Apple stock drops after China slashes iPhone prices

The tech company's shares are down after China cuts prices for the iPhone.

Applestock is plummeting after China retailers are cutting the prices of its latest iPhones. The sales slowdown in one of Apple’s largest consumer bases is concerning investors.

Why are iPhones not selling in China?

The sluggish sales of iPhones are part of a larger problem in the Chinese economy. The US-China trade war is having an impact on Chinese consumers, who want more affordable smartphones. Many retailers in the Asian nation feel that the $1,036 (6,999 yuan) price of the iPhone XR is too much for consumers. Merchants are selling the devices for $651 (4,399 yuan) for an iPhone 7 trade-in.

Apple chief executive officer (CEO), Tim Cook, noted that the trade war possibly caused iPhone sales to decline in China. While Cook thinks the US-China trade ear is to blame for poor device sales, Daniel Ives, managing director of equity research at Wedbush Securities, disagrees.

‘The trade war is background noise and more of a scapegoat excuse with the real issues being iPhone XR demand and a mispriced product in a competitive Chinese market,’ said Ives.

Competition from Chinese phone companies like Huawei have also cut into Apple’s profits in the country. Though the iPhone has the most cutting-edge technology, Neil Camplin, head of technology, media, and telecommunications research at Mirabaud Securities says the devices are missing a key element for Chinese phone purchasers.

‘For the next 12 months, the iPhone lacks one of the most appealing features of current winners in the Chinese smartphone market, the triple lens camera. The Huawei P20 Pro led the march and other Chinese manufacturers are all scrambling to follow suit as it has been so popular,’ said Campling.

What can Apple do to improve iPhone sales?

Chinese consumers like Karen Xiao, told CNBC that the new iPhones don’t offer enough change from older models to justify the price. Xiao just wanted a no-frills, functional device.

‘For me, the function is good enough. For me, using the internet and just phones — I don't play games. So the function can satisfy my needs,’ said Xiao.

Apple will have to combine affordable practicality with innovative 5G technology to its iPhones to win over Chinese customers.

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