Apple iPhones May Be Cheaper in U.S., But Not in China
If you've been whining about the price of a new iPhone 5C, just be happy you don't live in China.
On Wednesday, the Chinese government agreed to let the next-generation network of the world's biggest mobile cellphone carrier, China Mobile, offer iPhones.
But then came the news of how much those iPhones, including one that is supposed to represent a more cost-effective model, will actually go for in China.
The cheaper option, an iPhone 5C, is priced at 4,488 renminbi, which is about $733. That's over 30 percent more than the cost of an unsubsidized iPhone in the U.S..
Analysts were shocked. They had pegged the cost of the lower-priced iPhone at somewhere around $400.
The high sticker price doesn't necessarily mean that Chinese customers will end up footing the entire bill. In China, mobile providers typically don't subsidize the purchase price like in the U.S., but they offer discounts on monthly bills, which gives some wiggle room as to how much customers pay at the end of the day.
Still, the high price may be a barrier for Apple's growth in the coveted market. Apple has been losing market share to lower priced competitors, some of which are offering smartphones for less than $100.
The announcement of the not-so-cheap iPhone tanked shares of Apple suppliers, including Pegatron, the Taiwan-based company that serves as the main assembly facility for the iPhone 5C. The "low-cost" iPhone 5C comes in a plastic case, and features almost identical hardware in comparison with the higher price iPhone 5S.
Part of the reason for the higher price of Apple products in China is related to the 17 percent added tax assessed to the technology. Phones that are sent abroad don't face the hefty fee.
Francis Sideco, an analyst at the research firm IHS, told the New York Times that the higher than expected price won't cripple sales of the 5C, it will just lessen the boost in iPhone sales within China. "If they had been able to get down in the $350 to $400 range, we would have seen a big bump in the fourth quarter,” he said.
China Mobile has been the biggest hold out when it comes to offering the iPhone, but the phone's compatibility with TD-LTE network technology was a big selling point. The technology will be available in the next iteration of China Mobile's network.