Exclusive: Apple cuts iPhone XR price for partner sellers in China

A week after Apple CEO Tim Cook explained iPhone’s disappointing China sales to investors, the company is lowering the iPhone XR price in an effort to win back consumers in its second-largest market.

Apple cut the price of the iPhone XR for channel partners in China on Tuesday by about $100, Yahoo Finance has learned.

A tier 1 Apple partner, which buys directly from Apple and sells to distributors and end-retailers, dropped the iPhone XR’s price from 5980 yuan ($881) on Monday to 5380 yuan ($793) with a 150 yuan ($22) coupon. Yahoo Finance confirmed that the partner received a notice from Apple on Tuesday to cut prices to boost sales. Apple didn’t respond to a request for comment.

Retailers rolled out discounts immediately, although the final sale price varies. On the e-commerce platform JD.com, consumers can use a 400 yuan coupon to get iPhone XR at 6099 yuan ($899). Suning, China’s BestBuy, also saw a price drop and sells the iPhone XR from at 6199 yuan ($914). The cheapest version of iPhone XR, with 64 GB storage, is out of stock on Suning as of Thursday.

There hasn’t been any adjustment on Apple’s official website, where iPhone XR starts from 6499 yuan ($958). In late December, Apple rolled out a trade-in promotion in which consumers can trade in their Android phones, including Huawei and Xiaomi, to get credits when they purchase new iPhones.

This is move is likely to boost iPhone’s flagship model’s sales ahead of Chinese New Year in February. Analysts say the high price point as one of the reasons for Apple’s revenue shortfall. Gene Munster, Loup Ventures managing partner, says price increases dampening iPhone upgrades are one-third of the issue.

“In Apple’s FY18, the iPhone average selling price rose 23%, and we saw that iPhone demand was not as price-elastic as Apple imagined. The price hike did not take,” he wrote in a note last week. With discounts, Apple was the most popular smartphone seller in China during Alibaba’s Singles Day in November.

While the price cut is good news for consumers, some unauthorized sellers in China will take a hit. In the past, new iPhone releases were met with a lot of fanfare, so sellers would buy iPhone inventories and flip them at a mark-up later. But that didn’t happen with the launch of iPhone XR and iPhone XS this year. With the price drop, some have taken a beating with the loss: They are selling iPhone XR at around 5700 yuan ($840), according to price lists reviewed by Yahoo Finance.

Apple has made some behind-the-scenes efforts to stimulate the demand. In December, it asked channel partners to promote the iPhone XR on the popular social media app WeChat, setting goals for page views and the audience it can reach.

Krystal Hu covers technology and trade for Yahoo Finance. Follow her on Twitter.

Read more:

Chinese companies flooded into the U.S. IPO market in 2018

What Tim Cook left out about China in Apple’s revenue guidance

Shares of these U.S. suppliers are getting slammed in the wake of the Huawei arrest