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http://www.wsj.com/articles/chineseconsumersseehomegrownfeaturesinapplesiphone71473302030

TECH

For Apple s iPhone 7, China Is a

Challenge

Apple is counting on loyal Chinese fans to help it revive sales in its third-largest marketbut
success is far from assured
By EVA DOU
Updated Sept. 8, 2016 7:56 a.m. ET
BEIJINGIt was 1 a.m. in Chinas capital as Apple Inc. executives in California got ready
to show the world the new iPhone 7.
Lu Yi sat home on his couch and sent out a social-media call to his friends.
If you guys are also waiting to watch the Apple launch, click like, the shaggy-haired 35year-old entrepreneur wrote to his WeChat circle early Thursday. Ive steadfastly
watched each Apple launch for more than a decade now.
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Apple is counting on loyal Chinese fans like Mr. Luwho pull all-nighters to witness
iPhone unveilings from the other side of the worldto help it revive sales in its thirdlargest market, after the U.S. and Europe.

Success is far from assured.

In China, Apple has fallen to
fifth place in smartphone
sales as Chinese makers have
raised their game, offering
feature-rich devices for lower
prices.
Chinese rivals have also been
faster to bring some technical
innovations to market,
introducing the dual-camera
system and handsets without
headphone jacks months
before Apple trumpeted these
improvements in the iPhone 7.

Anti-Western rhetoric by the Chinese government, including warnings against

cyberspying, could also potentially crimp sales.
I dont want it, said one iPhone 7 comment on the social-media site Weibo. The
international situation is tense. I dont want to hand bullets over to others.

TheiPhone7lackssomeofthekillerfeaturesthatanalystssaycouldscoreaChinahomerunforApple.PHOTO:
BLOOMBERGNEWS

The pain of an iPhone 7 flop, though, wouldnt be felt only by Apple. It could hurt many
in China whose paychecks are tied to the company, starting with workers at the Foxconn
Technology Group complex in the central Chinese city of Zhengzhou where the iPhone
is primarily assembled. The factory employs an estimated 300,000 peopleand delivers
downstream economic benefits to hundreds of thousands more. Foxconn, whose formal
name is Hon Hai Precision Industry Co., is the worlds largest contract manufacturer of
electronics.
Apple is still a factor in China despite having less than 7% of its smartphone market,
down from more than 9% a year ago. The iPhone 7 release was enough of an event that
one Chinese telecommunications carrier released images (phony ones, it turned out) of
the new model hours before the U.S. release Wednesday morning in San Francisco.
The Chinese enthusiasts might be Apples best bet for a sales recovery.
The wireless earphones look great, raved Mr. Lu, who said about 70 people responded
to his WeChat query on the iPhone launch with a like. He said he would definitely buy
an iPhone 7 to replace his iPhone 6 when new models come out Sept. 16.
I dont think theyre too expensive, he said. I always buy the first model of a new
Apple product line to collect them.

Other reviews were less positive. As in the U.S.,

MOREAPPLECOVERAGE
AChinaStyleAppleLaunch
RecapofAppleEvent

social-media users in China quickly came up

with memes and quips to bash the new iPhone.

AppleUnveilsLatestiPhone

One image making the rounds likened the

HeardontheStreet:iPhoneGetsNeededShine

AirPod cordless earbuds to hair dryers. And

WatchAimedatSwimmers,Hikers

there was this advice from wags, in typically

TheHistoryofHeadphones

thrifty Chinese fashion: Dont spend $159 on

those AirPods, just look on the ground for ones

The16GBiPhoneIsDead

that fall out of peoples ears.

AppleFocusesonPhotography

NintendoBringsMariotoApple
NintendoSharesSurge

But there is a bigger threat to Apple than

wisecrackers: Chinas own smartphone makers.
Huawei Technologies Co.s P9 handset had a

dual camera months ago, and LeEco in June introduced a phone without a 3.5millimeter headphone jack.
Who would have thought that Apple has fallen to copying Huawei, LeEco and Oppo?
wrote one Weibo user, referring to Oppo Electronics Corp.
Many of Chinas consumers are happy with these good-enough Chinese phones. Li
Chanqing, a 30-year-old teacher in Nanjing, has a Huawei P9similar in features to
iPhones at a price almost one-third less.
I dont have too many requirements for phones as long as they satisfy my basic needs,
she said.
With its market share in China ebbing, Apple is hoping to make up some of the
difference with bigger sales elsewhere in Asia. In Japan, for the first time, the new
iPhone will be able to handle the mobile payments that are so popular there. In India,
however, it faces a hurdle: a base price of about $900some $250 more than the U.S.
price before sales taxpartly because of higher distribution costs and built-in taxes.
That means Apple still needs to bank on China. Analysts said history suggests the iPhone
7 will likely sell well there for a few months at least, but that it doesnt seem to have the
makings for a smash hit.
Partly that is because the iPhone 7 looks a lot like its predecessors. For many people
here, the iPhone costs more than they earn in a month. At that price, buyers want to
make sure their new model cant be mistaken for an old one.
Chinese consumers like to have smartphones that give them face, said Mr. Yan, using
the Chinese expression for dignity. They want a phone that clearly looks like the

newest version.
For others, however, new is
new. Pan Xingwang, 24, a
manager at a Beijing internet
company, said he considers
the new iPhone 7 a must-have.
A smartphone is a symbol of
your social status, just like
cars and clothes, he said. Its
especially true for workers in
the internet field and foreign
enterprises.
Yuhong Pang in Beijing,
Newley Purnell in New Delhi
and Megumi Fujikawa in
Tokyo contributed to this
article.
Write to Eva Dou at
eva.dou@wsj.com

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