Chief Executive Officer Tim Cook has seen China as a key part of Apple's strategy: last fiscal year the company generated nearly $52 billion in revenue from Greater China, a region that includes Hong Kong.
Apple saw its sales in China fall by almost 40 percent on year in Q4 2018, while other local brands saw their sales drop about 20 percent.
To address the fall, Apple has suggested it will offer new financing and phone replacement services, while the iPhone XR could be discounted in some markets to offset the strengthening United States dollar.
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The report is the first to put a firm number on the scale of a recent decline in Apple's fortunes in the world's second-largest economy after Chief Executive Officer Tim Cook pointed to China as a big factor in a rare cut in the company's quarterly sales forecast last month. Both companies have seen a slump in shipments in China, and have been the worst performing among top five smartphone makers. But when it comes to India, there have been multiple reports that Apple may start manufacturing more smartphones in the country.
Meanwhile there is intense competition between major manufacturers like Apple and Samsung and with local vendors like Huawei, Xiaomi, Oppo and OnePlus. This means that competitively priced, feature-packed phones have caused problems for the iPhone which has become more expensive over time.
Apple can reignite demand for the iPhone by cutting prices, introducing a much cheaper model, or persuading carriers like China Telecom to restart their subsidy programs, added Mawston. Apple still provides total revenue by region, though, and its "Greater China" sales - including Taiwan and Hong Kong - were down 27% annually to $13 million, according to CNBC. Sales on the Chinese mainland and in Hong Kong and Taiwan tumbled 27 percent on the year to USD13.2 billion, the firm said on January 30 in its financial report for the first quarter of its fiscal year 2019 - the final quarter of 2018.