The prices of iPhones in China are falling thanks to a tax cut that took effect Monday.

Apple cut the prices on iPhones, iPads and other products on its official Chinese website.

The cuts followed a three percentage-point drop in the rate of value-added (sales) tax that kicked in on April 1, according to state-run news agency Xinhua.

Apple (AAPL) reduced the price of some products, such as the iPhone XS, by even more than the 3% tax cut.

The latest 64GB iPhone XS now costs 8,199 yuan ($1,220), making it 500 yuan ($74), or 5.8%, cheaper for Chinese buyers. The iPhone XR dropped in price by 300 yuan ($45), or 4.6%.

Apple (AAPL) declined to comment on the price changes.

The company raised alarm bells in January when CEO Tim Cook warned investors that “more severe” economic conditions in China weighed on iPhone sales last year.

Cook later told Reuters that Apple would lower iPhone prices in some markets outside the United States to offset the strong US dollar.

But the iPhone had already been struggling in China, even before the country’s economy showed signs of slowing and the weak Chinese yuan bumped up prices.

Apple’s smartphone sales in China have been declining for more than three years and plunged by 20% last quarter, according to market research firm IDC.

The California company faces stiff competition from domestic rivals like Huawei, Oppo, Vivo and Xiaomi, which all offer cheaper, high-end smartphones tailored for the Chinese market.

“Even with this price reduction, these iPhones are still more expensive than the competing ones from those such as Huawei,” said Kiranjeet Kaur, an analyst with IDC.

Still, China remains a key market for Apple, accounting for more than 15% of total sales.Revenue from the Greater China region — which includes Hong Kong and Taiwan — fell about 27% to $13.2 billion last quarter compared to the same period a year earlier.

By Sherisse Pham
CNN Business

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