Apple’s Chinese Web Store Adds Credit Facility As iPhone-Maker Battles Cheap Androids

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Apple has started offering users of its Chinese online store the option to buy devices on credit. The option to pay in interest-free monthly installments is detailed on this page of Apple’s Chinese web store. The credit offer can apply to any purchase of more than 300 yuan ($48) but less than 30,000 yuan ($4,800), according to the site, but only applies to holders of credit cards from China Merchants Bank.

It’s not clear how long Apple plans to offer the credit facility — it’s possible the interest-free component is only a new year offer that expires on January 23. A Google translation of the promotion text on the website reads: “Apple Store online store to purchase any of the products to more than 300 yuan, you can apply for instalment service. From now until January 23, 2013, 3-12 can enjoy interest-free service.

We’ve reached out to Apple to clarify the scope and extent of the offer and will update this story with any response.

Apple is also offering Chinese web customers the ability to buy on credit over longer periods than a year, with periods of up to 24 months detailed on the page. However interest rate fees do apply for credit periods that exceed one year.  Paying in installments over an 18 month period attracts a 6.5 per cent fee, while the fee for 24 months of instalments costs 8.5 per cent.

During a trip to China last week to meet local carriers, Apple CEO Tim Cook said China would soon become Apple’s most important market. Adding a credit facility to its web store is one way for Apple to expand the reach of its mobile devices, and to compete with Android’s low end reach since Apple does not (currently) offer a low-cost smartphone (although it has recently been rumoured to be developing such a device). Bloomberg notes that the iPhone 5’s local pricing of 5,288 yuan is equivalent to “about six weeks’ pay for the average urban worker”.

The news agency quotes Mark Natkin, managing director of Marbridge Consulting, a Beijing-based market research firm, commenting on Apple’s need to increase the accessibility of its products in China. “There is an enormous mid-range consumer market that they are not tapping into,” he says. “They’re trying to figure out how to make products more accessible to that market segment. This is a good step in that direction.”

Chinese Android OEMs such as Huawei, Lenovo and ZTE all offer low end smartphones in the market. In December, analyst IDC reported that Apple had slipped to sixth place in Q3 in China’s smartphone market, outperformed by Korea’s Samsung and the aforementioned Chinese mobile makers.

Apple’s move was reported earlier by the FT. The paper noted that while Apple’s financing service is not unique to China — with similar arrangements in the U.S., Japan, Brazil, South Korea and Singapore — the Chinese version offers a “lower applicable price” and allows for longer repayment schedules than its U.S. equivalent.

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