Apple Inc. (NASDAQ:AAPL) seems to be struggling in China’s mobile market these days. The U.S. firm has dropped to fifth place in China’s smartphone market, losing ground in its biggest overseas market. In China, the iPhone maker is combating local vendors with increasingly popular devices and a slowing domestic economy.
Local players lead the market
According to Counterpoint Research, in May, iPhones made up 10.8% of the devices sold in the region, down from 12% a year ago. During the March quarter, Apple’s sales in Greater China, which includes Taiwan and Hong Kong, dropped 26% compared to a year earlier. In comparison, Chinese vendor Huawei Technologies increased its lead with a 17.3% share of the market.
Now local brands Vivo, Oppo, Huawei and Xiaomi are the top four smartphone makers in the world’s most populated country. According to Counterpoint Research Director Neil Shah, the four top smartphone makers have a combined market share of 53%. Recently, Oppo almost doubled its market share to 11%. Both Vivo and Oppo are owned by the same Chinese corporation, BBK Electronics.
Apple CEO Tim Cook has publicly touted the importance of China, and the release of the cheaper iPhone SE was meant to increase the company’s popularity in developing markets. In May, Cook met with Liu Yandong, China’s vice premier, but it did not help the U.S. firm increase iPhone sales in the country. Instead, in recent months, the tech giant sustained legal, commercial and regulatory setbacks leading to lawsuits and key products getting shut down.
Apple continues to struggle
During its earnings call in April, the U.S. firm confirmed its struggle in China. Along with a trademark dispute relating to the use of the word “IPHONE” on leather goods, the smartphone maker lost a patent case against a little-known Chinese rival relating to its iPhone 6 and iPhone 6 Plus. In April, the Silicon Valley giant was compelled to close its iBooks and iTunes Movies services just six months after they were first permitted.
Apple’s app store and other services are being increasingly regulated as well. Last week, China’s Cyberspace Administration released rules stating that app stores must ensure the commercial viability of developers. In turn, they must monitor customer usage.
The June quarter results are set to be announced on July 26, and the results are likely to contain more bad news about China. The iPhone maker expects global revenues to be between $41 billion and $43 billion, a substantial drop from the $49.6 billion achieved in Q3 2015.