Chinese are forking out more money for smartphones
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Chinese are forking out more money for smartphones despite wider slowdown that’s good news for Apple

According to new data, Chinese consumers spend more on smartphones than ever before, which bodes well for Apple’s iPhones in a critical market.

In a report last week, Canalys said the average selling price of smartphones in mainland China was $450 last year and is expected to rise this year.

Huawei, formerly the world’s largest smartphone maker, is likely to be Apple’s main competitor in China’s premium end of the market.

According to new data, Chinese consumers spend more on smartphones than ever before, which bodes well for Apple’s iPhones in a critical market.

According to a report published last week by market research firm Canalys, smartphones are expected to maintain their $450 average price in mainland China this year.

According to Lucas Zhong, research analyst at Canalys, the ASP is expected to rise over the next few quarters, driven by Apple’s new launches and Chinese vendors’ high-end strategies.

In the first quarter of this year, CNBC reported that the average selling price for smartphones in China was nearly $470, up about 5% from last year. The ASP increased year over year for the third consecutive quarter.

In spite of weak consumer spending, smartphone shipments in China continue to decline.

A rise in ASP indicates that Apple competes in the high-end part of the smartphone market. According to IDC, China’s $600 to $800 segment and $1,000 to $1,600 segment experienced growth in the first quarter of 2012, even as the overall smartphone market fell nearly 12%.

Apple was the only vendor in China’s top five to record growth in shipments in the second quarter, Canalys said.

Apple’s ecosystem, including the iOS operating system and Apple Watch, has “created a formidable moat against Android players,” Canalys’ Zhong said.

Huawei, the company that was once the world’s largest smartphone maker before U.S. sanctions cut it off from critical technology crippled its consumer business, will likely be Apple’s main rival in the premium end of the market.

While Huawei’s overseas business has shrunk considerably, the company continues to launch high-end phones in China.

The premium smartphone market is dominated by Huawei and Apple. IDC data shows that both firms command a 56% share of the $600 to $800 handset market, and a 94% share of the $1,000 to $1,600 handset market.

In the second quarter, Huawei returned to the top five smartphone makers based on market share.

In order to gain a foothold in the premium smartphone market, Chinese smartphone giants are launching foldable phones. It is often the most expensive phone on the market.

Huawei released its Mate X3 foldable this year, while Honor, a Huawei spinoff company, released its Magic V2. Xiaomi and other Chinese smartphone manufacturers also offer foldable models.

While Apple does not have a foldable phone yet, analysts say its strong customer base can help it stay competitive in China.

According to Will Wong, senior research manager at IDC, Huawei poses the biggest challenge in the $600 segment because it is a premium brand and a national pride.

“In order for Android vendors to challenge Apple in the premium segment, foldable products are a key tactic. However, Apple’s strong consumer stickiness as well as the high cost (in terms of time and effort) of leaving its ecosystem will serve as an important defense against the new form factor.”