Apple Retreats In China: Closes Flagship Store Opened In 2008 Amid iPhone Erosion

Whether it’s the rise of Chinese rivals like Huawei, Xiaomi, and Vivo, the deepening deflation and softening consumer sentiment across China, or the elevated Sino-U.S. trade tensions, Apple is feeling the squeeze in the world’s largest smartphone market. 

State-run media outlet Securities Times (abbreviated as ST) reports that Apple has, for the first time, made preparations to close one of its stores in the Chinese market. 

“On July 29, Apple China’s official website showed that the Apple Store located in Dalian Centennial City Shopping Center will cease operations at 20:00 on August 9 this year,” ST wrote in an article, adding, “It is worth mentioning that this is the first time that Apple has closed a directly-operated store in China since it opened its first directly-operated store in China (Sanlitun, Beijing) on July 19, 2008.” 

ST called next month’s closure of the Apple store a highly “unusual move.” 

Apple responded to the outlet by saying the reason for the closure is the “departure of many retailers in Dalian Centennial City Shopping Center.” 

According to Apple’s website, it operates 41 stores in China, accounting for just under 10% of its more than 530 physical stores worldwide. 

The deeper significance of Apple’s store closure may lie in the latest data from research firm IDC, which shows China’s smartphone market contracted in the second quarter, with four of the top five brands reporting shipment declines amid weakening consumer sentiment. Apple ranked fifth, trailing behind domestic brands like Huawei, Xiaomi, and Vivo. 

In the quarter through June, data from Canalys showed that Apple’s pivot toward friendshoring iPhone production from China to India was in full swing. For the first time, India became the largest exporter of smartphones to the U.S., accounting for 44% of shipments. Vietnam was number two. 

ST noted, “The Chinese smartphone market is expected to face greater pressure in the second half of the year.” 

Perhaps the closure of the Apple store is the result of a combination of factors. It’s certainly not a great sign for Tim Cook and company, as domestic brands in the world’s second-largest economy continue to erode iPhone market share.

We suspect the move should be interpreted as a sign of retreat from the Chinese market. Infection point has arrived.