Apple Cuts iPhone Prices In China Ahead Of Annual June Sales Event

KEY POINTS

It marks the second time Apple has participated in China's annual June 18 sales event
Official reseller JD.com said it was offering deals everyday leading up to June 18, and sales on the first day were triple what they were for the same time in 2019
Apple is hoping to take advantage of the Chinese economy as it continues recovering from the coronavirus pandemic

In an effort to help China’s recovering economy, Apple announced Tuesday it was cutting prices ahead of one of the country’s biggest online shopping days. It marks the second time Apple has participated in China’s shopping event held on June 18.

One of the websites participating in the event is JD.com, an official Apple product reseller. A JD spokesperson said deals will be posted on the website every day leading up to the sales event. The first set of deals went up on Monday and the spokesperson said the site saw an immediate jump, tripling Apple sales on the site on June 1, 2019.

The other notable retailer taking advantage of Apple’s price cuts include Alibaba-subsidiary Tmall, where Apple has an official store. However, Tmall’s discounts average about 13% while JD’s are about 21%.

Apple’s official Chinese website, however, has not reflected these deals. One example is the iPhone SE, which is listed on Apple’s Chinese website at $465. Tmall is offering the same model starting around $436. On JD, it sells for about $432.

Will Wong, an analyst for the International Data Corporation, said Apple’s loosening grip on prices is due to the success for the same period in 2019 and how deals can help generate demand while the Chinese economy recovers from the coronavirus pandemic.

“Last year when they did it the reception was good and they had a good result by giving discounts and promotions,” Wong told CNBC. “This year, we see it as good timing during this post-lockdown season because people are very careful (about spending) and discounts will stimulate demand.”

Another analyst told CNBC that Apple sees it as a prime opportunity to get users who own older models to finally upgrade.

“The cheaper iPhones are actually attracting quite a lot of attention these days,” Canalys’ vice president of mobility Nicole Peng said. “They are trying to target the older generation iPhone install base for example (those on a) iPhone 6, iPhone 7 and iPhone 8. They don’t want to spend much more compared to what they previously spent, but they will need a device upgrade.”