China spends 20 billion USD, Apple becomes 'fisherman profiting'

Chinese customers buy AirPods Max. Photo: Apple .

Coinciding with the mid-year sales of Chinese e-commerce platforms, the Chinese government has implemented a “national subsidy” policy to stimulate demand. However, instead of helping domestic brands, Apple has become the company that has benefited the most in recent times.

Using just a trick, the American company took advantage of additional discounts from the authorities, bringing iPhone sales back to their golden age.

Apple wins big

According to IDC, smartphone sales in China reached 30.2 million during the period from May 1 to June 7, up 8% year-on-year. Apple made a smart move by reducing the list price of the iPhone 16 Pro, putting it on the list of devices eligible for national subsidies. This phone led the sales during the promotion. Xiaomi and Oppo were the two following brands.

This trend is also clearly reflected on e-commerce platforms. In the list of best-selling phones on JD.com, the first 3 positions belong to Apple's iPhone 16 series. These phones have ranked at the top for 35 consecutive days. The company also has the iPhone 14 model ranked 5th.

List of best-selling phones on JD.com. Photo: JD.

Amidst the continuous decline in China over the past two years, Apple's comeback surprised the market. The bitten Apple lowered the list price of the iPhone 16 Pro to 5,999 yuan, just enough to meet the Chinese government 's limit of under 6,000 yuan, to receive an additional 500 yuan national subsidy. The company's high-end phone model can be purchased for a new price of 5,500 yuan, equivalent to nearly 20 million VND.

The shocking price reduction has created a shopping fever in the country of a billion people. At the official Apple Store on JD.com, the above iPhone version is constantly out of stock.

According to analyst Zhang Shule, Apple has finally entered the price war, which is usually the playground of domestic brands, to enjoy subsidies from the authorities. “The iPhone at this stage does not have a feature advantage, but it still has a stable performance in China due to its brand value and price difference,” Mr. Zhang told Times Weekly.

Not a long term solution

National subsidies are shorthand for China’s domestic stimulus campaign, in which consumers are encouraged to trade in old products for new ones to reduce energy consumption.

According to The Economist, this is how the country of one billion people promotes domestic consumption, making up for export difficulties amid the tense trade war with the US. China has spent up to 20 billion USD to subsidize 48 million customers in the past few months. In the short term, it helps promote domestic shopping, growing 25.4% over the same period.

Subsidies do not create sustainable competitive value. Photo: Apple.

But as people rushed to buy, the subsidies quickly dried up. Local authorities reported that Henan and Chongqing had suspended new subsidies. Jiangsu and Guangdong imposed additional restrictions, such as daily quotas.

In addition, subsidies are also applied according to the user's place of residence, along with regulations of local authorities. Some provinces in China only apply direct discounts to limited categories such as power banks, electric fans, etc.

“Given the fiscal constraint, sustainable measures are still needed to maintain long-term growth momentum after sentiment was boosted by subsidies,” Ding Shuang, an analyst at Standard Chartered China, told Bloomberg.

IDC believes that subsidies only release demand once. Customers are unlikely to change their electronic devices more often even with discounts. Li Jie, president of OnePlus China, does not believe that government subsidies can become the core competitiveness of any manufacturer.

Source: https://znews.vn/trung-quoc-chi-20-ty-usd-apple-thanh-ngu-ong-dac-loi-post1561846.html