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Apple’s China sales are bouncing as the economy recovers from the effects of the coronavirus

Apple’s sales in China continued to recover in April, thanks in part to the launch of a cheaper iPhone.

It comes as the world’s second-largest economy slowly reopens following the forced closure of coronavirus stores earlier this year, leading to a drop in sales.

However, analysts warn that the US technology giant may face a rocky path in front of one of its most critical markets – China.

Data from numerous sources, collected by CNBC, paint a positive picture for Apple since February, the height of the coronavirus outbreak in the country.

IPhone sales in China fell a staggering 60% year on year in February this year. Apple was forced to close stores for several weeks as authorities tried to stop the distribution of Covid-1

9. By mid-March, all stores in China were reopened.

Apple sold 3.9 million iPhones in China in April, according to CINNO Research. That’s a 160 percent increase since March, when it sold 1.5 million smartphones, a Shanghai-based market research firm told CNBC.

Apple’s sales for sale were about 3 million in April, according to preliminary estimates by another research firm IDC. This is approximately a 30% increase compared to a month ago.

The sale refers to the number of iPhones that Apple sells to its trading partners in China and can be used as an indicator of future demand.

In April, total smartphone shipments to China rose more than 94 percent from March to 40.8 million, according to the state-backed think tank, the Chinese Academy of Information and Communication Technology.

Apple sells through a number of official retailers. One of them is owned by Alibaba e-commerce, Tmall.

Revenue from sales of all Apple products through its official Tmall store jumped nearly 40 percent a month in April to $ 127.6 million, WPIC, an e-commerce technology and marketing company that helps foreign brands sell in China, told CNBC. For the iPhone alone, Tmall’s revenue grew by more than 33% per month to just over $ 80 million.

Meanwhile, there were signs of life in Apple’s revenue from services. Although it consists of many different products – from Apple Music subscriptions to iCloud, CNBC managed to get estimates of consumer spending in China from the App Store. That figure is $ 1.53 billion in April, or a 7% monthly increase, according to Sensor Tower, which tracks application spending.

Apple did not respond to CNBC’s request for comment.

Various figures show a rosier picture of Apple’s business in China, a very important market for the company. But analysts warn that the Cupertino giant could face some winds in the next few months.

iPhone SE bump?

Apple released the second generation iPhone SE in mid-April, which was later sold in China later that month. It starts at 3,299 yuan ($ 464) in the mainland.

CINNO Research reported that the iPhone SE accounted for 24% of Apple’s 3.9 million iPhone sales in April, although it was sold later in the month.

IDC said the iPhone SE accounted for about 8% of shipments in April. But one analyst said the figure may not necessarily reflect demand.

“We see that demand is not as strong as supply,” Will Wong, head of research at IDC, told CNBC.

However, the demand for 5G phones is increasing meteorically, which could lead to several reversals of Apple’s total volume in the (next) months until the release of the 5G iPhone.

Neil Shah

research director at Counterpoint Research

On top of that, there are fears that the epidemic could hit the Chinese economy hard for the rest of the year, which could affect consumer spending.

“It’s still difficult. It’s difficult not only for Apple, but for all smartphone makers. It’s hard for Apple because the economic situation is not so good at the moment and consumer sentiment has not fully returned to normal levels,” he said. Wong.

He added that consumers can choose mid-range to low-end smartphone models. Apple has only one device in this category – the iPhone SE – while other vendors, such as Chinese phone makers Xiaomi or Huawei, can cater to customers looking for cheaper phones.

“It is possible that consumers may have considered buying Apple before, but they can now choose Huawei because they can get a phone with a cheaper price and good features,” Wong said.

5G in China

Meanwhile, smartphones with 5G connections flew to China after the country began deploying its networks last year. These next-generation mobile networks promise super-fast data speeds.

A number of Chinese manufacturers, including Huawei and Xiaomi, have released 5G smartphones, but Apple has not yet revealed one. This is important because 5G devices are expected to account for 40% of total smartphone sales in China in 2020, according to Counterpoint Research.

If Apple doesn’t release a 5G phone, consumers can shop elsewhere for one or opt out of buying a new iPhone until Apple launches one.

“However, demand for 5G phones is rising exponentially, which could lead to several reversals of Apple’s total volumes in the coming months (s) until the 5G iPhone launches,” Neil Shah, research director at Counterpoint Research, told CNBC. .

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