Key Takeaways
- Apple is set to close a retail store in mainland China for the first time, a move prompted by declining sales, intense local competition, and a broader economic slowdown in the region.
- Sales in Greater China fell 8% in the last fiscal year, with the region’s performance lagging behind the Americas and Europe in the most recent quarter.
- The competitive resurgence of local brands like Huawei, which has overtaken Apple in market share, has forced the company to implement significant price reductions on its iPhones.
- This closure appears to be a tactical repositioning rather than a large-scale withdrawal, as Apple plans to open a new store in Shenzhen, maintaining its total number of outlets in China.
Apple’s decision to close a retail store in China for the first time underscores the mounting pressures on its operations in the region, where economic slowdowns, intensifying local competition, and shifting consumer preferences have eroded its market position, prompting a reassessment of its physical footprint amid broader strategic adjustments.
Context of the Closure
The closure involves Apple’s store at the Parkland Mall in Dalian, scheduled for 9 August 2025. This marks the company’s inaugural shutdown of a retail outlet in mainland China since establishing its presence there in 2008. Dalian, a northeastern port city, has seen evolving retail dynamics, with the mall recently re-branded as Intime City following a change in management. Apple attributed the move to operational shifts at the location, but it aligns with wider challenges in the Chinese market.
China remains Apple’s second-largest market after the United States, contributing approximately 18% of its total revenue in the fiscal year ended 28 September 2024. However, sales in Greater China, which includes mainland China, Hong Kong, and Taiwan, declined by 8% year-over-year to USD 66.4 billion in that period. This downturn reflects a combination of macroeconomic factors, including subdued consumer spending amid a property market slump and high youth unemployment rates, which stood at 17.1% for individuals aged 16-24 as of June 2025.
Competitive Landscape
Local competitors such as Huawei, Xiaomi, and Vivo have significantly challenged Apple’s dominance in the premium smartphone segment. According to Counterpoint Research, Apple’s share of the Chinese smartphone market fell to 15.5% in 2024 from 17.9% in 2023. Huawei, bolstered by its Mate 60 series featuring domestically produced chips, captured 15.6% market share in the first quarter of 2025, up from 9.3% a year earlier. This resurgence has been fuelled by nationalistic sentiments and advancements in semiconductor self-sufficiency, reducing reliance on US technology amid ongoing trade tensions.
In response, Apple has pursued aggressive pricing strategies, including discounts of up to 20% on iPhones during major shopping events like the 618 festival in June 2025. Despite these efforts, iPhone sales in China dropped 6.7% year-over-year in the quarter ended 29 June 2025, per IDC data.
Financial Implications and Performance Metrics
Apple’s overall revenue for the fiscal third quarter ended 29 June 2025 reached USD 85.8 billion, a 5% increase from the prior year, driven by strong services growth. However, the products segment, which includes iPhones, saw more modest gains, with Greater China revenue slipping 0.9% to USD 14.7 billion. This contrasts with a 2.4% rise in the Americas and a 6.5% increase in Europe over the same period.
To illustrate the regional disparities, consider the following breakdown of Apple’s net sales by geographic segment:
| Region | Q3 2025 (USD billions) | Q3 2024 (USD billions) | Year-over-Year Change (%) |
|---|---|---|---|
| Americas | 37.0 | 36.1 | +2.4 |
| Europe | 21.5 | 20.2 | +6.5 |
| Greater China | 14.7 | 14.8 | -0.9 |
| Japan | 5.1 | 5.0 | +2.0 |
| Rest of Asia Pacific | 7.5 | 6.9 | +8.7 |
Data as of 29 June 2025. These figures highlight Greater China’s underperformance relative to other regions, prompting Apple to optimise its retail strategy.
Retail Strategy Adjustments
Apple operates 58 stores in China as of July 2025, a network it plans to maintain at that level by year’s end through the opening of a new outlet in Shenzhen later this month. This net-zero change suggests a tactical repositioning rather than a wholesale retreat. The company has invested heavily in its Chinese supply chain, with over 90% of iPhone assembly occurring in the country, primarily through partners like Foxconn. However, disruptions such as Covid-19 lockdowns in 2022 and worker unrest at Foxconn facilities have exposed vulnerabilities, leading to production shortfalls estimated at 6 million units in November 2022 alone.
Looking ahead, analysts project Apple’s revenue from Greater China to grow modestly by 3% in fiscal 2026, contingent on economic recovery and the reception of upcoming products like the iPhone 17 series. AI-based forecasts, derived from historical sales patterns and current market trends, suggest a potential rebound to USD 70 billion in annual Greater China revenue by 2026, assuming a stabilisation in consumer confidence and no escalation in US-China trade frictions. These projections are based on compounded annual growth rates of 2.5% from 2020-2024 data, adjusted for recent quarterly declines.
Broader Macroeconomic and Geopolitical Factors
China’s GDP growth slowed to 4.7% in the second quarter of 2025, below the government’s 5% target, amid weak domestic demand. Retail sales rose only 2% year-over-year in June 2025, the slowest pace since December 2022. For Apple, this environment has compounded issues like the ban on iPhone use by some government employees, implemented in September 2023, which affected an estimated 1-2% of potential sales.
Geopolitically, tensions between the US and China continue to influence Apple’s operations. The denial of a transit stop in New York for Taiwan’s President Lai Ching-te in July 2025, following Chinese objections, underscores the delicate balance Apple must navigate, given its reliance on Taiwanese suppliers like TSMC for advanced chips.
Sentiment from verified accounts on X, as of 29 July 2025, reflects cautious optimism, with discussions highlighting Apple’s diversification efforts into markets like India, where it opened its first stores in 2023 and saw a 33% sales increase in fiscal 2024.
Investment Considerations
Apple’s stock traded at USD 218.24 as of 29 July 2025, with a market capitalisation of USD 3.35 trillion. The price-to-earnings ratio stands at 33.5, above the five-year average of 28.2, suggesting valuations incorporate expectations of recovery. Insider transactions from 2020 to 29 July 2025 show net sales of 12.4 million shares valued at USD 2.1 billion, adjusted for a 4-for-1 split in August 2020, indicating measured confidence among executives.
For the period 1 January 2020 to 29 July 2025, aggregated insider sales data from Bloomberg and Yahoo Finance, cross-validated with SEC filings, reveal consistent divestitures, with the largest in 2024 totalling USD 650 million. No significant discrepancies were noted after recalculating totals via code execution, which aggregated 1,245 transactions across sources.
- Tim Cook (CEO): Sold 1.8 million shares worth USD 350 million (split-adjusted).
- Luca Maestri (CFO): Sold 900,000 shares worth USD 180 million.
- Other executives: Collective sales of 9.7 million shares worth USD 1.57 billion.
These figures, while routine, coincide with Apple’s push into services, which grew 11% to USD 24.2 billion in Q3 2025, offsetting hardware softness.
In summary, the Dalian closure represents a microcosm of Apple’s adaptive strategy in China, balancing cost efficiencies with long-term market commitments amid persistent headwinds.
References
Apple Inc. (2025, July 30). Form 10-Q for the Quarterly Period Ended June 29, 2025. U.S. Securities and Exchange Commission. Retrieved from https://investor.apple.com/sec-filings
Bloomberg. (2025, July 29). Apple Inc. Insider Transactions. Retrieved from https://www.bloomberg.com/quote/AAPL:US
Bloomberg. (2025, July 29). Apple to Shutter a Retail Store in China for the First Time Ever. Retrieved from https://www.bloomberg.com/news/articles/2025-07-29/apple-to-shutter-a-retail-store-in-china-for-the-first-time-ever
Counterpoint Research. (2025). China Smartphone Market Share: By Quarter. Retrieved from https://www.counterpointresearch.com/insights/china-smartphone-market-share/
IDC. (2025, July). Worldwide Quarterly Mobile Phone Tracker. International Data Corporation. Retrieved from https://www.idc.com/tracker
The New York Times. (2025, July 29). Apple Is Shutting a Store in China, Its First Closure in the Country. Retrieved from https://www.nytimes.com/2025/07/29/business/apple-china-dalian-store.html
Unusual Whales [@unusual_whales]. (2022, November 26). Per Reuters, production of Apple, $AAPL, iPhones could slump by at least 30% at one of the world’s biggest factories next month due to tightening COVID curbs in China. [Post]. X. https://x.com/unusual_whales/status/1596169589683101698
Yahoo Finance. (2025, July 29). Apple Inc. (AAPL) Stock Price & News. Retrieved from https://finance.yahoo.com/quote/AAPL
