Apple pioneers installment plans in China

Apple has introduced installment payment plans for buyers of iPhones and MacBook laptops in China as it struggles to compete with low-cost devices in the world's largest computer and mobile-phone market.

Payments on purchases costing from $48 to $4,800 made via the company's Chinese website can be spread over as long as two years, according to the site. The plan, which requires a China Merchants Bank Co. credit card, has fees ranging from zero to 8.5 percent.

Apple is trying to make its products more affordable in China after being surpassed by local suppliers such as ZTE Corp. and Lenovo Group Ltd. in the smartphone market. The iPhone 5, released in China last month, is priced at $850 on Apple's local site, equal to about six weeks' pay for the average urban worker.

"There is an enormous mid-range consumer market that they are not tapping into," said Mark Natkin, managing director of Marbridge Consulting, a Beijing market research firm. "They're trying to figure out how to make products more accessible to that market segment. This is a good step in that direction."

New customers

Online customers in China will be able to split payments into three, six, 12, 18 or 24 installments, according to Apple's website. Through Wednesday, choosing 12 or fewer installments carries no fee. A fee of 6.5 percent of the selling price will be charged for 18 installments, and 8.5 percent for 24 installments.

Apple dropped to sixth in China's smartphone market in the third quarter, from fourth in the prior three-month period, as local producers lured buyers with smartphones costing less than $160 each, according to researcher IDC.

The phone maker is also opening new stores in China, and Chief Executive Officer Tim Cook has visited twice in the past 10 months as the company tries to boost sales. The country will eventually overtake the U.S. to become Apple's largest market, Cook said last week.

Urban workers in China had average monthly pay of about $570 in the first nine months of last year, according to data from the National Bureau of Statistics.

Apple "has likely approached maximum penetration in China's higher economic stratas, and now needs to be able to appeal to students, workers and rural residents to sustain robust growth," said David Wolf, China managing director for market consultant Allison+Partners in Beijing.

A 'pioneer'

"Financing is traditionally the best route to make expensive luxury items affordable to those unable to save the cash for them, and if Apple pulls it off it will be a pioneer in consumer credit in China," Wolf said.

Apple has used financing plans in other markets, including the U.S., Brazil and Singapore.

In China, Apple recorded $5.7 billion in sales during the quarter ended September. The company has 11 retail outlets in the country, including Hong Kong.

The phone maker distributes iPhones in China through China Unicom (Hong Kong) Ltd. and China Telecom Corp., the nation's second- and third-largest carriers. Both companies offer subsidies on the handset that can reduce the cost to consumers.

Apple has yet to reach agreement to offer the devices through China Mobile Ltd., whose customers make up 64 percent of the nation's 1.1 billion mobile users.

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