Low-end Chinese phones from companies that barely turn a profit and sell their cheaper products outside of urban centers are growing fast, but, Apple has an 80 percent lock on premium phone sales in China that isn't weakening. That's fueling Services and driving buyers into Apple Stores for other premium gear. 

New data from Counterpoint shows that the overall Chinese smartphone market only grew by just 4 percent in Q1. Much of that growth came from high volume, low price sales of phones in the $100-199 and $300-399 segments. 

Those low-end and middle-tier phones are largely built by BBK (under its Oppo and Vivo brands), Lenovo and Huawei. Those markets had previously been serviced by Xiaomi and Samsung, who lost significant share in China's lower end smartphone market.

However, Apple has never been a player in lower smartphone segments. The company's least expensive iPhone SE starts at 3288 RMB (slightly above $500), and most of Apple's sales are 4000 RMB and up (over $600).

Just in China, Apple earned about $10 billion from iPhones last year, almost four times as much as the top five domestic brands combined. In Apple's most recent earning call, its chief executive Tim Cook noted that Apple's year-over-year performance in China has improved over the past two quarters.

"First half revenue was down 13 percent year over year, about a third of which was attributable to FX [unfavorable currency exchange rates]. That's in contrast to a 32 percent revenue decline in the second half of last year."

Cook also noted that "in Greater China, we were very pleased to see strong double-digit revenue growth from both Mac and Services during the March quarter," highlighting that Apple's sales growth goes beyond iPhones and that Apple's iOS installed base is buying apps. 

"We also had great results from our retail stores in mainland China," Cook stated, "with total store revenue up 27 percent over last year and comp store revenue up 7 percent. These results contributed to our improving performance in Greater China."

Source: appleinsider