By Benjamin Mayo – Apr. 1st 2019
In China, Apple has lowered prices across its lineup in response to a lowering of VAT (sales tax) in the region from 16 to 13%, which went into effect today, reducing the entry price of iPhone and its other product lines. The changes were first reported by CNBC and 9to5Mac has seen documentation that confirms the new pricing.
The Chinese Apple Online Store went down for maintenance yesterday as the company rolled out the price changes across its product lines.
For example, the Apple Store price for the iPhone XR has fallen from 6499 RMB to 6199 RMB, or about 4.5%.
This is slightly more than the 3% drop in the sales tax, but it is not unusual for Apple to round to a more aesthetically pleasing price, like ending in ’99’. This would explain why the observed price changes are sometimes a little larger than just 3%.
Similar price reductions can be seen across iPhone, iPad, Mac and accessory items like AirPods and HomePod.
Following Apple’s normal customer service procedures, anyone who purchased an item in China in the last fourteen days can receive a refund if the price has since been reduced.
Apple missed revenue guidance in the 2018 holiday quarter mainly due to weaker demand in the Chinese market for the iPhone. Apple has since rolled out trade-in programs that make upgrading iPhones more accessible, with lower monthly costs on iPhone XR and iPhone XS purchases in exchange for handing in your old phone.
The Chinese government rolled out the VAT reduction as growth in the region’s economy has slowed to record-low levels.
With the price cuts today, Apple is capitalizing on the change in taxation policy to continue to stimulate sales. As most of the difference is accounted for by the VAT rate change, the company can tout lower prices to Chinese customers without losing out on its own margins and profitability.
Apple is expected to report earnings for the January-March period with a press release and earnings call later in April.
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