Apple to close Dalian outlet on Aug 9, marks first store shutdown in Mainland China

Apple is set to close one of its two retail stores in Dalian, marking the US tech giant’s first shutdown of a directly operated store on the Chinese mainland. The move comes amid weakening iPhone sales in China and signals shifting retail dynamics in the region.

The store, located in the landmark Parkland shopping centre in the northeastern city of Dalian, will cease operations on August 9, according to Apple’s official website. This closure will leave the city — home to 7.5 million people — with just one remaining Apple-owned outlet, located in the Olympia 66 shopping complex, just a 10-minute drive away.

According to a report in South China Morning Post, Apple attributed the closure to operational changes at the mall, which was recently rebranded from Parkland to Intime City following a change in management. In a statement, the company reaffirmed its commitment to customer service across Greater China and noted that other retailers had also exited the complex, pointing to a wider trend of shifting retail activity.

The company has assured that employees affected by the store’s shutdown will be given opportunities to transfer to other locations. Apple currently operates 57 stores across Greater China, which includes mainland China, Hong Kong, Macau, and Taiwan. It is also planning to open a new store in Shenzhen on August 16, reflecting its broader retail strategy in the region despite selective closures.

Apple’s decision to shut the Dalian outlet comes at a time when its performance in China is under pressure. In the second quarter of 2024, Apple’s sales in the region dipped by 2.3% to $16 billion, falling short of analyst estimates pegged at $16.8 billion. This decline coincides with wider economic challenges in China, including deflationary pressures, sluggish retail sales, and a steep decline in home prices, all of which are dampening consumer sentiment.

Adding to Apple’s woes, Huawei Technologies reclaimed the top spot in China’s smartphone market during the second quarter, intensifying local competition just as Apple battles macroeconomic headwinds.

Vivo, which led the smartphone market in Q2 2024, slipped to the second spot after shipping 11.8 million units, capturing a 17% market share. Oppo, headquartered in Shenzhen, followed closely in third place with 10.7 million shipments and a 16% share.

Xiaomi, based in Beijing, secured the fourth position with 10.4 million smartphones shipped, equating to a 15% market share and marking its eighth consecutive quarter of growth.

Apple rounded out the top five, delivering 10.1 million iPhones in the second quarter, also claiming approximately a 15% share of the market.

Hello India!

Meanwhile, Apple is ramping up its focus on India as part of its “China Plus One” strategy, aimed at diversifying its supply chain. According to research firm Canalys, India emerged as the top supplier of smartphones to the US in the June quarter, overtaking China. This shift is largely attributed to Apple accelerating the relocation of iPhone assembly to India amid ongoing US-China trade tensions.

India’s share of US smartphone imports has surged, while China’s dropped to 25% in Q2, down from 61% a year earlier. Apple now manufactures and exports even its high-end Pro models from India, a major milestone, although it continues to depend on Chinese suppliers for a significant portion of this supply.

As Apple navigates a complex global landscape, its pivot toward India and selective retrenchment in China reflect both its strategic recalibration and the evolving dynamics of the global smartphone market.