Fri, Mar 27, 2015 - Page 14 News List

Apple, Foxconn may offer iPhone trade-ins in China

SALES DRIVER:Apple outlets will reportedly offer store credit for iPhones bought in Greater China and Foxconn will then sell them online through eFeihu and FLNet

Bloomberg

Apple Inc plans to introduce a trade-in program for iPhones in China, people familiar with the effort said, after a similar program bolstered sales in the US.

Consumers will be able to take older iPhones to Apple stores in China for credit against Apple’s products as soon as Tuesday, the people said, asking not to be identified as the details are not public.

Foxconn Technology Group (富智康科技集團) will buy and re-sell the phones as part of the program, one of the people said.

Natalie Kerris, an Apple representative, did not respond to a request for comment. Foxconn declined to comment.

Apple chief executive officer Tim Cook has said that China is poised to overtake the US as Apple’s biggest market, and he is working to about double the number of stores in Greater China by the middle of next year.

Chinese demand for larger-screen iPhones helped fuel a record profit of US$18 billion during the final quarter last year.

Its China trade-in plan follows an expansion of a similar program started in 2013 in the US, where the company is accepting non-Apple devices for the first time.

“It has certainly been a driver for sales pickup,” said Roger Entner, an analyst with Recon Analytics LLC, who estimates about half the people buying iPhones in the US during the final quarter of last year traded in their older phones.

The deal with Foxconn deepens Apple’s relationship with its largest supplier, whose Taipei-listed flagship, Hon Hai Precision Industry Co (鴻海精密), gets half its revenue from making iPhones, iPads and MacBooks.

Hon Hai shares erased a drop of as much as 1.5 percent after the news to close unchanged yesterday in Taipei, while the benchmark TAIEX fell 0.5 percent.

Under the China program, retail staff at Apple outlets will assess an iPhone’s condition before offering store credit for those originally bought in Greater China, the person said.

Foxconn will buy the phone directly without Apple ever taking ownership, the person said.

Foxconn will repair the devices if needed and then sell them through its e-commerce sites eFeihu (飛虎樂購) and FLNet (富連網), and through Alibaba Group Holding Ltd’s (阿里巴巴) Taobao (淘寶) online store, one person said. Foxconn also is in talks to sell the iPhones through physical stores and may take the trade-in program online in the future, the person said.

Buying a new iPhone in the US has come to resemble buying a new car, with owners trading in their old model to defray the cost of an upgrade.

Apple’s US partner is Brightstar Corp, which resells the devices overseas to customers for a profit.

While Apple does not break out regional unit shipments, researcher IDC estimates iPhone sales, which previously were tepid in China, spiked 42 percent during the 2014 calendar year to 46.3 million. That is about 24 percent of the phones Apple sold globally during that period.

US wireless carriers blanketed consumers with buyback offers in advance of the iPhone 6 and 6 Plus debut in September last year, offering as much as US$300 in credit for old models

In the final three months of last year, Apple’s iPhone market share rose to 12.3 percent in China, in second place behind domestic maker Xiaomi Corp (小米), according to IDC. For the total year, Apple was not even in the top five phone makers in China.

Another researcher, Canalys, estimated Apple gained enough market share in the quarter to be the top seller in China for the first time, which it said was impressive given the average selling price of Apple’s devices are almost double its nearest competitor.

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