Apple Inc teams up with Foxconn to introduce a trade-in program for iPhone in China. The plan is to take their old iPhones to Apple stores in China that can be kept as credit against the company’s product from March 31. Foxconn technology Group will be responsible for buying and reselling the phones for the program to be conducted. Apple’s CEO, Tim Cook believes that China will overtake U.S as Apple’s biggest market and hence he is trying to increase the apple store by double in greater China next year.
The program is same as one of the expansion program in U.S where the company accepted non-Apple devices in exchange of other products. The mainland trade-in program currently involves only Apple phones. If the deal takes off brilliantly, Apple’s business relationship with its largest supplier Taipei-listed flagship Hon Hai Precision Industry Co. will strengthen. Hon Hai precision receives half of the revenue for manufacturing iPhones, iPads and MacBooks.
The China program will involve the retail staff of Apple stores to check the Iphone’s condition and then offer credit against it. Foxconn will directly purchase the phone without Apple taking the ownership. If required, Foxconn will repair the iphone before selling on e-commerce sites like FLnet and eFeihu. An online store, Alibaba will also sell these exchanged Iphones for Foxconn. The program might as well sell the phone through physical stores and then take the trade-in program online later.
The similar trade-in tactic has given tremendous results in the U.S. Consumers sell their older iPhones and buy an upgraded one defraying the extra costs. A research company IDC approximated China sales to fuel up by 42% in 2014 to be around 46.3million. Some major wireless Multinationals in U.S including Sprint Corp and Verizon Communications offered certain subscriber schemes whereby they traded older phones for new ones.
China is a crucial market for Apple. In the fourth quarter of 2014, Apple propagated $16.1 billion of revenue in the country, which is almost as good as its $74.6 billion in total revenue. Apple’s China revenue was up 20 percent year over year and 66 percent compared to the third quarter of 2014. Also, demand for larger screen Iphone by Chinese accelerated Apple’s profit of $18 billion in the final quarter last year.