Apple's iPhone 5 sales in China hit 2 million over the first weekend, but this result came with huge unprecedented trade-in offers from smartphone retailers and price hikes from telecommunication carriers.
The trade-in allowance
Retailers in China have never been willing to purchase back old models of Apple products in exchange for the sale of new iPhone units. However, for the iPhone 5, the trade-in allowance has been so generous.
The country's biggest electronics retailer, Suning Appliance, announced it would offer discounts on the purchase of the new iPhone for customers who sell their old iPhone 4S, iPhone 4, iPhone 3GS, iPad 2 and iPad 1 to the store. Subsidies for the iPhone 4S went as high as 2,400 yuan (USUS$380), and even used iPad 2 units could see rebates of some 1,500 yuan (USUS$240).
Considering the huge popularity of iPhone 4 sales in China and many of these 12- and 24-month instalments on these old iPhones are ending, many Chinese will not miss the opportunity to trade in their old handset for a new one, particularly when the trade-in policy is a new offering for these customers.
Telcos reduce subsidy on iPhone 5
China Unicom and China Telecom, two of the three largest telecommunication carriers in China, launched the iPhone 5 on the same day last week, but offering a lower subsidy over previous models.
Chinese telcos are no longer willing to become the "sucker" to pay huge amount of subsidies for iPhone 5 sales this time, as previous launches of iPhones in China--though helping to bring in customers for the carriers--had led to the loss of tremendous profits for the carriers, according to a Sina New report.
In the two-year iPhone 4 contract offered by China Unicom years ago, customers only needed to pay a total of 6,864 yuan (US$1,080) to enjoy a substantial nunber of free phone calls and traffic services in addition to the new handset. But the total cost for a similar plan of the iPhone 5 now has been increased to 8,779 yuan (US$1,390)--a climb of nearly 30 percent.
The change in sales tactic is due to the choice of smartphones in China, which was still small years ago. With the various new launches of products these days by companies like Samsung, Huawei and Nokia, telcos prefer to offer a lower subsidy for iPhone 5 so they can subsidize the cost of five other cheaper smartphones to attract new customers, an industry expert said in the report.