As I mentioned briefly in my post before one of the key features of the Chinese mobile market is that consumers place less emphasis on access to Apple’s ecosystem of products. This is because Chinese mobile users can get most of their functionality out of a single app – WeChat.
Hence, we can say that iPhones and other mobile devices are closer substitutes than they are in Western markets. Using the basic economic theory of cross-price elasticity of demand, we can say that if two goods are close substitutes then demand for one of the goods will be more responsive to changes in the price of the other good. iPhones and Huawei phones will never be perfect substitutes, not least because of the brand loyalty attached to each device. But, if they are closer substitutes in China then we would expect to see a reduction in price of Huawei phones reducing demand for Apple phones in greater magnitudes than in other markets.
