In a dramatic step in one of its most crucial international markets, Apple is planning to permanently shut down its store at Parkland Mall in Zhongshan District of Dalian City.
The closure on August 9 is the tech giant’s first-ever closure of a China-based store, with Apple attributing it to shifts in the surrounding shopping complex environment.
Weaker Retail Sales in China
Apple’s move comes as China is suffering growing economic woes. The nation is grappling with deflationary pressure, weakening consumer demand, and rising global trade tensions.
All of these have come hard on retail activity, retail sales growth has missed forecasts, and property prices are dropping sharply.
Apple’s own results have tracked these patterns. The company posted $16 billion in China sales in the second quarter, a 2.3% decline and shy of expectations of $16.8 billion among analysts.
Apple Holds Ground Despite Closure
The Parkland Mall store is among two Apple stores in Dalian. The other store, located in the Olympia 66 shopping center just 10 minutes’ drive away, will stay open.
Apple has promised employees who are affected by the closure that they will be given chances to transfer to other roles.
In a statement, the retailer said, “We remain committed to providing an exceptional customer experience through our physical stores across Greater China and our online store.”
The decision comes in line with a bigger trend, as other chains have also been retreating from the Parkland Mall.
Expansion Plans Signal Continued Investment in China
Even after closing the Dalian store, Apple is not winding down operations in China. The tech giant is actually growing. A new store will open at Shenzhen’s Uniwalk Qianhai on August 16. Other stores in Beijing and Shanghai are also in the pipeline in the near future.
Apple already opened a store earlier this year in Anhui province, further solidifying its presence in China.
Expansion in India and Middle East
With uncertainty shrouding the business scenario in China, Apple is building its presence in other markets around the world like India, the UAE, and Saudi Arabia. Among these, India has emerged as a prime focus.
A Canalys study finds that India surpassed China in the June quarter to emerge as the top smartphone supplier to the US. This is primarily due to Apple’s increasing iPhone assembly operations in India, a central aspect of its ‘China Plus One’ policy to avoid over-reliance on Chinese manufacturing during trade tensions.
Based on Canalys, the percentage of US imports of smartphones from China fell sharply from 61% to 25% year-over-year during the June quarter, which India took in quite a bit.
Apple has started manufacturing and shipping even its higher-end Pro versions from India, though Chinese companies still export a good proportion of the same version that goes into the US market.
