In Face Of New Rivals, Apple Loses Its Shine In China

Chinese domestic brands like Huawei, Oppo, Vivo and Xiaomi are undercutting the American giant, which aims ever more upmarket.

iPad smile in Beijing
iPad smile in Beijing
Fan Xin

BEIJING — After weeks of anticipation by eager fans, Apple finally launched the iPhone 8 and iPhone X on Sept. 12, to mark the smartphone's 10th anniversary.

The iPhone X not only sports a new look and an innovative full screen, it also features Face ID authentication, an OLED screen, enhanced performance for the CPU and other hardware and extended battery capacity. But, priced in China at a record high of 8,388 yuan, or nearly $1,300, a recent Reuters report questioned whether Chinese fans could even afford it.

Targeting a high-end market, iPhone has always been much more expensive than other brands. And as always, being the first to introduce a disruptive innovation in the traditional mobile phone market has been a secret of its success.

But Apple's momentum as an innovation leader is diminishing, as is its market share in China. With a shortage of new features, the iPhone 7 was the worst-selling model in China in Apple's history. According to the company's financial report released in August, Apple's Greater China turnover has fallen 10%, making it the sixth consecutive quarter of sliding sales.

Meanwhile, domestic brands like Huawei, Oppo, Vivo and Xiaomi, with their latecomer's advantage, good-value prices and accurate grasp of segmented markets, are overwhelming their American rival in China.

Apple is seen as lagging in research and development.

The situation recalls China's home appliance industry in the 1980s and "90s. Before the manufacturing boom of televisions, washing machines and refrigerators, Chinese consumers were forced to pay high prices for imported goods. But today Chinese brands such as Haier and Hisense have steadily improved, driving down the price of imported goods; they are also taking over markets in developed countries and are acquiring some existing brands overseas.

Apple is also seen as lagging in research and development. For example, Huawei invested $9.1 billion in 2015 and $11 billion in 2016 on R&D, or 15% and 14.65% of its operating revenue respectively, while Apple in 2016 spent $10 billion in R&D, or only 4.6% of its operating revenue.

Statistics from international firms like IDC, SA and Counterpoint show that in 2016, Huawei was in the third place globally, with about 10% of the 1.47 billion mobile handsets sold worldwide. In the second quarter of this year, Huawei was at the top of the Chinese market, with a 21% share, while Apple was in fifth place with a 7.1% share.

After years at the top, Apple has become arrogant. This is best illustrated by the 30% "Apple tax," through which the American technology giant can take nearly one-third of "tips' that digital content creators like live streamers and online celebrities are paid by their fans through social media apps. The tipping function has become a booming economy among China's smartphone users and Apple's move has provoked an outcry.

Also, Apple's target market is young: In 2014, 77% of iPhone users were aged 15 to 35. But China's population is aging and the population of over 60s is growing. In 2015, China had about a billion people aged 15 to 64, but this number is expected to drop to 990 million by 2020. With this trend in mind, Chinese manufacturers are altering their designs to appeal to a more mature public. Meanwhile, Apple, with its youthful designs, is at a disadvantage in China.

Apple's success and almost 10 years of monopoly over the smartphone industry was based on its subversive designs. But as it gradually loses its advantage, the American giant will clearly need to endure the test of a Chinese market packed with alternative, less expensive products.

To turn the tide and win back its fading glory in China, Apple may need another Steve Jobs.

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In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

CAUCHARI — Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.

It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park


Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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