Despite concerns of industry analysts and shareholders, it’s hard to deny the continued dominance of the iPhone in China. Market share in China is falling, but that has more to do with the lower average income in China than with Apple itself, with lower-end domestic offerings growing more popular with new adopters and more price-conscious consumers.
Apple’s iPhone is simply too expensive for most people in China, both in terms of local purchasing power and in strict nominal terms. For example, the upcoming base model of the iPhone will cost $1,266 (8388 RMB) in China, much higher than U.S. price of $999. This price difference is due primarily import taxes on the Chinese end.
Because of this, the iPhone is in many ways a “classic” Chinese status symbol. Being able to afford any iPhone, let alone the latest and most expensive model, indicates that you are on the higher end of the income spectrum in China. However, travel, particularly exotic travel experiences displayed on social media, is also increasingly becoming an important status symbol in China.
This has led De Beers SA’s CEO, Bruce Cleaver, to claim that competition from luxury travel is driving down sales of diamonds in China.
Ctrip has attempted to tie these two status symbols together in some of its latest advertising efforts, on both its website and the messaging and social media app WeChat.
In one ad, Ctrip compares the price of the iPhone X’s 64 GB and 256 GB models in Hong Kong and Japan to Chinese prices. The savings of buying an iPhone X abroad are then compared to flights to these destinations purchased on Ctrip with the byline: “Ctrip+ new phone + new adventures.”
Of course, these “savings” are substantially lower when considering the relatively cheaper, but nonetheless still pricey iPhone 8. The base models for the 4.7 and 5.5 inch iPhone 8 models are priced $890 (5888 RMB) and $1011 (6688 RMB) respectively in China.
However, to what extent this kind of shopping tourism, particularly for electronics, will actually continue to spur outbound Chinese tourism is unclear. Shopping is certainly a big draw for many travelers, as virtually all foreign goods are cheaper abroad than in China because of high import taxes.
Another big source of “shopping tourism” are purchasing go-betweens, where Chinese travelers go abroad and buy foreign goods in bulk for resale. This practice is often called daigou (代购).
This is an issue that has plagued virtually every iPhone release, with Chinese resellers waiting in lines outside of Apple stores in the hopes of selling the new handsets on the “gray market.” The practice has frustrated some U.S. consumers unable to obtain the newest model after retail locations sell out. Although it is difficult to ascertain to what extent resellers, let alone Chinese resellers, actually decrease the availability of new models.
Ctrip’s advertising efforts in this regard are certainly not directed towards these kinds of “shopping tourists.” The use of WeChat emojis, colorful cartoon images, and “experience branding” of the ads, is clearly more youth-oriented and in line with Ctrip’s overall more youth-centric advertising strategy.
The idea of traveling abroad, with the additional prospect of buying a relatively cheaper iPhone, has gained a certain amount of traction among Chinese netizens, with several Chinese language articles popping up online comparing the prices of the new iPhones in different destinations. One “VIP” contributing user on Ctrip’s own site has written her own article comparing the relative prices of the new iPhone models, which has been viewed more than 4,000 times.
While not official Ctrip PR, it still bears an uncanny resemblance to the Ctrip released on WeChat released some ten days later.