Tech firm joins with Alipay to give interest-free loans to iPhone buyers in China
By Stella Yifan Xie
Apple Inc., hoping to revitalize sales in China, has paired up with the world's largest financial-technology company to give iPhone buyers an affordable purchase option: up to two years of interest-free financing.
Apple and Alipay, a popular Chinese mobile-payments network owned by Jack Ma's Ant Financial Services Group, this week informed customers that they could borrow money at no cost to buy products on Apple's online store and pay for the devices in monthly installments over 24 months.
The minimum purchase to qualify for the interest-free financing is 4,000 yuan ($595).
On Apple's China website, the cost of an iPhone 8 starts at 5,099 yuan ($758) while the iPhone XR, a new handset released last fall that the company hoped would sell well in China, has a starting price of 6,499 yuan ($967).
Apple last month blamed declining iPhone sales in China, the world's largest smartphone market, for the company's first cut to its quarterly revenue estimate in more than a decade. The Cupertino, Calif., technology giant has been losing ground to Chinese rivals that sell smartphones for far less, and has also pointed to weaker economic and consumer sentiment in China. Apple's smartphone shipments in China fell 20% in the quarter ended December from a year earlier, according to International Data Corp.
The new financing offer from Ant's Huabei service, which provides lines of credit to tens of millions of individuals who use the Alipay platform, will sharply lower the monthly sums that people have to pay for new iPhones. Apple offered a similar financing package at its 42 physical stores in China last month to buyers of new iPhones.
Huabei, which means "just spend" in Chinese, on Wednesday told customers that it could temporarily increase their credit limits to enable them to purchase Apple products.
While such loans are interest-free for shoppers and can spur them to make big-ticket purchases, retailers are in effect footing the financing costs. In such arrangements, retailers typically pay lenders an upfront fee that is a small percentage of a product's price. Consumers then repay the lenders over time.
An Ant spokesman declined to comment on the terms of the company's arrangements with Apple. An Apple spokesman declined to comment.
Apple's website said holders of credit cards issued by three state-owned Chinese banks can also obtain 24-month interest-free financing to purchase its products. Credit-card penetration in China, however, is low compared with the U.S. Apple's own digital-wallet service, Apple Pay, has also failed to gain traction in the country since its launch three years ago.
Instead, hundreds of millions of Chinese have connected their bank accounts directly to Alipay and rival Tencent Holdings Ltd.'s WeChat Pay networks and use their phones to make online and offline purchases.
Ant's Alipay has more than 700 million active users in China. Its Huabei service, which operates like a virtual credit card, is used by shoppers to fund everything from daily spending to online purchases on the websites of e-commerce giant Alibaba Group Holding Ltd., which created Alipay more than a decade ago and spun it off into a separate company.
As many as one out of four Chinese aged 30 or younger are users of Huabei, according to a 2017 report from Ant, which also noted that most of these users prefer to pay by installment when purchasing mobile phones.
Apple has a store on Alibaba's Tmall online marketplace, where Huabei users have been able to get interest-free financing for one year to purchase iPhones and other Apple products. The current 24-month financing offer ends on March 25, Apple told users of Alipay.
To boost flagging sales in China, Apple has also been offering discounts on some of its new iPhones for customers who trade in older ones. For instance, the iPhone XR can be purchased for 4,399 yuan, lower than its sticker price of 6,499 yuan. The higher-end iPhone XS can be bought for 6,599 yuan with a trade-in, compared with its regular 8,699 yuan retail price.
Yoko Kubota and Tripp Mickle contributed to this article.
Write to Stella Yifan Xie at email@example.com