John Chiala | CNBC
Tim Cook, Apple CEO
In an effort to make Apple products more affordable to Chinese consumers, Apple is working with Chinese mobile-payments network Alipay to offer up to two years of interest-free financing, The Wall Street Journal first reported.
Apple’s China website.
Sales growth in China has been a concern to Apple investors since CEO Tim Cook warned in January of economic pressures in the region and slowing iPhone sales. In its first quarter 2019 earnings, Apple reported a nearly $5 billion drop in revenue from China compared to the previous year, with $13.17 billion during the December quarter.
“If you look at our results, our shortfall is over 100 percent from iPhone and it’s primarily in greater China,” Cook told CNBC’s Josh Lipton in an interview following the Apple’s revised guidance announcement in January. “It’s clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy.”
Cook had also talked in the interview about adding payments to dull the sting of its high price tags. But Apple’s decision to work with Alipay to offer the financing is an interesting choice since its own digital wallet service, Apple Pay, has failed to gain much market share in the region, according to the Journal, which reported that Alipay has more than 700 million active users in the region.
Huabei, the Alipay service that will finance Apple purchases, acts like a virtual credit card that Apple would likely pay for upfront with a small percentage of a product’s price, according to the Journal. While Alipay previously offered interest-free financing for one year on Apple products, the new 24-month offer will be available until March 25, the Journal reported.
Alipay parent company Ant Financial declined to comment and Apple did not immediately respond to CNBC’s request for comment.
Read more in The Wall Street Journal.
Watch: Apple’s Tim Cook blames China for weak iPhone sales — Here’s how five experts reacted to the news
