Apple CEO Tim Prepare dinner met with Labubu artist Kasing Lung throughout a visit to China in Oct. 2025, as pictured right here on the iPhone firm’s official Xiaohongshu account.
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This report is from this week’s CNBC’s The China Connection publication, which brings you insights and evaluation on what’s driving the world’s second-largest financial system. You may subscribe here.
The massive story
Whereas Nvidia‘s market share has gone to zero in China attributable to U.S. restrictions, Apple is seeing native iPhone demand choose up.
It is no small feat for Apple. On high of escalating U.S.-China commerce tensions and sluggish client spending, the smartphone firm faces an onslaught of Chinese language opponents additionally combating for market share overseas.
However the iPhone maker, like so lots of its Western friends, isn’t about to give up on China, particularly because the world’s biggest shopping event — Singles Day — will get underway.
In just some months, Apple has revamped its native technique. The corporate in August lastly opened an account on the social media app Xiaohongshu, or RedNote, which has grow to be the hip place for modern client content material in China.
And as livestreaming has grow to be a staple in Chinese language e-commerce, CEO Tim Prepare dinner reportedly joined a session on ByteDance’s Douyin, the Chinese language model of TikTok, final week to announce that the iPhone Air would lastly launch in mainland China after an preliminary delay. Prepare dinner additionally met with Labubu creator Kasing Lung while visiting Shanghai.
Mixed with product enhancements, the advertising and marketing paid off.
As Singles Day kicked off on Monday evening, iPhone gross sales within the first two hours on Alibaba’s Tmall platform exceeded the total from the primary day of final yr’s occasion.
Earlier on Monday, evaluation agency Counterpoint Analysis mentioned first-10-day unit gross sales of the brand new iPhone 17 sequence in China had practically doubled these of its predecessor.
Robust iPhone 17 gross sales within the U.S., Apple’s largest market, helped too. Apple shares hit a record high Monday, reinforcing its place because the world’s second-most beneficial public firm after Nvidia.
Larger China, which incorporates Hong Kong and Taiwan, stays Apple’s third-largest market, contributing about 16% of gross sales within the three months ended June 28.
China is simply as vital for Nike, driving about 13% of the sports activities model’s gross sales within the quarter ended Aug. 31. For Lululemon, mainland China is its second-biggest market outdoors the Americas with 16% of total net revenue as of this summer season — up from 13% final yr.
The businesses all noticed robust outcomes as Singles Day kicked off. Within the first hour, Apple, Lululemon and Nike have been among the many 80 manufacturers promoting on Tmall that noticed gross sales exceed 100 million yuan ($14.05 million), Alibaba mentioned. The Singles Day promotional occasion ends round Nov. 11.
Joint Alibaba occasion in LA
Different U.S. manufacturers, from magnificence to diet, additionally need in on the Chinese language client market. Late final week, 50 representatives from U.S. client manufacturers gathered in Los Angeles for the primary joint occasion hosted by Tmall World in North America and WPIC Advertising and marketing + Applied sciences.
Cross-border e-commerce is “the best path to enter the Chinese language market in most product classes, particularly amid commerce tensions,” mentioned Jacob Cooke, co-founder and CEO of WPIC. “We additionally emphasised that Chinese language client demand for high-quality U.S. merchandise stays resilient regardless of these tensions.”
The occasion coincided with Alibaba’s personal Singles Day launch in Shanghai, the place the corporate confirmed off new AI instruments to entice customers extra successfully and scale back prices for sellers.
Alibaba claimed that one such function can detect whether or not a person is looking for a present or a private merchandise, and may construct a much more advanced shopper profile that improves product concentrating on by 25%. One other permits customers to go looking with obscure phrases reminiscent of “finest cat litter possibility for a house with each cats and canines” and discover a appropriate product.
The brand new AI instruments “are straightforward to work with,” Cooke mentioned. “We count on this large-scale AI integration to ship a measurable enhance to Singles’ Day efficiency.”
These instruments are additionally a take a look at for Alibaba’s AI ambitions. The corporate has spent billions to develop its personal variations of ChatGPT and video era fashions, integrating them into current enterprise strains.
Alibaba Vice President Zhang Kaifu, who oversees AI for e-commerce, instructed reporters final week the corporate has already made back its AI investment within the on-line purchasing enterprise.
The corporate is way from being the one one utilizing AI for retail. Smartphone firm Honor final week additionally launched an on-device AI instrument that may quickly compare prices — including coupons — across online shopping sites in China.
AI-driven retail is not new in China, mentioned Charlie Dai, VP and principal analyst at Forrester. He identified that Chinese language retailers and producers have been utilizing AI instruments for the previous decade to forecast demand and handle provide chains, decreasing stock waste.
“[This year,] we are able to additionally count on digital try-on, AI reside hosts, conversational assistants on eCommerce and social platforms like JD.com and Douyin to spice up engagement, scale back returns, and reduce influencer prices,” he mentioned.
A market that wants some ‘shock’
These value financial savings are coming at a crucial time for manufacturers. China’s retail gross sales grew by just 3% in September from a yr in the past, properly under ranges seen earlier than the pandemic.
That did not cease LVMH from opening “The Louis” this summer season, a flagship retailer housed in a ship-shaped constructing simply throughout from one of many world’s largest Starbucks Reserve areas in downtown Shanghai.
Greater than 100,000 folks go by The Louis on daily basis, and about 2,500 go to it every day, in line with HSBC analysts. “In a market that wants some pleasure, a component of shock, actual causes to reconnect with manufacturers given the morose backdrop, the initiative is clearly hitting a nerve even 4 months after the opening,” they wrote in a be aware Monday.
Considered one of The Louis’ visitors last month was LVMH CEO Bernard Arnault, who reportedly additionally checked out upstart Chinese language luxury brand Laopu Gold. The European luxurious big final week reported an enchancment in Chinese language client spending domestically, up by the mid-to-high single digits, with Asia remaining its biggest market by revenue, forward of the U.S.
For some of the richest people in the world, U.S.-China tensions will not cease them from attempting to do enterprise with Chinese language shoppers.
As Weiwan Han, accomplice at consultancy Bain & Firm, summed it as much as me: only a few manufacturers are leaving China, if solely to defend their international market share.
“If you happen to lose right here, finally you lose all over the place, as a result of your native competitors goes abroad, your e-commerce platforms are going abroad.”
LVMH would solely affirm that Arnault visited The Louis in Shanghai. Apple didn’t reply to a request for remark.
High TV picks on CNBC
Krishna Srinivasan, Director of the IMF’s Asia Pacific Division, mentioned the impression of U.S. tariffs on Asia, U.S.-China commerce tensions, and China’s financial progress trajectory.
Former PBOC advisor David Li Daokui assessed the state of the commerce battle between the 2 powers forward of a probable assembly between U.S. President Donald Trump and Chinese language President Xi Jinping.
U.S. Treasury Secretary Scott Bessent joined CNBC’s Sara Eisen on the CNBC ‘Put money into America’ Discussion board in Washington, D.C, the place he revealed that the Trump administration will set worth flooring throughout a spread of industries to fight China.
Must know
China swaps out WTO negotiator. Beijing introduced Tuesday that Li Chenggang, a vice commerce minister who has been a part of the negotiating crew on U.S. commerce, would no longer hold his different function of consultant to the World Commerce Group.
Actual property drags down progress. China reported GDP progress of 4.8% within the third quarter, however fixed-asset funding for the primary 9 months of the yr unexpectedly contracted because the decline in property funding steepened.
China replaces U.S. soybeans. For the primary time since 2018, China imported zero soybeans from the U.S., as a substitute turning to South America for the crop, in line with information for September.
Quote of the week
Historical past tells us that each time the U.S. has tried to make use of export controls to constrain China’s improvement has solely led to an acceleration of home innovation in China. We will return to the Fifties and efforts to cease China from creating nuclear weapons.
Within the markets
Chinese language markets fell Wednesday, monitoring losses throughout most of Asia.
The Hang Seng Index dropped 1.27%, whereas the CSI 300 declined 0.7%. Each indexes have added 28.1% and 16.29% respectively this yr.
Yields on China’s 10-year authorities bonds have been regular at 1.768%.
The efficiency of the Shanghai Composite over the previous yr.
Arising
Oct. 23: China’s high leaders wrap up the “Fourth Plenum” to debate five-year objectives
Oct. 23-25: Chinese language assume tank CF40 hosts its Bund Summit in Shanghai
Oct. 25: U.S. Treasury Secretary Scott Bessent anticipated to satisfy Chinese language Vice Premier He Lifeng in Malaysia; Shenzhen-based GoPro rival Insta360 to open its first Hong Kong flagship store
Oct. 27: China stories industrial income for September
Oct. 27-30: China holds state-organized Monetary Avenue Discussion board in Beijing
Oct. 29: APEC CEO Summit begins in South Korea forward of financial leaders’ assembly; Hong Kong inventory change closed for a neighborhood vacation
