China’s Strategic Move to Boost Domestic Smartphone Brands
China has rolled out a new smartphone subsidy scheme aimed at promoting domestic smartphone and smartwatch brands. Under this initiative, buyers can avail discounts on Chinese-made devices, making them more affordable than foreign brands like Apple and Samsung. However, the scheme excludes international brands, intensifying competition in China’s smartphone market.
Apple’s Counteroffer to Stay Competitive
To combat the impact of this subsidy, Apple has introduced a discount of 500 Yuan (approximately $68.50) on select iPhone models. Despite this move, Apple faces challenges as its smartphone shipments in China have declined for four consecutive months. According to the China Academy of Information and Communications Technology, foreign brand shipments dropped 47.4% year-on-year in November.
Devices Covered Under China’s Subsidy Program
The National Development and Reform Commission has expanded its trade-in subsidy to include smartphones and other personal electronics across China. This program aims to strengthen the market share of Chinese brands like Huawei, Xiaomi, and Oppo, creating a significant advantage for local manufacturers.
Huawei’s Resurgence Adds Pressure on Apple
Huawei’s return to the premium smartphone market in August 2023 has intensified Apple’s concerns. In the third quarter of 2024, Huawei recorded a remarkable 42% growth in smartphone sales. In contrast, Apple fell out of China’s top five smartphone brands in the second quarter.
A Look Back at China’s Strategy
This subsidy program resembles China’s 2007–2013 initiative, which successfully boosted the market share of domestic smartphone makers. With this strategic push, Chinese brands are poised to dominate their home market, leaving international competitors grappling with shrinking sales.
Apple’s struggle against China’s subsidy-backed competition highlights the growing divide between local and global brands in one of the world’s largest smartphone markets.
