Apple has partnered with China Merchants Bank to offer Chinese customers two-year installment payment plans, as many of the company’s products remain financially out-of-reach for many of the nation’s consumers.
Despite the country’s fast-growing economy, Apple products are still too expensive for the world’s biggest computer and mobile-phone market. Apple’s iPhone 5 carries an $850 price tag, which is equivalent to approximately six weeks’ pay for the average urban Chinese worker. Junior-level workers who assemble many of Apple’s products make less than $300 per month, The Mac Observer reports.
“There is an enormous mid-range consumer market that they are not tapping into,” Mark Natkin, the managing director of Marbridge Consulting, said, according to The Mac Observer. “They’re trying to figure out how to make products more accessible to that market segment.”
Apple will offer online customers in China the ability to split product payments into three, six, 12, 18 or 24 installments. The move comes after Apple fell to sixth in China’s smartphone market after it was passed up by Lenovo and ZTE Corp.
Until Jan. 23, if a customer chooses an installment plan with 12 or fewer payments, there will be no fee. Choosing a plan of 18 installments, however, will carry a 6.5 percent interest fee and a 24-installment plan will carry an 8.5 percent fee, The Mac Observer reports.
Apple CEO Tim Cook said that China is a top market for Apple, adding that he expects the Chinese market to exceed the U.S. market as the company’s most important sector in coming years. While installment payment plans are relatively common around the world, the concept is still a novel one in China.
“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,” David Wolf, a managing director for Beijing-based Allison+Partners, said, according to The Mac Observer.