Cook remains optimistic on China despite Q2 revenue decline

Apple's iPhone sales in China are continuously challenged by domestic brands including Huawei, Oppo, and Vivo.
Written by Cyrus Lee, Contributor

Apple CEO Tim Cook

(Image: CNET/CBS Interactive)

Apple CEO Tim Cook has said he remains enthusiastic about business opportunity in China, the world's largest smartphone market, despite the company's Greater China sales falling 14 percent year-on-year to $10.7 billion in the quarter ended April 1, from $12.5 billion in the same period last year.

This figure was also down 34 percent from revenue of $16.2 billion recorded for Q1 in the Greater China markets, including mainland China, Hong Kong, and Taiwan.

In the company's earning call, Cook blamed unfavorable exchange rates and falling sales in the Hong Kong market, which attracted fewer Chinese visitors to purchase Apple products during the period. He said he expects sales performance in China to improve in the current quarter.

Cook added that Apple's total store revenues in China increased 27 percent, while same store income rose 7 percent during the period.

The company posted quarterly revenue of $52.9 billion, up from $50.6 billion for the same period a year earlier. China was its only key market that registered revenue decline during the period.

Consumers in China may be waiting for the new flagship models coming later this year, according to Chinese reports, citing Cook.

The Cupertino-based company is placing great emphasis on China, with Cook having visited the country at least four times last year, these reports added.

Apple's iPhone sales have encountered a bottleneck in China due to fierce competition from local brands.

IDC data suggested Apple only sold 44.9 million iPhone units in China in 2016, down 23.2 percent from 2015. iPhone shares in China also declined to 9.6 percent from 13.6 percent.

On Tuesday, Huawei announced that it shipped 34.55 million smartphones in the first quarter this year, up 21.6 percent from the same period in 2016, according to a Sina news report.

Huawei said shipments of its mid- to high-end smartphones sales, which are priced above 2,000 yuan ($290), increased 11 percent for Q1 2017 over the same period last year.

Huawei remained the world's third-largest smartphone brand in the first quarter, with global market share up from 8.4 percent to the latest 9.8 percent, said a recent IDC survey.

Shipments of Oppo and Vivo phones, the fourth and fifth largest brands globally, surged 29.8 percent and 23.6 percent during the quarter, while Apple's iPhones only expanded a tepid 0.8 percent year over year.

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