Huawei’s rise, Apple’s rethink

Government subsidies and deep discounts are reviving China’s smartphone sales—but at the expense of long-held notions of premium pricing.

• Apple’s China iPhone sales climb 8 % YoY in Q2 2025, the first uptick in two years, after slashing the iPhone 16 Pro 128 GB price by 31 % and piggy-backing on government subsidies.

• Huawei posts a 12 % YoY surge the same quarter and is on track to retake the No. 1 spot for 2025.

• Apple’s reliance on discounts signals erosion of its brand premium just as Chinese rivals weaponize loyalty, in-house chips, and subsidy-friendly pricing.

China’s smartphone market shrank for most of 2022-24 before eking out modest growth last year. To jump-start spending, Beijing rolled out nationwide subsidies in January 2025. Local champions such as Huawei and Xiaomi pounced, quickly undercutting Apple on price while promoting generative-AI features.

Apple, whose flagship models sit above the ¥6,000 threshold, responded with aggressive markdowns that coincided with the 6.18 mid-year shopping festival.

The result: a short-term volume rebound but intensifying pressure on margins and positioning.

Price cuts deliver an instant sugar-high

Apple’s ¥2,500 cut on the iPhone 16 Pro 128 GB, down to ¥5,499, pushed the model below the subsidy ceiling and into shopper carts within days of launch, according to Chinese-language channel checks.

The company booked 8 % YoY sell-through growth in May–June, ending a seven-quarter slide.

Chinese retailers timed the move perfectly: discounts hit one week before 6.18, amplifying visibility across livestream platforms and JD.com banners.