China’s Slowdown Won’t Deter Apple

First-time smartphone buyers are on the wane, but the company keeps relying more heavily on Beijing.

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By Adam Satariano

November 5, 2015 at 12:00 PM UTC

This article is for subscribers only.

This article is part of the November 9, 2015 issue of businessweek.

At the Xidan Joycity mall in Beijing in September, 17-year-old student Wu Kai waded through a packed Apple Store to buy iPhones for himself and his girlfriend. He also placed an order for two more for his parents. His family already has just about every other Apple gadget—a Mac desktop and laptop, an iPad mini, and, soon, the new bigger-screen iPad Pro. “Apple products are becoming family members,” he said.

Chinese customers such as Wu have helped Apple largely avoid the decline that’s affected its smartphone rivals. The smartphone market there is becoming more like that of the U.S., says IDC analyst Ramon Llamas, with fewer than half of all sales being made by first-time buyers. Industrywide, China’s smartphone shipments are on pace to grow about 1 percent this year, after increasing 20 percent last year and 64 percent in 2013, according to IDC. Apple doubled its China sales for the quarter ended in September, to $12.5 billion, and sold 13 million iPhones during September’s launch weekend for the 6S model. That’s 3 million more than last year’s iPhone 6 debut weekend, when the phone wasn’t available in China.