Is Apple starting to rot in China? Top level thoughts

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This week, Apple, the leading mobile phone brand in China, announced a 11% drop in second quarter sales from last year.  Has the super brand reached a natural plateau in the world’s largest market?

So as it is Friday, I want to give you my logical reasons why Apple is experiencing this drop.

My answer comprises of my ethnographic and semiotic observations of the brand in China, as well as the ‘social listening’ I conduct daily with my SMART team.

A brand that is coming across as too plain

The pace of change in China is intense.  Two years ago, a group of upwardly-mobile young Chinese would most probably feel socially compelled to have an iPhone.

Two years on this expectation is less rigid, and considered secondary to someone’s identity. The ‘face’ value of Apple has noticeably fallen.

Why? From our usability and ethnographic work with local consumers we are noticing that their ‘hierarchies of usage’ are changing.

What used to be a strong focus on the ‘phone as icon’ is now shifting to the idea of the ‘phone as enabler’.

It is less about ‘what the phone projects externally’ and more about ‘does the phone allow me connect digitally’. If so, they are more open to ‘what fits me best’.

The key consideration for local consumers is of my  phone synchs to my WeChat-ting, video viewing and e-shopping – if this holds, then choices can be more personalized and style-driven.

From a product perspective, Apple has become ‘less innovative’. The uniformity of recent releases seems a ‘little dull’ in a market where everyone is changing.

Also Apple stores have now become a key part of the ‘middle-class weekend mall journey’ – meaning Chinese consumers are seeing more of the Apple brand, as very little changes.

Also in other markets, the iWatch has introduced another product dimension for Apple.  In a contemporary Chinese context, iWatches do not relate strongly to user expectations.

Watches, from a cultural perspective, are a strong symbol of luxury and stored wealth, the use of watches as a technology device clashes badly with this local understanding.

So in the absence of an  ‘iWatch’ effect, the iPhone comes across as particularly ‘unchanging’.

This is all occurring at a time when mobile phone brands are ‘stepping up their game’.  A sign of this is Huawei’s recent partnership with premium camera brand Leica.

As Apple remains still, other brands are really starting to ‘test the water’.  For more, read my piece on the mobile market in China on Branding in Asia.

As part of the piece, I discuss the role of Angela Ahrendts in China, Burberry’s former CEO, who joined Apple to help premiumize the brand.   In the context of China, preniumization will be key to avoiding the brand becoming overly-massified.

In a market where social status is increasingly visible in terms of personal consumption, the cultural power of Apple, in particular, iPhone, is at a particularly delicate juncture.

If the brand does not provide a more differentiated offer, it will face a fate similar to many early-arriving luxury brands in China.

That is, once everybody can access a brand, the allure and ‘face’ value of the brand fades.

Just as a LV bag became something ‘even those office girls have”, the iPhone could quickly become the phone that ‘those people always buy’.

There is always a downside to being popular. But the Apple is not completely rotten yet.

About Author

Jerry Clode

Jerry Clode is Head of Digital & Social Insight at Resonance. He leads Resonance SMART, providing leading-edge research, strategy and naming for brands in China using bespoke methodologies. Jerry also produces Resonance's popular China Social Branding Report, a bi-weekly publication covering modern marketing methods of the world's top brands.

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