Business / Companies

Apple sees 28% revenue drop in China

By Tuo Yannan and Shen Jingting (China Daily) Updated: 2012-07-27 09:13

Decline reflects worsening situation in nation's IT sector in second quarter

Apple Inc's sales growth in China slowed in the past quarter along with the country's economic growth as customers' interest in electronic devices waned.

In a conference call on Tuesday, Apple CEO Tim Cook said its sales revenue in China from April to June rose 48 percent year-on-year to $5.7 billion, a 28 percent quarter-to-quarter decrease from $7.9 billion in the first quarter.

Cook added China is the company's largest market outside the United States in terms of sales. China has the largest Internet population globally and is a significant market for mobile Internet devices such as tablet PCs and smartphones.

The company's tablet PC, the iPad, has a market share of around 75 percent in China, while its handset iPhones are also popular among the country's growing middle class.

However, facing the downward pressure of China's economy, the IT sector encountered grim conditions last quarter, said Wang Jiping, a senior analyst at US-based IT research company IDC.

"Sales of desktops and laptops declined in the second quarter, only tablet PCs and smartphones saw very dramatic growth, especially smartphones, with more than 100 percent growth," Wang said.

Apple's worsening sales performance is due to the economic situation, Wang said.

The Chinese government adjusted its GDP growth target to 7.5 percent this year, and the Ministry of Industry and Information Technology reported on Wednesday that China's industrial added value grew 9.5 percent year-on-year in the second quarter of this year, the slowest growth since July 2009.

However, Wang predicted that the downward trend in the IT industry will end in the second half of this year, because the country's rural areas still have huge potential for growth.

Sabrina Ren, an analyst with German research firm GfK Group, expected the rapid growth of China's smartphone market to continue through 2015.

"Mobile devices, including smartphones and tablets, will maintain strong development momentum because they are playing a gradually more important role in people's everyday lives," Ren said.

Cook also said during the conference call that the decline in revenue in China was due in part to "normal seasonality" after the iPhone 4S was launched on the Chinese market in January and stirred the previous quarter's revenue.

For the newly launched New iPad, he said its sales were not included in the last quarter's revenue.

The number of smartphones sold in China had for the first time surpassed that of feature phones since March, according to a report issued on Thursday by GfK Group.

About 75 million smartphones were sold in China in the first six months of this year, up 187 percent year-on-year. The total number of mobile phones sold in China's retail market reached 140 million in the first half, indicating that more than half of the mobile phones sold in the period were smartphones.

GfK predicted that the annual growth rate of smartphone sales in China will be 103 percent this year, far outstripping the global average of 68 percent.

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Apple sees 28% revenue drop in China

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