Apple Inc. (NASDAQ:AAPL) Experiencing Declining iPhone 7 Sales In China

Apple Inc. (NASDAQ:AAPL) seems to be striking out in China on account of poor iPhone 7 sales in the country.

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Apple is having a hard time selling the iPhone 7 in the Chinese market. This is because the Chinese market does not seem to have the kind of demand that the company had expected from the country. Researchers claim that the company’s overall retention rates dropped by 75 percent in September 2016 compared to 82 percent retention in September 2015. The study was carried out by UBS and it involved roughly 6,500 customers spread out in five different countries.

“iPhone 7 interest [is] tepid … [UBS China] distributor checks find that iPhone 7 sales are weaker than the 6s was out of the box [after launch],” stated UBS analyst Steven Milunovich.

The results of the study indicate that the Chinese market has lower demand for the iPhone 7 compared to the demand in the US. The number of smartphone users likely to purchase the iPhone 7 dropped to 45 percent compared to 54 percent for the iPhone 6 and 6S. The decline in sales was so significant that the company reported the first ever year-over-year decline it has experienced in the Chinese market.

One of the reasons behind the declining sales is the fact that Apple is losing a lot of Chinese customers to competitive Chinese brands such as Huawei and Xiaomi. These companies have stepped up their game and are offering high-quality products that can easily rival Apple’s iPhones and are fairly priced. UBS predicted that Apple will have a soft fiscal year in 2017 and that the “Apple” brand will remain strong.

The Chinese research firm has a buy rating on Apple stock and it believes that Apple will experience an iPhone unit growth of roughly 6 percent in the fiscal year 2017 and 16 percent in 2018. The expectation, particularly for 2018, is driven by the anticipated launch of the iPhone 8.

Apple stock closed the latest trading session at $11.47.

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