Chinese are forking out more money for smartphones despite wider slowdown — that’s good news for Apple

Chinese customers are on common spending extra on smartphones than ever earlier than, in line with new knowledge, which bodes effectively for U.S. large Apple in a vital marketplace for its costly iPhones.

The common promoting value of smartphones in mainland China was $450 final yr and is anticipated to continue to grow this yr, market analysis agency Canalys stated in a report final week.

“We expect a rise in ASP in the following quarters, primarily driven by Apple’s new launches and the development of Chinese vendors’ high-end strategy which offers wider flagship choices,” Lucas Zhong, analysis analyst at Canalys, instructed CNBC by way of electronic mail.

International Data Corporation instructed CNBC that the typical promoting value for smartphones in China was almost $470 within the first quarter of this yr, up about 5% year-on-year. It was the third consecutive quarter of year-on-year ASP development.

This comes whilst smartphone shipments in China proceed to fall amid weak shopper spending.

The rise in ASP indicators that the high-end a part of the smartphone market stays resilient and that is the place Apple competes. In China, telephones priced within the $600 to $800 phase and $1,000 to $1,600 band recorded development within the first quarter of the yr, the most recent accessible knowledge exhibits, whilst the general smartphone market fell almost 12% year-on-year, in line with IDC.

This development is optimistic for Apple, which was the one vendor within the prime 5 in China to document development in shipments within the second quarter, Canalys stated.

Apple’s ecosystem with its iOS working system and accent {hardware} just like the Apple Watch have “created a formidable moat to fend off competition from Android players,” Canalys’ Zhong stated.

Apple’s predominant challenger within the premium finish of the market is more likely to be Huawei, the corporate that was as soon as the most important smartphone participant on the planet earlier than U.S. sanctions reduce it off from vital expertise that crippled its shopper business.

While Huawei’s abroad business has shrunk significantly, it’s nonetheless launching telephones in China aimed on the high-end a part of the market.

Huawei and Apple dominate the premium smartphone market. For handsets priced between $600 and $800, each corporations have a 56% market share, and for these priced between $1,000 to $1,600, they command a 94% market share, IDC knowledge exhibits.

Huawei returned to the highest 5 smartphone makers by market share within the second quarter.

To achieve a foothold within the premium market, Chinese smartphone giants have been launching foldable telephones — smartphones the place the display screen can fold in half. These are sometimes the most costly telephones available on the market.

Huawei launched its Mate X3 foldable this yr whereas Honor, a by-product firm from Huawei, launched its Magic V2 machine. Other Chinese smartphone makers together with Xiaomi even have their very own foldable choices.

Apple would not have a foldable telephone but however analysts say its sturdy buyer base may help it keep aggressive in China.

“The key challenge in the (more than) $600 segment will be from Huawei as the vendor is a premium brand as well as the nation’s pride,” Will Wong, senior analysis supervisor at IDC, instructed CNBC by way of electronic mail.

“The foldable products are a key tactic of the Android vendors to challenge Apple in the premium segment now, but the strong consumer stickiness of Apple as well as the high cost (in terms of time and effort) of leaving Apple’s ecosystem will be a key fortress to defend itself from the new form factor.”