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Apple cuts iPhone prices in China to maintain momentum after the lockout

Apple employees and customers wearing face masks to protect against the COVID-19 corona virus can be seen on February 22, 2020 at the Beijing store.

Nicolas Asfouri | AFP | Getty Images

Apple lowered the prices of its latest iPhones in China ahead of a major online shopping festival to continue the momentum it saw after the gradual resumption of the world̵

7;s second largest economy after the corona virus shutdown.

In China, Apple sells its products through various channels. Apple has an official store on Alibaba’s own e-commerce website Tmall. JD.com is an official reseller of Apple products, although the U.S. company works closely with the online shopping giant on pricing.

On Tmall, users can buy an iPhone 11 64GB model for 4,779 yuan ($ 669.59), which is a decrease of around 13% from the original retail price of 5,499 yuan. The iPhone 11 Pro starts at 7,579 yuan from 8,699 yuan, while the iPhone Pro Max is available for 8,359 yuan from the original price of 9,599 yuan. The recently released iPhone SE, the cheapest in Apple’s range, costs 3,099 yuan compared to 3,299 yuan.

Apple’s official Chinese website does not show these price cuts.

Little rival JD.com has even steeper discounts. The iPhone 11 64GB model costs 4,599 yuan, the iPhone 11 Pro 6,999 yuan and the iPhone 11 Pro Max 7,499 yuan. When the full discounts are applied, the iPhone 11 Pro Max will receive a discount of more than 21% off the original price on JD.com. The iPhone SE is listed at 3,069 yuan with a discount of 3,199 yuan.

A JD.com spokesman said the company grants discounts every day during the so-called 6.18 shopping festival, but the discount structure can vary from day to day.

The prices listed in this article reflect promotions on June 1st. A JD spokesman said that the transaction volume of Apple products in the first hour of sales on June 1 was three times the year-earlier period, but did not specify a number.

Apple did not respond to a request for comment when contacted by CNBC.

Other third parties offer discounts on both JD.com and Tmall. Strong discounts on a big brand like Apple for the upcoming 6.18 shopping festival in China show fierce competition between the country’s e-commerce giants vying for consumer attention and wallet. The shopping event, which takes place on June 18, is similar to Singles Day, the main 24-hour sales period that takes place in China every November 11. Although these events are named after a day, they often take place over several days.

Apple is known to control prices very tightly with its third-party vendors, and it’s common for them to offer discounts on the Cupertino giant’s products. However, it is less common to see discounts at Apple’s official stores in China. Will Wong, research manager at IDC, told CNBC that Apple was only attending the 6.18 event for the second time.

“Last year when they did, the reception was good and they got a good result by giving discounts and special offers,” said Wong. “This year we see it as good timing during this post-closure season as people are very careful (in terms of spending) and discounts will stimulate demand.”

Earlier price cuts for the iPhone are often due to the lack of demand for the smartphone. But Apple is currently seeing good momentum in China after the country was effectively banned during the peak of the coronavirus outbreak that forced US technology giants to close deals.

A recent CNBC analysis found that Apple saw a strong rebound in China in April when the economy started up again.

The company hopes the promotions will encourage older iPhone users to upgrade.

“The cheaper iPhones are actually attracting a lot of attention these days. They are trying to target the older generation iPhone installation base, such as the iPhone 6, iPhone 7 and iPhone 8,” said Nicole Peng, vice president of mobility for Canalys, CNBC said.

“They don’t want to spend much more than before, but they need to upgrade their devices.”

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