China To Subsidise Smartphones To Boost Sales Amid Market Slump

The Chinese government has announced it will offer subsidies on smartphones and other personal electronic devices to boost domestic spending, which saw a significant downturn in the post-Covid era and has since been aggravated by global economic headwinds. The subsidies will help brands increase discounts on smartphones, tablets, smartwatches, and audio products to entice more customers in the world’s largest smartphone market.

Bloomberg has reported, citing an announcement from China’s top economic planning agency, that the new smartphone subsidies will be part of an expansion of the national trade-in programme, which currently applies to home appliances and cars. The government’s decision has filled China’s smartphone industry with hope as it faces challenges in wooing customers, who cut down their spending on smartphones due to growing financial burdens and, more importantly, the inevitable stagnation in device features.

Government subsidies, the report added, will also help drive sales for brands such as Huawei and Xiaomi, which have doubled down on efforts to sell their latest smartphones. Huawei announced deep discounts on its flagship models, followed by a similar but rare move by Apple as part of which customers are eligible for a discount of up to CNY 500 on top iPhone models. The report mentioned that the government’s move will also excite the e-commerce industry, which is responsible for a significant chunk of smartphone sales.

Doling out sops to boost consumer spending on electronics will not only help the government reclaim China’s position as the world’s biggest smartphone market but also prepare it to absorb the impact of US sanctions on Chinese exports. The subsidy programme will be funded through “significantly” increased sales of ultra-long special treasury bonds, according to Yuan Da, deputy secretary-general of the National Development and Reform Commission. Although multiple Chinese states have previously offered similar offers as part of trade-in programmes last year, the government’s decision to take it national could be more effective.