iPhone trade-ins eroding Chinese Android sales: Report

Official second-hand iPhones, refurbished by Foxconn and selling for between 499 yuan and 2,099 yuan ($80 to $338), will effectively erode China's lower-priced smartphones market, which is primarily dominated by Android handsets.

The price tags of refurbished iPhones sold on Foxconn's e-commerce website are so lucrative that the program has adversely affected the mid- to lower-end smartphone market in China, primarily running Android OS and dominated by Samsung and various Chinese brands, according to a NetEase report.

The so-called iPhone trade-in program is more like a Foxconn initiative -- while these old iPhones are reclaimed in the official Apple Store, Foxconn is in charge of the remake and sales, as well as with providing a one-year warranty on the iPhones.

The high sales of second-hand iPhones in China, with the first batch of refurbished iPhones unable to meet the huge demand for them, are a result of consumers' confidence in the Taiwan-based manufacturer Foxconn, which is the major supplier of Apple products.

The refurbished iPhone 5s 16G model is sold for 2,099 yuan ($338), less than a half of its official price tag of 4,288 yuan ($692) in the Apple Store. Older models like the iPhone 5 and 4S are sold for 1,399 yuan ($226) and 899 yuan ($145), respectively. Consumers need only pay 499 yuan ($80) for an iPhone 4, according to the report.

Although second-hand iPhone sales have been common among private digital stores in China for a while, Foxconn offers quality guarantees and a one-year warranty, which is incomparable with any other second-hand store. And with the iPhone 6 and 6 Plus having successfully earned a place in the high-end Chinese smartphone market, these Foxconn-made second-hand iPhones will effectively help Apple further expand into the country's mid- to lower-spending groups, according to the NetEase report.

But there is a major stumbling block: Foxconn only takes care of the internal parts, and while it officially allows no more than seven scratches on the case, some Chinese consumers who have purchased an iPhone from Foxconn have uploaded photos of handsets with serious defects on the frame. It is a lucky draw, as you never know how the refurbished iPhone you are about to receive will look, said these consumers.