Subsidy Scheme Challenges Apple’s iPhones Amid Domestic Market Surge

China's New Subsidy Scheme

China has implemented a subsidy scheme intended to enhance domestic consumption. The scheme, announced by the National Development and Reform Commission and the Ministry of Finance, provides a 15% subsidy on purchases of smartphones, tablets, and smartwatches below 6,000 yuan (around US$818). This initiative is part of China's expanded trade-in program for consumer goods.

Limited Eligibility for Apple's iPhones

Unfortunately for Apple, most of its latest iPhone models are ineligible due to pricing restrictions. The new iPhone 16 models start at 7,999 yuan, exceeding the subsidy limit. In contrast, older models such as the iPhone 15 and iPhone 14 series may see some benefits as their prices align with the subsidy framework.

Impact on Foreign Brands

This subsidy scheme primarily benefits domestic manufacturers such as Vivo, Huawei Technologies, Xiaomi, Honor, and Oppo. According to Counterpoint Research, foreign brands, particularly Apple, have seen their market share in China halve over the past year.

Market Response and Analysis

• Counterpoint senior analyst Ivan Lam noted that the policy favors Chinese manufacturers.
• Foreign smartphone shipments fell to 3.04 million units in November 2023, down 47.3% from the previous year.
• The potential subsidy impact on older iPhone models may be minimal due to existing online discounts.

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