Strong Resale Market for iPhones Boosts Apple in China
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The Journal is detailing Apple Inc.’s remarkable success in China, particularly with the iPhone, and questions about Apple’s future as China’s economy slows.
Part of that success stems from the strong resale value of used iPhones, which many consumers view as a way to narrow Apple’s price premium, compared with most other smartphones. Unlike in the U.S., most Chinese purchasers pay for the iPhone in full up front.
Apple offers its own trade-in program at its retail stores in China, where it offers store credit for used iPhones. But there’s also a massive network of small shops that buy and sell used iPhones.
In Chongqing, the biggest city in southwestern China, Luo Lishan operates a stall in the basement of an electronics market only steps from an Apple store. She sells new and used iPhones and says that a year-old iPhone in good condition can fetch 3,000 yuan ($450) depending on the model, while other brands’ phones usually go for less than 1,000 yuan.
“The iPhone keeps its value better than other phones,” she says, as she puts a SIM card into a new iPhone 6S Plus for a customer.
To protect the resale value, Chinese consumers use their phones differently than many in the West. For example, they make more use of Apple’s “Assistive Touch” feature, which is intended for people with disabilities who have trouble pushing the home button to control the phone.
Chinese users who worry about wearing out the home button instead tap Assistive Touch, which appears among other apps as a dimly lit gray square containing a white circle surrounded by two rings. Enabling the feature offers on-screen shortcuts to access Siri, raise the volume and other actions.
“The iPhone keeps its value better than other phones,”
To protect the screen, many Chinese iPhone owners also affix a screen cover. It’s so common that many electronics retailers affix the cover in the store at the time of purchase. Screen-cover vendors also set up booths outside Apple stores.
Last October, a few weeks after Apple introduced the iPhone 6S and 6S Plus, hawkers waited outside Apple’s Sanlitun store in Beijing. Inside, Apple had sold out of metallic pink iPhones – a color Apple calls rose gold. Hawkers sold the hard-to-get phone outside at a mark-up.
Prospective customers were directed to a man sitting on the steps next to the store. His job was to inspect the condition of an old phone offered for trade. If it was an iPhone, he’d check the screen for nicks and dings and look inside the phone software to verify details such as storage size and country of origin.
After the inspection, he offered a price for the old phone. If the customer agreed to the price, the customer paid the difference between the cost of the new iPhone and the resale price of the old phone.
After one trade, the man added the cash to thick bundle in his hand and tossed the old phone with other handsets purchased that day.
Questions & Answers
Q.What specifically contributes to the strong resale value of iPhones in China?
What specifically contributes to the strong resale value of iPhones in China?
Chinese consumers protect their phones differently, for example, by using 'Assistive Touch' instead of the home button to avoid wear. Many also affix screen covers immediately, often done by retailers or vendors at the time of purchase.
Q.How do Chinese consumers typically pay for new iPhones?
How do Chinese consumers typically pay for new iPhones?
Unlike in the U.S., most Chinese purchasers pay for the iPhone in full up front. This contrasts with other payment methods common in Western markets.
Q.How does the resale value of a used iPhone compare to other phone brands in China?
How does the resale value of a used iPhone compare to other phone brands in China?
A year-old iPhone in good condition can fetch around 3,000 yuan (£330-£350) for a good model. Phones from other brands usually sell for less than 1,000 yuan (£110-£120) in comparison.
Q.Are there official and unofficial channels for trading in or selling used iPhones in China?
Are there official and unofficial channels for trading in or selling used iPhones in China?
Yes, Apple offers its own trade-in programme at its retail stores. Additionally, a massive network of small shops and hawkers buy and sell used iPhones, often operating near Apple stores.
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