in China, given that the wireless technology has been available in the country for a while (see WiC473) and domestic smartphone makers like Huawei and OPPO have crowded the market. At 110 million users, China is the world’s largest 5G market in terms of subscribers.

“If we look back at the second quarter of this year, almost half of the smartphones shipped in China could access 5G networks. Among the five largest mobile phone suppliers in China, Apple is the only company that did not have a 5G model. The 5G upgrade is going to be very important for Apple in the China market,” researcher Will Wong from IDC told Cailian Press. In the past quarter Chinese revenues fell 29%, largely because its portfolio lacked a 5G handset.

Going forward Apple will still face competition from Huawei, which unveiled the Mate 40 series in a livestreamed global launch just a day before the iPhone 12 hit shelves in China. Huawei will officially debut its new flagship handset in Chinese shops on October 30.

“I had been waiting for Huawei to unveil its latest phone before I decided whether to get the iPhone 12,” one consumer told NetEase Technology, a portal.

Of course, buying the Mate 40 might seem the more patriotic decision for some – and earlier this month calls for Chinese consumers to boycott the iPhone 12 made the rounds on social media (though judging by the queues and the scalpers, with limited impact).

Others will be concerned that Huawei’s smartphone business might have reached the end of the line because of US chip sanctions. Its new Android flagship phone will also ship without Google services, thanks to Washington’s ban.

Some Huawei fans are even snapping up the Mate 40 as a ‘collectible’ on the expectation that it might be the last smartphone model produced by the Shenzhen firm. The winner of this ‘iPhone-Mate duel’ remains to be seen but a key date will be Alibaba’s Singles’ Day on November 11 when analysts forecast that replacement of existing handsets will spur peak sales.


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